But don’t go betting the farm on these optimistic findings just yet.  A look at the results from January’s survey of advisers shows that they aren’t necessarily the best augurs. In that earlier survey, 49% of advisers expected inflation to increase in the next six months (it hasn’t); 47% expected consumer spending to increase (it hasn’t); and 40% expected unemployment to increase (it hasn’t). Advisers did get some things right, though. In the January survey, 59% expected consumer savings to increase in the next six months (it did); and 46% thought the housing market would continue to soften (it has).

Schwab acknowledges that the survey has limited forecasting value. “We’re thinking [the study] is more like a national view of what’s going on,” says Bernie Clark, executive vice president for Charles Schwab Advisor Services. “It’s not a predictor as much as where we think that the trends are taking us.”

And what looks like the dominant trend these days? The biggest challenge facing advisers and their clients right now, Clark says, is what he calls the “uncertainty factor.” About half of advisers’ clients feel less optimistic about the economy than they did in 2009. Forty percent of advisers say their clients are less optimistic about their investment performance than they were six months ago, and 50% of advisers say their clients feel less confident they’ll be able to retire when they want to. Advisers report that 47% of clients are reducing expenses, and more than half are spending less on discretionary items.

Advisers have their own doubts, too. Seventy-one percent say it will be difficult to achieve their clients’ financial goals. That’s down from the 84% who held that opinion in early 2009, but up from the 58% who expressed these doubts earlier this year.

In any case, people are increasingly turning to independent advisers for help with financial planning. More than 9 in 10 advisers said they received new assets in the past six months.

For the record, the sector of the market that advisers think will perform the strongest over the next six months is information technology, cited by 47% of them. Of course, if you have your doubts about advisers’ predictive powers (see above), maybe you’d also like to know the sector in which they have the least confidence. And that’s consumer discretionary—the pick of only 9% of professionals. Check back in six months to judge their accuracy.

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Filed under: Economy, Investing

Thus far, about 40 U.S. billionaires have agreed to give away at least 50% of their wealth, according to the Giving Pledge. And while the Giving Pledge hasn’t released a tally, Forbes.com estimates that America’s wealthiest will give away an additional $120 billion or more in the years to come.

Considering that the total charitable giving in the U.S. has been hovering at about $300 billion per year for the last few years, according to the Giving USA Foundation, the amount pledged represents an astounding increase. While many billionaires will continue to give to causes they hold dear, perhaps some will be open to suggestions.

Speak up!

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Filed under: Family Money

Thus far, about 40 U.S. billionaires have agreed to give away at least 50% of their wealth, according to the Giving Pledge. And while the Giving Pledge hasn’t released a tally, Forbes.com estimates that America’s wealthiest will give away an additional $120 billion or more in the years to come.

Considering that the total charitable giving in the U.S. has been hovering at about $300 billion per year for the last few years, according to the Giving USA Foundation, the amount pledged represents an astounding increase. While many billionaires will continue to give to causes they hold dear, perhaps some will be open to suggestions.

Speak up!

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online surveys

Filed under: Family Money

You’d never fall for an email hawking shares in a diamond mine in Nigeria, but what if your own trusted broker tried to sell you a stake in a vodka enterprise in Moscow?

You might not be so suspicious. These so-called “off the book deals” — offered by an adviser you consider reliable — are among this year’s top investor traps, according to the National American Securities Administrators Association (NASAA).

(And FYI, a broker in Missouri was indeed selling shares in a Russian vodka stand deal — and raised nearly $2 million before he was busted last March.)

Other ploys to watch out for:

• Green Schemes Con artists often sell phony investments that play on hot news topics. This year, more people seem to be falling for green energy fraud, says Bob Webster, a spokesperson for NASAA. “People have a renewed interest in alternative energy sources, thanks to the Gulf oil spill, and scammers are taking advantage of that.”
• Friendly Fake-outs Bernard Madoff perfected this con, often known as affinity fraud: The scam artist targets respected members of a community (company, golf club, church, etc.) with an investment product. “The investment pays off as promised — then they go back out and tell their friends in good faith: Hey, this worked for me,” says Webster.

How to protect yourself from con games? “Always verify any investment opportunity, no matter who is pitching it to you,” says Webster. To check whether a certain investment product — or the person selling it — is properly licensed, contact your local securities regulator.  And even if you’re convinced that you’d never be so gullible, take NASAA’s investor awareness quiz. Just in case.

