Rather than deal with that growth impediment, PriceMetrix says large firms are developing ways to help advisors boost their productivity by eliminating small accounts. Some firms have created service centers with salaried professionals to support small households. One firm established a center with both salaried and variable compensation advisors who offer small households a limited product line that includes mutual funds, bonds, ETFs, money market funds and managed portfolios.
Other firms are using financial incentives or disincentives to get advisors to cut the number of $100,000-or-less accounts in their client base. For example, one firm decreed that revenue from small households wouldn't count in a bonus program where advisors can get a firm-compensated full-time sales assistant.
Survey Ranks Most Financially Literate States
Is there something about states with the word "New" in their name that makes their citizens financially savvy? According to a national survey that ranks the financial capability of the 50 states, the top three were New Jersey, New York and New Hampshire.
The survey, released in December, was a joint effort of the FINRA Investor Education Foundation, the U.S. Department of the Treasury and the President's Advisory Council on Financial Literacy. It measured five areas of financial capability: making ends meet; planning ahead; managing financial products; financial knowledge and decision making; and comparison shopping.
With making ends meet, the survey wanted to know if people were spending less than their household income, excluding big investments such as new home or car purchases. The national average of folks who spend less than their income was 41.6%. New Jersey scored best in this category (48.7%) and Montana fared the worst (30.1%).
In the category of planning ahead, the survey asked people if they had rainy day funds to cover expenses for three months in case of emergencies. Again, New Jersey did best, while Oklahoma had the least amount of respondents with rainy day funds.
Regarding managing financial products, this category looked at usage of non-bank borrowing such as taking an auto-title or payday loan, or using a pawn shop or rent-to-own store that typically charges high interest rates. Again, New Jersey did best in this category with the least amount of folks tapping into one or more non-bank borrowing methods. Montana had the highest percentage of people using these types of methods.
New Hampshirites scored best on a financial literacy test of five questions covering economics and finance expressed in everyday life, while people in Louisiana did the worst. And when it came to comparison shopping for credit cards, Rhode Island knows its plastic better than any state, while Missouri and North Carolina tied for the bottom ranking.
According to the survey, the states with the lowest overall financial capability were Kentucky and Montana.
The data came from an online survey of 28,146 people--roughly 500 per state--from June through October 2009. The data were weighted to match 2008 American Community Survey distributions on age category by gender, ethnicity and education. More information is available at www.usfinancialcapability.org.
Hawaii Has The Most Millionaires Per Capita
The state of Hawaii should throw itself a luau--paid for by its wealthier denizens--to celebrate its status as the state with the highest percentage of millionaires per capita. According to the latest national market sizing analysis and wealth rankings by Phoenix Marketing International, 6.93% of Hawaii's households are millionaires. That's the third consecutive year Hawaii has topped the list.
Phoenix defines millionaire households as those with at least $1 million in liquid assets, excluding sponsored retirement plans and real estate. Hawaii was followed in 2010 by Maryland (6.79%), New Jersey (6.69%) and Connecticut (6.65%). That marks the third straight year those states have maintained their order of ranking, and all four have placed in the top four since 2006 (New Jersey topped the list in 2007).