How Good is State Oversight?
* California investment advisor oversight ranked weak
Responding to proposed federal legislation that would turn regulation of investment advisors over to the states, Consumer Federation of America conducted a state-by-state survey of investment advisor oversight. The findings: “More than three-quarters of investment advisors in the United States are subject to state regulatory oversight that is not sufficient to prevent fraud and abuse,” according to the federation.
The study looked at whether states required investment advisors to be registered and had programs to ensure that they were. It also considered how frequently the states conducted inspections of advisory firms and their branch offices.
Ranking states on a 1-to-10 scale--one being worst, 10 being best--California scored near the bottom, with three points, as did Illinois and Maryland. Several other major states rated even worse with one or two points. One-point states include Arkansas, Hawaii, Maine, Montana, New Jersey, New Mexico, New York, North Carolina, North Dakota, South Carolina and Tennessee. Two-point states: Delaware, Florida, Indiana, South Dakota and West Virginia.
On the other hand, top-scoring states, with seven points or more, included Alaska, Arizona, Connecticut, District of Columbia, Louisiana, Mississippi, New Hampshire, Oklahoma, Oregon, Rhode Island and Vermont.
“States are doing the best they can with grossly inadequate resources,” says Barbara Roper, director of investor protection at the federation. “In all too many cases, however, their best still leaves investors dangerously vulnerable to fraud.”
The moral of this story: Let the investor beware.
* Medicare information
If you recently turned 65, chances are you have questions about Medicare, the complicated government health insurance program that covers most U.S. retirees. If you do, you can get a helpful 38-page booklet that explains the coverages and “gaps” in Medicare insurance. To get copy, write to S. James, Consumer Information Center-6C, P.O. Box 100, Pueblo, CO 81002. Ask for the “Guide to Health Insurance for People with Medicare,” Item 513C. It’s free.
* Investing tips
Want a quick, free guide to investing? The Securities Industry Assn. will send you one, if you send them a large letter-sized, self-addressed, stamped envelope. Requests for “Investor Topics: Basics of Investing” should be sent to the association at 120 Broadway, 35th floor, New York, NY 10271-0080.
* Financial fitness test
Are you fiscally fit?
According to Phoenix Home Life Mutual Insurance Co., there are a number of steps you need to take when in your 30s, 40s and 50s to get your financial health in order.
Some of the highlights: In your 30s, start retirement planning; make or update your will and consider how you’ll finance your kids’ education; in your 40s, update the retirement plan and consider trading in your simple will for an estate plan that “is appropriate for your acquired asset base.” In your 50s, check the retirement plan again; request a statement from the Social Security Administration to see how much you’ll get in monthly stipends from the government; and ask for a pension statement from your employer. Also consider how children’s weddings, travel plans and home improvement expenses might affect your long-term goals.
Given the emphasis on retirement planning, Americans might wonder how much they ought to save to be fiscally fit. The answer depends on how much you expect to need in annual income to be comfortable and what rate of return you earn on your money. According to Phoenix, which assumes you’ll earn a modest 6% annually on your savings, a person who wants $25,000 in annual income at retirement ought to save $417,000 before retirement; those who want $35,000 in income need $585,000; those who want $45,000 need savings of $750,000; and those who won’t be comfortable with less than $55,000 in annual income need $917,000 socked away. These figures assume that retirees don’t spend a dime of their principal.
It’s also worth mentioning that Equitable Life Assurance Society’s annual “nest egg” survey found that fewer baby boomers report “trying to save” this year than in 1995 or 1994. In addition, those who saved, saved less. To be specific, only 74% of the 600 individuals surveyed said they would try to save this year compared with 82% in 1994. Those who do save this year plan to save $5,000 compared with $6,000 in previous years.
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Consumer Checklist covers a range of pocketbook issues of interest to Californians. To contribute information about new legislation, products, services or surveys, write to Kathy M. Kristof, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053; or e-mail kathy.kristof@latimes.com