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Filed under: Investing, Retirement, Uncategorized

You may be the subject of a highly focused campaign meant to target consumers most likely to spend in excess of their balance.

Starting August 15, new Federal Reserve rules will require that banks can no longer automatically cover overdrafts and then levy a fee ($27 on average, per Moebs Services Inc.) as they had been; they’ll now need to get customers to opt in. Anyone who hasn’t said yes yet – and by the way, we don’t think you should – is probably getting a fair share of notices by mail. But some people will be hit harder than others.  Banks are employing sophisticated market research to help them identify the best prospects and how to reach them. For example, a study by Nebraska-based company Acton Marketing LLC conducted for bank clients, found that the people most likely to overdraw are white women in their late-30s/early-40s who rent homes in the south, and have annual household incomes of nearly $50,000. Acton is also helping banks market specifically to people who have racked up a lot of insufficient fund fees in the past.

If either of those sound like you,  then expect lots of mail — the “most preferred method of contact,” according to the study — and even get some phone calls at the last minute. (Acton is counting it down a la Dick Clark on its website.)

“At the end of the day, [overdraft protection] is a service,” says Gary Gabelhouse, a senior market researcher at Acton. While he admits that some banks have been “abusive” and “gaudy” in their  attempts to sign up customers, he adds, “the fact is that of the heavy overdraft users, 73% of them said they’d opt in to the program if they had to do it back in March.” Recent polls from other firms show that a considerable percentage of consumers would rather pay for protection than suffer embarrassment or inconvenience because of a rejected card — so for the banks, it’s just a matter of getting those people to sign up.

What say you, Money readers? Are you getting annoyed with the barrage of letters from your bank yet? Tell us in the comments.

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Filed under: Banking/Credit, Family Money, Uncategorized

Asked whether business conditions where they live will improve over the next year, 56% of women polled by Citigroup said yes, compared to just 50% of men. (The telephone survey, conducted in June, is accurate within 2.2 percentage points, according to Citi.) The outlook was similar when it came to personal finance: 66% of women were hopeful that their own personal financial situations would improve, versus 62% of men.

While the difference may seem slight, other numbers indicate that the financial outlook of the sexes is diverging; men grew more pessimistic in the three months since Citibank conducted a prior edition of the survey, while women’s confidence financial matters held constant or worsened to a lesser degree than men’s.

Why the shift? Lisa Caputo, CEO of Citibank’s Women & Co. business, says, “When people are optimistic, it’s because they’ve taken the steps to make sure that their own personal financial situation feels good to them.”

Alternatively, women’s relative optimism could be due to current big-picture financial conditions. One of the noteworthy effects of the latest recession, in fact, has been that the unemployment rate for men has risen faster and higher than it has for women.

And the relative optimism doesn’t extend to all areas of personal finance: The survey also showed that 36% of women reported being uncomfortable with their level of debt, compared to 30% of men. That could be due to perception rather than anxiety: At least one study indicates that wives tend to estimate that their family’s debt level is higher than their husbands do.

A bigger difference in the survey concerned how women view their personal financial situations throughout their lives. Stunningly, 82 percent of women under 40 surveyed believe their personal fiscal situation is on the upswing. But just 59 percent of women over the age of 40 were as optimistic.

And why is that? Having lived longer and undergone more financial ups and downs, females over 40 might be more likely to envision their future based on past experiences rather than future possibilities. For older women, the financial demands of a secure retirement may feel more immediate; younger women might find it easier to put off such worries to a later date. The financial challenges faced by women are well known: They tend to earn less over their lifetime than men do, and they tend to outlive men, meaning that they have longer retirements to fund. Earlier this year, a survey of workers age 60 or over found that 76% of women didn’t feel confident they had enough money to retire, compared to 68% of men.

Do you have a guess as to why women right now might feel more confident about their financial prospects than men? Leave your comments below.

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Filed under: Economy, Family Money

Just five years ago, Nevada was the state with the best economic conditions for workers, according to a study released last week.  Now it’s dead last. Unsurprisingly, other states that boomed in the real-estate bubble — Florida, California and Arizona — joined the Silver State at the bottom of the state-by-state mid-year employment rankings published by the business news site Portfolio.com and American City Business Journals.

Florida fell from the No. 2 spot for employment prospects in 2005 to No. 49 in this year’s report, which ranks the 50 states and the District of Columbia based on factors such as unemployment rates and changes in private-sector job counts. California took a slightly less drastic hit, dropping from No. 11 to second to last, right above Nevada. Arizona went from No. 3 a half-decade ago to No. 44.

