Month: August 2014

Half Of Federal Student Loan Borrowers Not Paying On Time

Less than half of borrowers with the most common type of federal student loan are repaying their debt on time, new data released by the US Department of Education show.

About 51 percent of Americans with student loans made directly by the Education Department, known as Direct Loans, have either fallen behind or are not making expected payments, according to data on the $686 billion portfolio. Borrowers who arent making expected payments for reasons that include temporary financial hardship or a return to school are included in the tally. Not included are borrowers not expected to pay back their loans because theyve either never left school, or are less than six months out of school. The figures are based on dollar amounts, rather than the number of borrowers.

Of the roughly $300 billion in Direct Loans in repayment, one in six, or about 17.2 percent, are at least 31 days delinquent, data show. By comparison, just 3.3 percent of all loans and leases held by US banks are at least 30 days late, according to the Federal Reserve.

ACTION LINE: Student loans plentiful but require study

Dear Action Line: My daughter is a senior in high school this year. She knows she wants a business degree but hasn#39;t chosen a school yet because of costs. My husband and I plan to help her financially as much as we can but she may still need to take out student loans.

Can you give her some advice on how to look for student loans?

PRESS DIGEST- Financial Times – Aug 18

n>Aug 18 (Reuters) – The following are the top stories in the
Financial Times. Reuters has not verified these stories and does
not vouch for their accuracy.


US banks plan ahead for UK exit from EU


Carney may not wait for growth in real wages before lifting
rates (

Eurozone banks set to borrow 250 bln euros in cheap money
from ECB (

BHP and Glencore set for cash return


Whitehall report into Muslim Brotherhood delayed by


Blackstone and TPG near deal for mortgage lender Kensington



Some Wall Street banks are drawing up preliminary plans that
include moving some of their London-based operations to Ireland
to deal with the possible scenario of Britain leaving the
European Union.

Bank of England Governor Mark Carney said he will not
necessarily wait for real wages to turn positive before raising
interest rates.

European banks are expected to borrow about 250 billion
euros ($334.75 billion) in cheap four-year money from the
European Central Bank in September and December, according to
projections by Morgan Stanley.

Shareholders in BHP Billiton and Glencore,
two of the worlds largest mining companies, could hear this
week when surplus capital will be returned to them, in what
would mark a milestone in the mining sectors recovery.

A British government report on Egypts Muslim Brotherhood
has been delayed as ministers and officials disagree over its

Private equity firms Blackstone and TPG are
close to buying the UK subprime mortgage lender Kensington from
Investec Ltd, the Anglo-South African financial
services group.

($1 = 0.7468 Euros)

(Compiled by Karen Rebelo in Bangalore; Editing by Eric Walsh)

McCrory changes financial disclosure and acknowledges selling Duke Energy …

Gov. Pat McCrory holds a press conference in Raleigh on Aug. 5, 2014 to tell the public that some of the wave of illegal young immigrants crossing into the US are being brought into the state by federal officials. He said that the federal government has not been forthcoming with the state in their communication about this.

Still waters hide sea of change in Top 100 planner numbers

In the wake of recent industry-wide change financial planning numbers appear to have moved little, according to data collected for the Money Management Top 100 Dealer Group Survey. However, as Jason Spits reports, there has been plenty of change below the surface with planners on the move at both the institutional and boutique ends of town.

The past twelve months may become known as the year in which everything changed but still all looked the same.

The Future of Financial Advice (FOFA), heralded in 2011, postponed in 2012 and implemented in 2013, has not created a massive ground shift of advisers fleeing the industry nor has it created a schism breaking the financial planning sector in two clearly defined camps of aligned and non-aligned. However, that may yet happen given current events surrounding advice offered by some institutionally-aligned planners and Government and public pressure for more root and branch changes.

In terms of the numbers of financial planners currently operating within the sector, the Money Management Top 100 Dealer Group Survey for 2014 has shown that while planner numbers have remained consistent since last years survey they have not remained static, with planner movements between licensees still active.

The consistency of the overall numbers is not initially evident in the total number of planners reported in 2014 Top 100 with the figure of 15,069 planners well down from last years figure of 16,368 planners.

However Money Management asked survey respondents to specifically separate out non-advice giving authorised representatives from advice giving authorised representatives. In doing so, it was found that nearly 900 people were being reported as involved in financial planning but not necessarily considered as being a financial planner.

At the same time a number of groups chose not to respond with planner numbers for 2014 leading to a further 400 planners being omitted from the survey this year. Taken together these numbers come to a total of only 30 short of last years figure.

