* FPA FILES LAWSUIT AGAINST SEC: The Financial Planning Association filed a petition in a District of Columbia Circuit Court of Appeals challenging a Securities and Exchange Commission rule exempting certain broker/dealers from the requirements of the Investment Advisers Act of 1940.
"The FPA is concerned about the quality of financial planning advice to consumers, and this rule is harmful to the profession," FPA president James A. Barnash said during an April press conference. He added, "The act itself is beginning to look like Swiss cheese."
The rule, titled "Certain Broker/Dealers Deemed Not to Be Investment Advisors," passed in a recent SEC vote, clearing the way for broker/dealers to offer fee-based accounts without registering as investment advisors. Under the rule, broker/dealers providing "nondiscretionary advice that is solely incidental" to their brokerage services are exempted from the Investment Advisers Act.
The FPA has challenged the expansion of the exemption, saying that it is contrary to law and "encourages broker/dealers to engage in self-dealing with their clients without disclosing their conflicts of interest."
Barnash said that the "ideal outcome is for the rule to be withdrawn completely." - Stuart Kahan
* CALIFORNIANS - WE'RE SMARTER THAN THE GOVERNMENT: A majority of Californians believe that they can do a better job of investing a portion of their Social Security payments than the government can - even though 80 percent admit that they have little or no investing experience, according to a recent poll.
In a survey of 800 Californians sponsored by the California Society of CPAs, when asked, "How does the prospect of managing a portion of your own Social Security investments strike you?" 51 percent said that they could make better investments than the government, while 41 percent were concerned about their ability to make such decisions.
When asked how they would describes themselves as investors, 52 percent admitted that they have little investment knowledge or experience, and 28 percent said that they have no investment experience. Only 19 percent said that they were very knowledgeable and experienced in investing.
Asked what they would consider the best solution to the Social Security "crisis," 35 percent of those surveyed favored allowing contributions to personal accounts, while 22 percent would continue the system as is, and 17 percent said that they'd increase the Social Security tax. Eight percent of respondents favored raising the minimum retirement age, while 14 percent said that they don't know what the correct solution is, and 1 percent declined to answer.
A quarter of respondents said that their 401(k) savings will be their primary source of retirement income, while 20 percent said that it would be Social Security, and another 20 percent said that it would be savings and investments that they fund themselves. Eighteen percent plan to rely on a pension as their chief retirement income source, while 10 percent will look to their IRAs.
Social Security topped the list of secondary sources of income for retirement, cited by 23 percent, followed by personal savings and investments (22 percent) and 401(k)s (16 percent), IRAs (13 percent) and pensions (10 percent).
When allowed to combine these sources of retirement income, 52 percent said that they'd rely on Social Security, IRAs, 401(k)s and other investments for their retirement. Thirty-six percent said that when they reach retirement age, they expect to work while also tapping these other sources of income. Seven percent said that they were likely to rely primarily on Social Security and no other sources of income.
* MELLON FINANCIAL, CALCPA TO OFFER HSAS: Mellon Financial Corp.'s human resources and investor solutions unit and the Group Insurance Trust of the California Society of CPAs signed an agreement to offer health savings accounts to approximately 28,000 society members.
Under the arrangement, Mellon will provide custodial, record-keeping, investment, debit card and reporting services, while the GIT arm of CalCPA will make Mellon's HSA services available to eligible members who adopt its ProtectPlus HSA high-deductible medical plan.
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