MONEY

Help! Rich Grandparents, Poor Grandparents: What to Do?

Did you ever want to be a personal-finance advice columnist? Well, here’s your chance.

In MONEY magazine’s “Readers to the Rescue” department, we publish questions from readers seeking help with sticky financial situations, along with advice from other readers on how to solve those problems. Here’s our latest reader question:

How do you handle a situation where one set of grandparents can afford to be (and is) much more generous to their grandchildren than the other set can afford to be?

Got a good answer? Submit it to us in the form below. We’ll publish selected reader advice in an upcoming issue. (Your answer may be edited for length and clarity.) Please include your contact information so we can get in touch; if we use your advice in the magazine, we’d like to check with you first, and possibly run your picture as well.

Thanks!


To submit your own question for “Readers to the Rescue,” send an email to social@moneymail.com.

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MONEY

Sugar-Coated Financial Advice for Women Leaves Bitter Taste

Do women really require female-targeted money books with chick-lit titles, cute covers and hipster language ?

That’s the debate sparked by an essay published on Slate last week about the rise of sugar-coated personal finance books for women.

Many people — not just those of us who write about women’s financial issues — have been baffled by the popularity of books such as Hot (broke) Messes and Does This Make My Assets Look Fat?

And in her Slate piece, Hannah Seligson argues that these books perpetuate a myth that women are financial dopes who can’t handle money, a la Sex and the City‘s Carrie Bradshaw (“Oops, I spent $40,000 on shoes”) and the protagonist of the Shopaholic books and movie.

Many women still hold the damaging view that they aren’t “good” with money, despite evidence to the contrary. Seligson cites data from Generation Earn, by US News & World Report columnist Kimberly Palmer, which dismantles the idea that women are chronic overspenders or have more debt than men.

Although Seligson is right that women are no less savvy and responsible about money than men are, I disagree with her conclusion that women don’t need additional, specialized financial advice.

The problem Seligson doesn’t address is that women, on average, are still lagging far behind men on the financial front. As I wrote in a November feature for MONEY, women tend to earn less and thus save less. And certain lifestyle issues — taking time out of the workforce to raise children, for example — further compromise women’s long-term financial health.

On average, according a survey from MassMutual, women’s retirement nest eggs are two-thirds the size of men’s. Studies from the Employee Benefits Research Institute show a similar gap. Yet we have to stretch our assets, flattering or not, to cover much longer lives.

It’s galling — and as a woman, it’s scary.

Is the answer to dole out financial advice in the paperback equivalent of brightly colored Pez dispensers?

As Tracy Clark-Flory wrote in a rejoinder on Salon: “As if I needed more reason to avoid the subject of finance, said section is apparently color-coded for the ladies, just like the rest of the bookstore…with the color pink.” Although Clark-Flory would like “a special sub-section just for me, and all other literate females,” the truth is that many women are buying the advice that’s packaged like candy.

I just don’t know if the spoonful of sugar is going to make the medicine go down. The more upsetting truth about these books isn’t that women don’t need them — as Seligson argues — but that they need something. And what’s being aimed at them is making matters worse, by perpetuating women’s own lack of financial confidence.

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MONEY

Women More Optimistic than Men about Finances

Women appear to be more optimistic about the economy and their financial future than men are, according to a recent survey. But it helps to be young.

Asked whether business conditions where they live will improve over the next year, 56% of women polled by Citigroup said yes, compared to just 50% of men.

(The telephone survey, conducted in June, is accurate within 2.2 percentage points, according to Citi.) The outlook was similar when it came to personal finance: 66% of women were hopeful that their own personal financial situations would improve, versus 62% of men.

While the difference may seem slight, other numbers indicate that the financial outlook of the sexes is diverging; men grew more pessimistic in the three months since Citibank conducted a prior edition of the survey, while women’s confidence in financial matters held constant or worsened to a lesser degree than men’s.

Why the shift? Lisa Caputo, CEO of Citibank’s Women & Co. business, says, “When people are optimistic, it’s because they’ve taken the steps to make sure that their own personal financial situation feels good to them.”

