Why the Rich Tend to Cheat on Their Brokers
For affluent Americans, having more than one financial adviser has now become the norm.
One in three Americans with more than $100,000 in investable assets started a relationship with a new financial services firm last year, seeking to combine the strengths of various firms to gain advice and resources, according to a new study released Tuesday by Hearts & Wallets, a financial research platform for consumers.
Related: The 6 Times You Really Need a Financial Adviser
Hearts & Wallets also noted that 55 percent of consumers with $500,000 in investable assets or more work with three or more firms.
Contrary to the popular image of wealthy investors dialing up their Wall Street broker, the Hearts & Wallets survey found that affluent investors are more likely to use self-service firms — discount brokerages like E*Trade or TD Ameritrade — than full-service brokers. More than 70 percent of investors with $500,000 or more use those self-service brokers, even if it’s for smaller “play money” accounts, compared with 40 percent for full-service firms such as Ameriprise and Edward Jones.
“It’s astonishing the self-service competitive set has deeper reach into investors with $500,000-plus, engaging more affluent investors than the full-service competitive set,” said Laura Varas, Hearts & Wallets partner and co-founder, in a press release.
Related: 6 Traits of an Emerging Millionaire: Are You One?
Some wealthy investors use both. A common pattern is what Hearts & Wallets calls “stable two-timing,” or when investors balance a self-service firm with a full-service firm. Some consumers might even tap into multiple high-service firms to obtain different advice.
“Just as in retail stores, wealthy customers may trust and frequent a Bloomingdale’s, but they will still shop at Costco, too,” Varas said. “Smart consumers compare.”
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GOP Tax Cuts Getting Less Popular, Poll Finds
Friday marked the six-month anniversary of President Trump’s signing the Republican tax overhaul into law, and public opinion of the law is moving in the wrong direction for the GOP. A Monmouth University survey conducted earlier this month found that 34 percent of the public approves of the tax reform passed by Republicans late last year, while 41 percent disapprove. Approval has fallen by 6 points since late April and disapproval has slipped 3 points. The percentage of people who aren’t sure how they feel about the plan has risen from 16 percent in April to 24 percent this month.
Other findings from the poll of 806 U.S. adults:
- 19 percent approve of the job Congress is doing; 67 percent disapprove
- 40 percent say the country is heading in the right direction, up from 33 percent in April
- Democrats hold a 7-point edge in a generic House ballot
Special Tax Break Zones Defined for All 50 States
The U.S. Treasury has approved the final group of opportunity zones, which offer tax incentives for investments made in low-income areas. The zones were created by the tax law signed in December.
Bill Lucia of Route Fifty has some details: “Treasury says that nearly 35 million people live in the designated zones and that census tracts in the zones have an average poverty rate of about 32 percent based on figures from 2011 to 2015, compared to a rate of 17 percent for the average U.S. census tract.”
Click here to explore the dynamic map of the zones on the U.S. Treasury website.
Map of the Day: Affordable Care Act Premiums Since 2014
Axios breaks down how monthly premiums on benchmark Affordable Care Act policies have risen state by state since 2014. The average increase: $481.
Obamacare Repeal Would Lead to 17.1 Million More Uninsured in 2019: Study
A new analysis by the Urban Institute finds that if the Affordable Care Act were eliminated entirely, the number of uninsured would rise by 17.1 million — or 50 percent — in 2019. The study also found that federal spending would be reduced by almost $147 billion next year if the ACA were fully repealed.
Your Tax Dollars at Work
Mick Mulvaney has been running the Consumer Financial Protection Bureau since last November, and by all accounts the South Carolina conservative is none too happy with the agency charged with protecting citizens from fraud in the financial industry. The Hill recently wrote up “five ways Mulvaney is cracking down on his own agency,” and they include dropping cases against payday lenders, dismissing three advisory boards and an effort to rebrand the operation as the Bureau of Consumer Financial Protection — a move critics say is intended to deemphasize the consumer part of the agency’s mission.
Mulvaney recently scored a small victory on the last point, changing the sign in the agency’s building to the new initials. “The Consumer Financial Protection Bureau does not exist,” Mulvaney told Congress in April, and now he’s proven the point, at least when it comes to the sign in his lobby (h/t to Vox and thanks to Alan Zibel of Public Citizen for the photo, via Twitter).
