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Who do the rich trust?

By Judy Martel · Bankrate.com
Friday, April 1, 2011
Posted: 3 pm ET

Two recent studies suggest a shift in how much the rich trust their advisers to manage their wealth. Since the recession, they've been spreading their assets among multiple advisers, rather than trusting one to make all the investment decisions. And wealthy investors under the age of 50, who are more likely to own their own businesses and have higher incomes, are quicker to leave a financial firm that doesn't meet their needs for technology and customization, and to seek advice elsewhere.

Cerulli Associates Inc., which polled 400 U.S. households with at least $10 million in investable assets, found that 57 percent are working with five or more financial advisers and 64 percent are working with at least four. In 2008, only 16 percent were working with four or more advisers.

Over the past 12 months, according to Cerulli, 44 percent of the wealthy have changed their primary adviser. Fear is the driving factor behind these numbers, mostly due to losses suffered during the recession and perhaps to the highly-publicized Ponzi scheme concocted by Bernard Madoff that bilked wealthy investors out of billions. The wealthy are increasingly uncomfortable with all their assets in one basket, so to speak.

Another study, by Cisco Internet Business Solutions Group, shows that 80 percent of wealthy investors surveyed have spread their assets over more than one firm, with more than a quarter of them at four or more firms.

Wealthy investors under age 50 are even more likely to consult with more than one adviser, according to Cisco, and they are also more likely to switch if their needs aren't being met. But despite their relative elusiveness, it's a lucrative market for advisers. The Cisco survey says this small but mighty group holds 28 percent of wealth across all asset classes in the U.S., and is poised to inherit substantial amounts from the older generations.

The younger rich are also more likely to demand interaction with financial advisers through social media outlets. According to Cisco, 55 percent of these respondents have used social networking for investment advice.

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2 Comments
Robert M. Johnson
April 10, 2011 at 8:58 pm

GREED:Is our problem!!!
n. 1. The defining characteristic of human nature. 2. The desire to own or control more resources than others.
Greed is not merely "I want more". Greed is "I want more than everybody else". Thus the majority of people are forcibly kept poor because if everyone had a million dollars, a loaf of bread would cost a hundred.
Taxs " The rich get richer and the poor get poorer"
Sanders compiled a list of some of some of the 10 worst corporate income tax avoiders.
1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
3) Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.
6) Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.

7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.
8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.
9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.
10) Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.