Max out tax advantages on summer-related activities; RBC posts earnings, holds steady on sweeps; watchdog undercover work questions federal oversight
Financial Planning
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TAX PLANNING: Summer always comes to an end, but financial advisors, tax professionals and their clients can fondly recall their fun in the sun with big savings on the next Tax Day.
Day camp for children under 13 years old, a summer job for clients' kids at the family business and vacation rental properties can rack up credits, deductions and exemptions — which means that advisors and their customers could find reason for a brief meeting between beach days and soaking up rays. Besides the more traditional summer activities, the season marks a good time "to figure out any tax strategies that you can put in place proactively," said Jerel Butler, MBA, CFP® , a financial planner with Philadelphia-based Zenith Wealth Partners.
EARNINGS: RBC has no plans to follow its rivals Morgan Stanley, Wells Fargo and UBS in raising yields on "cash sweeps."
Talking to analysts Wednesday about RBC 's third-quarter earnings, interim Chief Financial Officer Katherine Gibson, CPA, CA noted the firm's U.S. wealth management arm is holding roughly $30 billion of clients' uninvested cash in so-called sweeps accounts. While many large wealth managers have been responding to recent regulatory and legal scrutiny by raising yields on these accounts, Gibson said RBC has no such plans. Since the U.S. Federal Reserve started raising its target rate in 2022, "our pricing has been well above industry averages, particularly as it pertains to our largest wealth management relationship," Gibson said. "As such, we do not anticipate making any material changes to our pricing of advisory suite deposits."
REGULATION: Conflicts of interest in mutual funds and other complicated costs for retirement savers are hurting their nest eggs, according to a new government watchdog report.
Savers, with more than $18 trillion dollars individual retirement accounts and 401(k) plans collectively, may be losing out on potential higher returns in their mutual funds when wealth management firms receive compensation based on the level of assets, and the IRS should ramp up its enforcement of excise taxes against prohibited transactions in IRAs, according to a report released Aug. 28 by the US Government Accountability Office . The watchdog agency conducted the study at the request of lawmakers who asked the GAO to evaluate "where issues around conflicts of interest and investment advice stand today," the report said.
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