The real movement is below the surface of this headline number with a number of groups posting significant additions and subtractions of planner numbers.

Westpac Financial Planning added 390 planners – the single biggest increase in the this years survey – but this came at the expense of advice stable-mate St George which lost 403 planners – the single biggest decrease in the survey. The second biggest decrease was that of Morgans who dropped 378, however this was the result of the group separating out planners from stockbrokers (See About the Top 100 on page 14).

Putting those particular shifts aside the next largest increase in adviser numbers was that of Charter Financial Planning which grew by 64 from 779 planners to 843. Charter also posted the largest gain of financial planners in last years survey, adding 296, well ahead of this years increase.

BTs Magnitude also added about 60 planners as did The Financial Link Group which had its numbers boosted after advisers with Titanium Planners moved across to the Peter Daly led group. Synchron also continued to attract advisers at a solid clip, adding 43 this year compared with last years addition of 50 advisers, to sit at 313 planners in 2014.

Yet while there were some solid gains by planning groups across the Top 100 only 36 groups actually reported growth in planning numbers. The impact of FOFA and the wait and see approach to grandfathering was reflected in the gain experienced by the Top 10 fastest growing groups who only added 442 planners compared with 891 in 2013 (Table 1).

The level of decline among the Top 10 shrinking groups remained consistent with a decline of 871 among the 10 groups compared with 706 in 2013. Like-for-like comparisons are difficult with these numbers as only five of the 10 planning groups in this set this year also featured in it last year.

NAB Financial Planning and Commonwealth Financial Planning both appeared in last years bottom 10 and shed 151 planners and 135 planners, respectively and 200 planners and 175 planners over the past two years, respectively.

In fact institutions figured heavily in the fastest shrinking groups dropping 692 planners collectively with 520 of those planners dropping away from the top four fastest shrinking groups alone (Table 2).

Groups that had their numbers reduced to zero by being merged with other licensees include AMP-owned Quadrant and Strategic Planning Partners which were folded into Genesys Wealth Advisers and Ipac, respectively. Commonwealth Bank owned Whittaker Macnaught and WB Financial Management were both folded into Financial Wisdom while IOOF-owned SMF Wealth was folded into Consultum.

These mergers effectively mean that more brands will disappear from the planning sector as institutions, and boutiques, seek to rationalise costs involved with multiple brands, licenses, compliance and back-office regimes. It also changes the ranking of groups within the Top 100.

While last years survey saw the Top 10 groups by planner size containing the same names as 2012s survey – albeit in different positions – this years highest ranking groups have been shaken-up.

AMP Financial Planning, Charter, Millennium 3 and Commonwealth Financial Planning all retain their top four positions unchanged while Count and Professional Investment Services moved up a number of places as does Securitor and Hillross, off the back of declines in other planning groups.

However the single largest ranking change is that of Westpac Financial Planning, leaping into ninth from 54th, due to the shift of St George planners. Garvan falls from sixth to 13th with 346 planners after a decision within NAB to once again separate Garvan planner numbers from those of MLC Financial Planning, which re-enters the Top 100 for the first time in 9 years at 29th with 154 planners.

Sacramento airport sees financial picture strengthen

Sacramento International Airport officials say they finally see clearer skies ahead after years of financial struggles.

A recent increase in passengers, combined with aggressive expense-cutting efforts, has airport head John Wheat saying he#x2019;s #x201C;cautiously optimistic#x201D; that the facility is starting to emerge from the financial hole it has been in since the county borrowed $1 billion to build a new terminal during the depths of the recession.

The passenger uptick is modest, just 1.7 percent in the first seven months of this year, and barely begins to chip away at the 18 percent drop in passengers the airport has seen since its pre-recession peak in 2007.

Still, Wheat called the increase #x201C;a big milestone for us.#x201D;

#x201C;There is still a long ways for us to go, but we are definitely headed in the right direction,#x201D; he said.

Wheat, who was hired last year to improve the airport#x2019;s financial picture, said passenger increases appear likely to continue in the next few months, based on internal airline schedules that show a roughly 2 percent increase in available seats on flights. July passenger numbers alone jumped 4 percent over last year. But Wheat said it is too early to say the airport is out of its funk.

Jeffrey Michael, an economist and the director of the Business Forecasting Center at the University of the Pacific in Stockton, called the passenger increase modest. But he agreed with Wheat that the airport may be entering a growth period, noting that the Sacramento-area population is growing by about 1 percent annually, while job growth is at slightly more than 2 percent.