Unlike these other cellar-dwelling states in the employment ratings, Michigan has spent plenty of time at the bottom. The state, which has suffered from an imploding economy for years, was ranked dead last from 2005 to 2009, according to Portfolio.com. It now stands in 48th place, above only Nevada, California and Florida.

If you’re looking for work in any of the newly-fallen states — and if you’re unwilling or unable to move to where conditions might be better — is there anything you can do to improve your chances? Granted, the longer you’ve been unemployed the more inadequate any suggestion might feel, but here’s some advice from John Challenger, CEO of outplacement consulting firm Challenger, Gray & Christmas:

• Expand your search as widely as possible. “If you can’t expand it geographically, then you have to expand it in the kind of job you might be willing to take to give yourself opportunity,” Challenger says. Examine your expertise, and be open to moving to a different industry.

• Be open to companies of all sizes. “It pays, especially in a tight job market, to be open to any type of company, large or small,” he says.

• Take a part-time job. Even if it’s not in your field, you might be able to bring in extra money while you continue your search. “Some people think it hurts them if they do a job no longer current or right in their area of expertise, but I think that’s false,” Challenger says.

For those who live in a state such as Michigan, where the economy has stayed weak over several years, Challenger recommends long-distance commuting as an option. “A lot of people open up their search by commuting — it’s a way of going where the jobs are,” he says. Another option would be to start your own business, so long as it’s realistically viable. One possibility is setting up an online business, so you can rely on customers in other areas where the economy is better.

If you live in any of these battered states, has anything proved helpful? If you live elsewhere, what advice would you give?

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Filed under: Economy

That’s one of the findings from a recent study of 10 million individual retirement accounts conducted by the Investment Company Institute, a mutual fund industry trade organization. The study — which also indicates that women are more likely to contribute to an IRA than men are, that the wealthy are more likely to contribute than the poor, and that people’s contribution activity peaks in their late 50s — illustrates that IRAs can be a powerful tool for retirement, but that benefits aren’t spread evenly throughout the population. As of 2004, according to IRS figures, about 2 in 10 American taxpayers had a traditional IRA.

Among working-age Americans who do have an IRA, the contribution rates are low, according to the ICI study, which examined data from 2007 and 2008. At the close of 2008, IRAs amounted to more than one-fourth of Americans’ retirement savings, but that year only 9.4% of traditional IRA owners made a contribution. If one includes Roth IRAs, the activity rate increases: In 2007, when 11.2% of traditional IRA owners made a contribution to their accounts, an additional 5.4% of them put all their new contributions into a Roth.

Why is the contribution rate for traditional IRAs so small? The ICI says this could be because of competition from other retirement savings options, such as 401(k) plans and Roth IRAs, or because of limitations on the tax-deductibility of traditional IRA contributions.

And yet the people who do use traditional IRAs are committed to them. In 2007, 60% of contributors in 2007 put in the legal limit. In 2008 — a rotten year for the market, and one in which legal limits increased from the prior year — about 50% maxed out.

That decline in the share of people taking advantage of the legal limit points to another interesting pattern: Many contributors who don’t maximize their contribution are instead depositing a round-number amount that was the maximum allowable contribution in prior years — say, $2,000 or $3,000. It seems that the power of inertia is strong — and that people don’t often bother to check year-to-year and see whether various IRS limitations on retirement-plan contributions changed.

So that you don’t unnecessarily underfund your IRA, check out the IRS rules for 2010 limits. You can also visit the IRS site for in-depth information about Roth IRAs and guidelines for 401(k) plan contributions.

To shed further light on investor behavior, the ICI promises more IRA-account-behavior studies, which, like this one, will be mined from a new database it developed with the Securities Industry and Financial Markets Association.

In the meantime, tell us about your own IRA behavior. Do you contribute to a traditional IRA or a Roth? Are you maxing out your contribution? Tell us why or why not.

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Filed under: Retirement

Obama’s intentions are certainly in the right place, and the girls would no doubt learn a lot from earning their own cash. But making that happen could be difficult. Assuming that some D.C. family wanted to hire the girls to babysit, the logistics might be ridiculous. Would they take a motorcade to the job? Would the Secret Service have to clear the house first? Similar obstacles stand in the way of other traditional starter jobs in which the girls might be interested; imagine the chaos if Sasha opened a lemonade stand on the White House lawn, or if Malia tried stocking the shelves in a neighborhood mall.

