DO NOT PASS GO… DO NOT COLLECT $200
No, this is not the game of Monopoly. This is community management. Higher standards of care, a higher caliber of manager, more extensive training, and level of integrity beyond compare. Believe it, management professionals are being watched. Not just by clients, peers, and others across this nation but by legislators, regulators and other watchdog organizations worldwide.
When it comes to the handling of funds for Large Scale Community or Homeowner Associations the scrutiny becomes more microscopic as time goes by. Working with advisors who specialize in the field of community association financial management can save considerable time and effort and can help to make life easier on-board members and managers alike.
We can learn from others if we examine the details.
The day-to-day details of funds management are one of the keys in working towards success for any professional association manager. Once again allowing specialists to assist may make a considerable difference. Details like, who is responsible for accounts receivable, the daily posting of individual checks and dues for each association? Little details like, how does that money get deposited into the proper accounts and who verifies that it has been completed? Is there a checks and balances system and procedures and protocols to assure that each step is followed through competently and efficiently?
When issuing checks to vendors, who has the authority to handle and cut the checks and how are they safeguarded? Who signs them and are you in compliance with your states Civil Codes or Revised Statutes when transferring funds? Again, the little details that count so much. Do you have someone verify that the correct board members have approved these expenditures, and do you have these resolutions in writing and noted as a part of the minutes? All of these items are of primary importance, especially when it comes to future audits and questions that may arise. I like to use the term “CYA” which means, “cover your assets”…
Invest with Care
When investing funds for associations’ reserve accounts, it used to be easy. Just find some local bank or S&L, buy a 6-month CD and roll it over every 6 months. However, you are losing interest by moving funds and waiting on signature cards. Today, it is not quite that simple, since rates have flattened over the past few years and the number of available financial institutions has declined dramatically. Remember, the manager as well as the board of directors has a fiduciary responsibility to protect and maintain the assets of the association. Yes, the manager is the quarterback, and is held to a much higher standard of care.
Furthermore, unless you are a registered representative and possess licenses as an Investment Advisor or Registered Representative of the NYSE you may be overstepping your authority, even when recommending certain banking institutions for placement of CDs, versus receiving an independent recommendation on proper, prudent and appropriate investments for your association. While it has been easy in the past, the future is upon us and the world has changed.
In today’s low interest rate and uncertain economy, the management of funds and credit needs are vital for an association to survive. This means that the board should have professional investment advice and the manager is usually able to direct them to the right source for this assistance. The end result of this marriage is that the association should have enough professional advice and money over time to accomplish all the required maintenance and repairs necessary to maintain the value of their community.
Know the Rules
The rules of the game are not simple anymore. The past is a reminder, and one thing is for certain, the future of interest rates and our economy is uncertain. This does not mean you can’t plan for your future. Proper planning and professional help can help guide you towards a smooth and simple financial road to travel. For the professional community manager, working towards financial confidence and independence is the key for financial management. Boards today look to the management professionals, the experts in community management to help guide them towards a prosperous and efficient future. After all, what do you think they expected when they hired the manager in the first place…miracles of course. Working together with other advisors who specialize in community associations, miracles can and sometimes do happen.
Helping You Build a Firm Financial Foundation For Your Future
Nico F. March is the Managing Director for The March Group, LLC. He has worked with Community Associations since 1974 and has served on several Boards, including the Board of Directors for the Community Association Institute (CAI), San Diego Chapter. His team has specialized in Corporate Cash and Association Financial Management since 1982 and has assisted Nonprofits and Timeshares invest reserve, operating, SIRS and reconstruction funds. Nico and his team work out of their California, Arizona, Hawaii and Wyoming offices and may be reached at 888.811.6501 or email [email protected] for further information and consultations.
The March Group is not a tax or legal advisor. We will be glad to work with your professional CPA and Attorney to help you with your financial goals. Neither the information contained herein, nor any opinion expressed shall be construed to constitute an offer to sell or a solicitation to buy any securities mentioned herein. Nico March is a registered representative with, and securities are offered through LPL Financial, Member FINRA/SIPC.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual or organization. The situations presented are hypothetical situations based on real life examples. Names and circumstances have been changed. To determine which investments or strategies may be appropriate for you, consult your financial advisor prior to investing.
