Saving money is tougher for young Americans, study finds | Two-thirds of long-term-care benefits in 2012 went to women | Commentary: End tax advantages for high-fee funds
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March 15, 2013
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Saving money is tougher for young Americans, study finds
Americans in their 20s and 30s are finding it more difficult to save money than their parents did at the same age, and it could affect their ability to buy homes or have a secure retirement, according to an Urban Institute study. Issues contributing to the problem include declining wages, rising student-loan debt and the housing collapse, experts say. The New York Times (tiered subscription model) (3/14)
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Industry Update
Two-thirds of long-term-care benefits in 2012 went to women
Long-term-care insurers last year paid benefits totaling $6.6 billion to about 264,000 people, about two-thirds of whom were women, according to the American Association for Long-Term Care Insurance. Some insurers are planning to raise premiums for women. Alzheimer's disease, stroke, arthritis and cancer were top drivers of claims. AdvisorOne (3/14)
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Commentary: End tax advantages for high-fee funds
Tax-favored retirement accounts should only include index funds, not actively managed, broker-sold funds that charge higher fees and do not perform as well, writes Alicia Munnell of the Center for Retirement Research at Boston College. "The government [forgoes] considerable revenue in order to encourage retirement saving in 401(k)-type plans and IRAs; it has a responsibility to ensure that these accounts are managed in the best interests of participants," Munnell writes. MarketWatch/Encore blog (3/13)
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Advisers, clients await guidance on Roth 401(k) conversions
Financial advisers are awaiting guidance from the Internal Revenue Service and Treasury Department before advising clients whether to convert part of a 401(k) plan to a Roth 401(k), says Bob Kaplan of ING. The conversions are taxable, but it's unclear whether the taxes may be paid from the converted money or whether converted funds must be vested, he said. Kaplan also pointed out that Roth conversions are allowed only with 401(k), 403(b) and 457(b) plans. "We can't add a Roth conversion to any other type of plan, like a defined-benefit, cash-balance or profit-sharing type of plan with no 401(k) feature," he said. (3/13)
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FINRA's Ketchum calls for harmonization of rules
Investment advisers and brokers should be governed by the same set of rules, and the Securities and Exchange Commission's oversight has fallen short, says Richard Ketchum, the chairman and CEO of the Financial Industry Regulatory Authority. "If investors are to be protected, investment advisers need to be examined regularly and vigorously. It's as simple as that, and it is not happening under our current system," Ketchum said at an industry conference. Taking over supervision of investment advisers, however, is not a priority for FINRA, he has said. The Wall Street Journal (3/14)
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Other News
Financial Literacy
New financial-literacy standards will guide teachers
The Council for Economic Education is scheduled to release updated financial-literacy standards that specify the skills and knowledge students should master by fourth, eighth and 12th grades. The standards are meant for teachers, and the goal is to get more schools to incorporate these lessons into students' daily work. (3/12)
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Building Your Practice
Why establishing a niche is the best route to success
Success in financial advising doesn't come from being the best at what you do and trying to be all things to all people, writes James Carney, CEO of ByAllAccounts. Instead, success comes from defining a niche. "Narrowly define who you work with, and achieve a competitive advantage within that group," Carney writes. AdvisorOne (3/8)
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Any party which takes credit for the rain must not be surprised if its opponents blame it for the drought."
-- Dwight Morrow,
American businessman, politician and diplomat
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