Alternatively, women’s relative optimism could be due to current big-picture financial conditions. One of the noteworthy effects of the latest recession, in fact, has been that the unemployment rate for men has risen faster and higher than it has for women.

And the relative optimism doesn’t extend to all areas of personal finance: The survey also showed that 36% of women reported being uncomfortable with their level of debt, compared to 30% of men. That could be due to perception rather than anxiety: At least one study indicates that wives tend to estimate that their family’s debt level is higher than their husbands do.

A bigger difference in the survey concerned how women view their personal financial situations throughout their lives. Stunningly, 82 percent of women under 40 surveyed believe their personal fiscal situation is on the upswing. But just 59 percent of women over the age of 40 were as optimistic.

And why is that? Having lived longer and undergone more financial ups and downs, females over 40 might be more likely to envision their future based on past experiences rather than future possibilities. For older women, the financial demands of a secure retirement may feel more immediate; younger women might find it easier to put off such worries to a later date. The financial challenges faced by women are well known: They tend to earn less over their lifetime than men do, and they tend to outlive men, meaning that they have longer retirements to fund. Earlier this year, a survey of workers age 60 or over found that 76% of women didn’t feel confident they had enough money to retire, compared to 68% of men.

Do you have a guess as to why women right now might feel more confident about their financial prospects than men? Leave your comments below.

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MONEY

Should Personal Finance Writers Be Liable for Bad Advice?

After I argued last week that Congress ought to force financial advisers to do a better job for their clients, a reader posted a related question: Would personal finance journalists have to meet these higher standards as well? He followed up with an email:

George, for this fiduciary responsibility that you are advocating — shouldn’t it also apply to you and the other columnists who post advice on CNNMoney? For that matter, why not to Suze Orman and Jim Cramer? Shouldn’t you be able to be sued if your advice doesn’t work out for an investor that took it?

Fair questions.

I can’t say I have years of experience in the field of securities law and regulation, but here’s my short answer: No.

A slightly longer answer (none of which should be understood as an official answer from MONEY’s lawyers or owners): The fiduciary standard I discussed would, in the amendment introduced by Senators Akaka, Menendez and Durbin, be expanded to cover “a broker or dealer, when providing personalized investment advice about securities to a retail customer.” Suze Orman, my colleagues at MONEY and CNNMoney.com and I aren’t brokers or dealers, so we wouldn’t be covered by that legislation.

Even though that knocks us out of a fiduciary obligation in this go-round, I think it’s worth exploring whether we financial journalists do in fact offer “personalized investment advice.” You could argue that we do, since at MONEY and CNNMoney.com we regularly answer questions from individuals seeking advice. But I would disagree, for two reasons.

First, our answers to specific questions — along with all the advice we give in articles that aren’t responding to individual readers — aren’t “personalized”; they’re intended to be useful information for anyone who looks at them. Second, to the extent that we do answer a specific person’s question in a column, I’d say there’s a huge qualitative distinction between what we know about the writer and his or her situation (generally, a paragraph of background information) and what an investment professional knows (or should know) about the particular circumstances of the customers he or she is advising. As a general rule, financial journalists most of the time don’t even meet the fiduciary standard’s weaker cousin, the suitability standard, as part of which brokers are instructed, “Know Your Customer.” I think people seeking advice from personal finance journalists have expectations of us that are far different than those they have of financial industry professionals. We journalists are strangers dispensing free advice; financial advisers, however, are meeting them face-to-face and doing business. While they might reasonably assume that we journalists will have intelligent, well-thought-out answers to their questions, I doubt they believe that our obligations to them are as strong as those of someone they’re paying to ensure their financial security.

Another thought: The fiduciary duty, when it is applied, is usually understood as covering someone not simply who is in a trusted position, but also who can profit at a trusting person’s expense by choosing one course of action over another. Whatever advice we financial journalists might give, we wouldn’t make more money by recommending a lousy investment over a good one — a far different situation from that of a broker who might earn a larger commission by selling you a product that’s worse for you than another that earns him less.

But though my colleagues and I might not be legally obligated to give you good advice, we have selfish motives for doing so. The dumber our recommendations, the more likely you are to figure out we’re giving bad advice, and the more likely you are to lose interest in us. It’s a matter of pride — and continued employment — for a journalist to write material that readers find useful and good; none of us wants to develop a reputation for stupidity.

