Martha Stewart, CFP? | May 2002 Media Watch

Martha Stewart, CFP?
(Media Watch)

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Financial advice tucked into the pages of a homemaking magazine may be a good thing.

By: David Connell

It's important to know where your clients--and more importantly your potential clients--are getting their financial advice. It seems that tips on saving and investing can be found just about everywhere these days, and that any publication, no matter what its focus, has a column on investing or retirement planning.

One odd source of financial advice comes in my mailbox every month, addressed to my wife, naturally--a giant, slick volume full of decorating ideas, knickknacks and recipes adding up to a homemaking ideal that few could possibly attain. It is of course, Martha Stewart Living.

Nestled among articles on pocillovy (collecting eggcups to you and me), creating "whimsical" cat toys that "are sure to prompt hours of fun for you and your cat" and hosting a "spring harvest lunch," is some sound financial advice.

That's right, several times a year, Stewart finds time to preach the needs of financial planning directly to her flock. While the articles are usually short and cover basic topics such as "Building Your Nest Egg" and "Home Office Tax Deductions," the advice provided by Living is generally strong and includes a good amount of specific information.

These articles are reaching a demographic few financial planners reach, but all should covet: upper-middle-class women.

"Building Your Nest Egg," for instance, begins with a bromide from Gwen Reichbach, director of the National Institute for Consumer Education at Eastern Michigan University: "The typical middle-class household should be saving at least 10 percent of its income each year--more if you are getting a late start." The article moves into more detail saying: "A 35 year old who contributes $11,000 a year to her 401(k) and earns, say, 8 percent annually would amass $1.25 million by age 65. If she began at 42, she would accumulate only $670,000."

However, the advice in Living is not always so practical or easy to understand. Take this passage from "Home Office Tax Deductions" that attempts to explain how those selling a house can avoid paying penalties on the depreciation of their home office: "Normally, you can take a tax-free gain of up to $250,000 for a single person or $500,000 for married couples. But having a home office means the IRS views that portion of your home as a business property, and that portion of your capital gains as taxable. So if you've used 10 percent of your home for an office and then sell the house at $200,000 profit, you would have to pay a long-term capital gains tax of 20 percent on the business portion of that profit: $20,000."

Phew, this is harder than making a confit of wild salmon on cucumber salad with horseradish sauce! Even with dumbed-down hypothetical numbers this article seems to go beyond the knowledge of the average homemaker.

But perhaps "it's a good thing," as Martha would say. These articles target a demographic few financial planners reach, but all should covet: upper-middle-class women. Many reading these articles will instantly recognize the need for financial planning. They're also likely to recognize the need to seek professional help. And if they don't recognize the need, a little cajoling from Queen Martha doesn't hurt. "Ask your accountant how these plans fit your finances," reads the nest egg article. "For now, consult your tax advisor about whether a home-office deduction makes sense for your present financial situation," advises the home office article.

So the next time a harried middle-class couple dressed in Anne Taylor and Polo comes running into your office saying they've just read a fascinating article on saving for a second home in Martha Stewart Living; lean back, smile and tell them you have a "whimsical savings plan that should provide hours of rustic comfort for years to come."

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Martha Stewart, CFP? (Media Watch)

Martha Stewart, CFP?
(Media Watch)