Of course, Malia, 12, and Sasha, 9, don’t need to get jobs at all. Their parents are millionaires; like many super-wealthy, President & Mrs. Obama face a unique dilemma in teaching their children about money. How do you teach your kids to be fiscally responsible, while also providing a life replete with the luxuries you’re able to provide (or, in the Obamas’ case, can’t practically avoid providing)?

Comedian Adam Sandler, for example, has said he stays up nights worrying that his kids are going to end up spoiled brats. Billionaire Warren Buffett, who has famously said he’s not leaving a huge inheritance to his children, started the lessons early, providing son Peter with just a modest allowance to supplement his summer jobs. On the other end of the spectrum, music mogul Sean “Diddy” Combs apparently has fewer qualms about letting his kids enjoy his money. He gave son Justin a $360,000 Maybach for his 16th birthday!

Elisabeth Donati, who teaches financial education to children through her Camp Millionaire program, says the key to teaching kids to be responsible with money is to lead by example. “When you’re spending money, ask yourself if the behavior is something you want your children to parrot,” she says. “If so, explain what you’re doing. If not, stop doing it.” She also offers the following tips:

• Set up an allowance for your children by around age six. Give them a set amount of cash for the month. If they run out before the month is over, use it as an opportunity to teach them about budgeting.

• Don’t buy your children everything they ask for. Let them use their allowance or other earnings to save up for items they want.

• Include your children in family money discussions, from setting a budget for the family vacation to conversations with financial advisers.

So what advice do you have for the Obamas? How can a wealthy family pass money lessons on to their kids in a household where money and luxury are as readily available as running water?

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Filed under: Family Money

Thanks to new Federal Reserve rules, you now can decide what happens when you pull out a debit card to pay for a purchase but don’t have enough money in your checking account to cover it.

Previously, if you didn’t have enough in your account to make a purchase, your bank would generally cover it anyway — at a price. Swipe for a $3 carton of milk if you only had $2 in the bank, and, without any notice, you’d pay an extra $35 to $40 to compensate for overdrawing your balance. Withdraw $20 from the ATM and the same thing would happen.

Under the changed rules — applicable to new accounts opened after July 1, and effective August 15 for pre-existing ones — attempted debit-card payments with insufficient funds will just be declined, unless users opt into the previously-automatic coverage, which banks liked to call “courtesy overdraft protection.”

The now-optional service — which many banks are spinning as a must-have, you’ll-never-be-able-to-set-foot-into-your-local-deli-if-you-don’t program — isn’t cheap. TD Bank, for example, charges $35 per transaction that overdraws an account more than $5, up to five transactions per day. You pay another $20 if your account balance remains negative for 10 consecutive days.

Interestingly, though the Fed’s new rules are being enacted to protect customers, a Credit.com poll shows that many consumers would rather pay the fees in order to avoid the embarrassment and inconvenience that accompany card rejections. But what are the alternatives if you want to avoid debit-card rejections without paying extra?

Credit.com has a list of suggestions, and we picked our favorite three:

• Carry around an emergency pre-paid or alternative credit/debit card that you know has money on it.

• If your bank allows, tie your savings account to your checking account so that any checking-account debit overdrafts are covered by the money in your savings. There may be fees for the transfer, but they’re likely cheaper than the courtesy overdraft charges.

• Sign up for text message alerts to notify you if your balance falls below a certain threshold (of course, standard messaging fees would apply here).

If you have other payment options readily available — cash or  credit cards, for example — don’t opt in for overdraft protection, advises Greg McBride, a senior financial analyst at Bankrate.com. Otherwise, you’re setting yourself up for an expensive fee that can easily be avoided, and which you may not even be aware of (since banks don’t necessarily let you know that a transaction is overdrawing your account).  If, however, you don’t usually carry around cash or your credit cards are frequently maxed out, McBride says opting in would be a sensible way to save yourself in an emergency situation when your debit card is your only payment option. But the best solution for avoiding the fee might be the most obvious one: “Everyone needs to monitor their available account balance,” says McBride, “so that they can avoid overdrafts.”

Several MONEY staffers say that in recent weeks they’ve gotten a hard sell from their banks, both online and inside local branches, to opt in for overdraft protection. Confusing marketing gimmicks and persistent sales representatives are aimed at making customers aware of the new option – and signing them up. What about you? Will you opt in? Have you experienced incessant pleas to join? Tell us in the comments.

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Filed under: Banking/Credit