Raising rich kids isn't easy
The majority of very wealthy parents worry that their kids will place too much emphasis on material possessions, or be naive about the value of money or that they'll spend beyond their means.
These results are from US Trust Co.'s annual survey of its clientele, which is the top 1 percent of wealthy Americans, meaning net worth of $3 million or adjusted cross income of $300,000-plus.
Raising unspoiled children isn't easy, not when being a rich parent means you you'll be paying for music, art or dance lessons (92 percent), summer camp (87 percent) and international travel (83 percent).
Or for privileges at a private country club, yacht club or tennis club (49 percent), expensive electronic equipment other than computers (48) and special events such as debutante balls (46).
Such things can give young people the wrong impression, so 99 percent of respondents expect their offspring to clean up their bedroom, take out the trash (85 percent), set the dinner tables and do the dishes (83).
About three-quarters of this year's respondents said their children had, or will have, a part-time job during junior high or high school and work at least some of the summers between those school years.
SEC cautions online brokers
Most online brokerages examined in a recent Securities and Exchange Commission study were paid by the markets where they sent customer orders, and many didn't make sure to get the best terms for those orders.
The report stopped short of saying the brokerages failed to get the best prices for their customers' orders or that the payments, called payment for order flow, affected execution. Rather, it said there were "indications" that firms didn't always check carefully to find the market with the best price in executing orders.
For the 12 months ending Sept. 30, 2000, the SEC received 4,258 complaints concerning online trading compared with 1,114 for the 12 months ending Sept. 30 1998.
The most common complaints have been about failures or delays in processing orders online, difficulty in accessing online accounts, and errors in processing orders.
Don't panic if laid off
Laid-off workers too often take the money in their 401(k) plans and run.
Cashing in your retirement plan is a costly step. Income taxes and penalties could claim 40 percent of assets if a laid-off worker in the 28 percent tax bracket withdraws retirement money, notes David Wray, president of the Chicago-based Profit Sharing/401(k) Council of America.
"A lot of individuals do not understand well enough the impact of having preretirement distributions taxed and penalized," he said.
In 1997, LIMRA International, a Connecticut-based organization that conducts research for the financial services industry, surveyed workers who changed jobs or retired and were offered lump-sum distributions from retirement savings accounts.
Twenty-eight percent of workers changing jobs took cash payments from their former retirement savings programs; 38 percent rolled the money into an individual retirement account; a quarter left the money in the previous employer's retirement plan, and just 8 percent transferred the money to the retirement program of a new employer.
If the amount saved in an employer-sponsored program is less than $5,000, chances increase that the money will be spent.
Employers are permitted to cash out such accounts and have no obligation to retain the money or transfer it to another employer's retirement savings program.
With low-balance retirement accounts, employers typically withhold 20 percent of the amount for federal income taxes and send the remainder as a check to the worker.
If the former employee doesn't roll the money into an IRA or other qualified retirement program, he or she may also owe a 10 percent penalty, plus relevant state income taxes on the distribution, Wray said.