In a recent report, the Federal Aviation Administration said it expects 1 percent growth nationally on domestic flights this year and a 2 percent annual growth in the coming years.

The airport still faces a challenge, Michael said, because of its high debt burden from what he calls a #x201C;significantly overbuilt#x201D; terminal, and because airlines are taking a cautious approach to adding flights and routes. #x201C;It is going to be struggle for quite some time.#x201D;

The airport#x2019;s annual debt obligation was $15.5 million in 2008, when the expansion project was launched. This year, it has ballooned to $83.8 million. Debt payments will level off to $75 million in 2016, but the Sacramento airport #x2013; an enterprise separate from the county general fund #x2013; will be making $75 million debt payments every year until 2041.

Wheat said the airport has been cutting costs to improve the bottom line and free up money for future capital improvements, including ambitious plans to expand Mather Airport, also owned by the county, as a cargo and general aviation alternative to the main airport. Current airport budget numbers show a 15 percent decrease in annual operating expenses this year compared to last.

By year#x2019;s end, airport staff will have thinned to 300, down from 386 last year. That does not include reducing the sheriff#x2019;s airport unit this spring from 43 to 31. No layoffs were involved, Wheat said. Some airport employees were transferred to jobs in other county departments.

The airport has reduced the number of parking lot shuttles and no longer is washing the windows monthly. Wheat said it even has changed the type of hand-cleaner available in the restrooms, from a liquid soap to a foam. The switch, which stopped spillage waste, should save about $15,000 a year, Wheat said.

#x201C;We are looking for big dollars, but we are also looking for small dollars,#x201D; he said. #x201C;If we can save five bucks, it all adds up.#x201D;

The airport also is looking to increase revenue. It recently signed a deal with food manager SSP America to remake the Terminal A food court, adding more local restaurant outlets and creating a more inviting atmosphere. SSP has agreed to invest $3 million in the revamp.

Wheat said the bar area in Terminal A will be rebuilt to allow fliers to see their gates better. That, he said, will allow passengers to relax more #x2013; and spend more #x2013; at food and beverage outlets before their flights.

The airport also is in active negotiations with a developer for a privately financed hotel close to both terminals, Wheat said.

A representative for Sacramento#x2019;s main carrier, Southwest Airlines, which handles slightly more than half of flights in and out of the airport, said his company is pleased with Wheat#x2019;s efforts.

#x201C;Southwest continues to support the work John Wheat is diligently undertaking, and we#x2019;re in constant contact with him and his team,#x201D; Southwest spokesman Brad Hawkins said in an email. #x201C;We don#x2019;t publicly discuss our business agreements, but I can underscore how much we appreciate and are invested in the work John is leading to provide the best cost structure to support Southwest#x2019;s ability to provide the service our Sacramento Valley customers want and will support.#x201D;

Hawkins said Southwest is flying planes with larger seating capacities in and out of Sacramento, but he said the airline has no substantial scheduling changes planned in the near term.

The airlines have been forced in recent years to pay substantially more in rents and fees to help the airport make good on debt payments for the new Terminal B. Currently, the airport unilaterally imposes annual rents and fees on the airlines. Those fees increased from $34 million in 2008 at the start of the airport expansion project to $80 million last year.

Wheat said he hopes to negotiate a new deal with the airlines, likely involving revenue-sharing, when the financial situation is a little more certain. He said that could come in the next year. The fee the airport charges passengers is capped by the federal government at $4.50 per ticket.

Sacramento was one of several medium-sized airports hit hard by the recession. Oakland, San Jose, Burbank and Ontario also saw a drop-off in passengers. Sacramento#x2019;s situation was exacerbated by the expansion project. Construction began in 2008. The new facilities opened in late 2011.

The project, led by then-airports director Hardy Acree and approved by the Board of Supervisors, is designed to give the county a facility large enough to handle years of future passenger growth, and to be expanded, if needed. The airlines opposed the size of the expansion.

Call The Bee#x2019;s Tony Bizjak, (916) 321-1059.

Read more articles by Tony Bizjak

Elder financial abuse: Perps may be close to home

Few things are more disturbing than stories of elder abuse. But while physical abuse and neglect of seniors gets plenty of attention, financial abuse of the elderly is less visible.

Still, about one in eight of the elder abuse cases reported every year relate to financial abuse, according to the National Center on Elder Abuse. And the perps are not who you might think.

In a new study of the state of elder financial fraud, 58 percent of the people reporting financial abuse said the wrongdoer was a relative, most often an adult child.

