California is so reliant on taxing its high net worth residents that it's experiencing a major budget shortfall this year, according to the Los Angeles Times. The deficit, which Gov. Jerry Brown puts at $1.6 billion, is partly due to the fact that income growth of the top 10 percent of earners has slowed. Although full figures have not been released, preliminary numbers show that income other than salaries—profits from the sale of stocks or cashing in on options to buy shares—declined 4 percent in 2016 compared to 2015. In addition, wages from the finance, technology and movie industries are expected to increase 1 percentage point less than expected in 2017. For instance, people earning more than $263,000 paid a top state income tax rate of 10.3 percent in 2015. In 2014, the 10 percent of earners—who made an average of $404,184—paid 79 percent of all personal income tax revenue.
Though the Department of Labor's Fiduciary Rule, set to take effect in April, might be delayed by legislative action under the Trump administration, financial advisors have been prepping for a year. Or have they? An AssetMark assessment of 400 advisors, conducted in November, suggests that the industry may be woefully unprepared. Only 5 percent of advisors were considered ready to comply with the rule, while only 18 percent were identified as "likely prepared" for a transition in terms of reviewing the affected parts of their business. Meanwhile, only 2 percent were considered to have a formalized plan in place to meet the new rules. The not-so-bright silver lining? Thirty-four percent were identified as "likely prepared" when it came to simply understanding of the rule itself.
Global Consumers Warming to Robo Advice
People around the world are warming to the idea of computers handling their finances. A new study of 33,000 consumers in 18 countries by Accenture Financial Services found seven in 10 people are willing to let robo advisors exclusively handle their banking, insurance and retirement planning. Four out of five said they would welcome robo advice in traditional investing. However, two-thirds of the consumers surveyed still want human interaction when it comes to dealing with complaints and advice on complex products like mortgages.
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