Granted, a fiduciary obligation might establish minimum requirements of professional competency for personal finance journalists. But who needs such a formal standard when you have the Internet? As I have learned from personal experience, if people think I’ve given bad advice, word gets around pretty quickly.

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MONEY

More Money Friday Roundup: Spirit CEO Speaks & Fannie Execs Surprised

Personal finance from around the Web:

  • Home owners apparently were not the only ones caught off guard when home prices began to fall as the housing bubble burst. Former Fannie Mae executives tell Congress that plummeting prices consistently surprised them as well. [Associated Press]
MONEY

More Money Thursday Roundup: Five Fees to Dump & Why Blondes Make More Dough

Personal finance from around the web:

  • Tax day is fast approaching, and if you haven’t filed yet, it’s probably making you grumble. The Washington Post debunks five myths about your taxes. [The Washington Post]
  • And would you tattle on someone you know is cheating on his taxes? The IRS hopes you will. If you have specific and credible evidence, you could score a payout. [WalletPop]
  • Maybe a dye job should be part of your investment portfolio. Not only do blondes have more fun — they have more money, too, according to a new British study. [It’s Your Money]
  • FreeCreditReport.com, the site that promises a free credit report but really charges you a monthly fee for the service, is changing its tune. Slightly. With new federal guidelines requiring such sites to clearly state that the only real source of free reports is annualcreditreport.com, the company has started charging $1 for the report and donating the cash to charity. The move looks like a clever way to get around the new rules. [The New York Times]

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MONEY

More Money Wednesday Roundup: Tax Credits & Hedge-Fund Flatulence

Personal finance from around the Web:

  • If you are sending a kid to college next year, this is the week financial aid offers should be arriving from colleges and universities. To help cushion the blow of what can sometimes seem a paltry sum, here’s advice on how to negotiate for more aid. [ABC News]
  • Rather than focus on the medical impact of not having health insurance, a new study looks at the financial impact. And guess what? It’s bad. If a member of an uninsured family is struck by illness, the household will lose 22% to 51% of assets within two years. [The Huffington Post]
  • There’s a financial-industry metaphor in here somewhere: A New York hedge fund manager has published a children’s book all about a Mrs. Buttkiss — a woman who has been holding in her, uh, flatulence, for a very, very long time. [City AM]

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MONEY

More Money Monday Roundup: Sharing a Job & Avoiding Real-Estate Bubbles

Personal finance from around the Web:

  • Remember that bond-fund manager who got ousted from TCW in a dispute that, uh, reeked of pot and porn? Well, on Tuesday his new firm will be launching two new mutual funds. [DoubleLine Funds]
  • Despite recent job growth, the unemployment rate may stay high because many people out of the work force, previously too discouraged to even look for work, have started hunting for jobs again. [The Washington Post]

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MONEY

More Money Friday Roundup: Government Jobs & Recess for Adults

Personal finance from around the Web:

  • Unemployed? Consider working for Uncle Sam. The federal government will add more than 190,000 jobs to its payroll over the next few years. [Wise Bread]
  • A trip to the slums of India taught a rich, privileged New York teen how to change her spoiled ways. Read her account of the trip as well as her mother’s version. [New York Post]
  • Adults need playtime, too. A nonprofit CEO claims that companies would be more productive if they provided a “recess” for employees. [The Huffington Post]

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MONEY

More Money Wednesday Roundup: A Thrifty Trick & Big Bank Failures

Personal finance from around the Web:

  • Fearful of fraud? Of course, you are. In fact, it’s is a sign of successful messaging on the part of the IRS, which seems to make an annual push for publicizing tax fraud cases as the calendar year approaches April 15th. [Economix]
  • If you have ever been in a Southwest Airlines corral for seating, you will probably enjoy AirTran’s latest commercial, which takes the herd of cattle metaphor to a very literal level. [The Consumerist]
  • Never too big to fail: Former Federal Reserve Chairman Paul Volcker scoffs at the notion that banks should think financial reform will protect them from getting shut down. [AFP]

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