Its happening in the house. Somebody is borrowing money or helping themselves to things. The older adult knows its happening, but it really doesnt stop, said Janey Peterson, an assistant professor of clinical epidemiology at Weill Cornell Medical College and the lead author of the study.

3 Things To Keep in Mind When Choosing a Financial Adviser

Photo Credit: Lending Memo.

Some investors without a background in finance might seek out professional assistance when it comes to investing. This is reasonable, as the capital markets are full of minefields that require careful navigation.

For other investors, the need for investment advice from a qualified financial advisermight arise with a certain amount of investable assets.

Relationships with financial advisers are not without complication, though, and investors should carefully examine a professionals qualifications, as well as other issues.

Issues with financial advisers range from hidden referral agreements to the appropriateness of specific investment recommendations, both of which can negatively impact the investors portfolio.

Investors should particularly consider the following three areas that have the potential to adversely affect both the relationship with the financial adviser and the return performance.

1. Referral agreements
This is a tricky subject, but one that can be navigated with proper disclosure.

Financial advisers should generally receive a flat fee for their investment guidance. However, some might recommend certain investment products for which they receive kickbacks or sale commissions.

A hidden referral agreement, of course, is a serious breach of trust. Such relationships must be disclosed in order for the investor to get a proper picture about the underlying incentive structures that influence the adviser to make certain investment recommendations.

2. Asset allocation
Every serious financial adviser will never suggest that clients invest a considerable amount of funds in any particular security, whether its a stock or a bond.

Using all kinds of asset classes in building a portfolio is a prudent investment approach that takes advantage of the concept of diversification.

Diversified portfolios exhibit much higher resilience in times of erratic market behavior. The recommendation to construct a diversified portfolio is a sign that your financial advisor takes seriously his or her task of providing value-adding service.

3. Competence
Topping the list of things investors should grill their advisers about is their educational background.

The higher the qualification and educational achievements of the financial adviser, the better. Look for investment-related credentials such as certified financial planner or chartered financial analyst, which signal a solid understanding of both capital markets and portfolio construction.

Both qualifications ensure that the person talking about your financial future really understands the matter at hand.

The Foolish takeaway
The adviser-client relationship can be complex. However, the issues can be resolved by insisting on proper disclosure.

If no disclosure is made, investors should raise the subject with the financial adviser directly in order to make sure that you, the client, receive the best, unbiased investment advice possible.

CBA boss’s pay rises to $8.1m

AAP Commonwealth Bank CEO Ian Narevs (pic) pay rose to $8.1 million last financial year.

Commonwealth Bank boss Ian Narevs pay packet has grown to $8.1 million despite a cut to his bonus because of the companys financial planning scandal.

Mr Narevs 19 per cent pay rise from the previous years $6.8 million comes amid revelations of misconduct by some of its financial advisors that caused millions of dollars in losses for some clients.

The bank has already paid around $52 million in compensation and is reviewing a decade of activities within its financial planning businesses, from 2003 to 2012.

Mr Narev took home $4.06 million in cash salary and bonuses in the 2013/14 financial year, plus $4.05 million in cash and shares from bonuses earned in previous years.

His 2013/14 short term bonuses were cut by $515,000 because of the financial planning scandal, CBAs annual report shows.

Other executives also had their bonuses reduced.

CBAs 12-member executive group was paid $43.8 million in total in the year, level with the previous year.

The bank said its remuneration policy reflected CBAs strong financial performance, which lifted it to a record cash profit of $8.7 million.

It said it had also achieved its highest ever levels of customer satisfaction, record dividends to shareholders and a historically high share price.

Mr Narevs pay rise confirms his place among the highest paid CEOs in the country, with the heads of rival banks and the mining giants.

But he is outranked by Suncorp chief executive Patrick Snowball, whose pay rose to $9.1 million in 2013/14.

The latest pay details of most leading CEOs will be released in the coming months.

7 Financial Tasks to Accomplish Before You Hit 30

Over the last decade, 30 has officially pronounced itself the new 20. The millennial generation is taking longer to finish schooling, decide on a career and leave mom and dads place. The average age of marriage is at an all-time high — 27 for women and 29 for men.

And while some of those delays may be beneficial — the higher age of marriage translates into a lower divorce rate — other delays could have detrimental, long-term financial consequences. Luckily, we have you covered with this list of seven financial musts-dos to make sure youre prepared for the future.

Youre only in your 20s once, so squeeze every last drop out of them. But dont let this decade pass you by without getting your financial ducks in a row. And if youve already passed the big 3-0, you know what they say: Theres no time like the present.