Advisers split on Occupy Wall Street

Exclusive poll shows that nearly 40 percent support protests; close to half back taxing the rich

Oct 20, 2011 @ 3:50 pm

By Darla Mercado

+ Zoom
((Bloomberg News))
Though most do not support the Occupy Wall Street movement, advisers are largely split when it comes to imposing higher taxes on the wealthy and tougher regulations on big banks. According to the results of an exclusive InvestmentNews online survey of 350 advisers, 58.2% said they disagree with the views expressed by the Occupy Wall Street protesters. Meanwhile, 38.8% of advisers said they agree with the views of the protesters and 3% said they were unfamiliar with Occupy Wall Street. The survey, conducted last week, also found that 46.3% of advisers support tax reform that ultimately would lead to higher taxes on the wealthy, while 43.6% are against it. Additionally, the survey revealed that 41.6% of advisers are in favor of tougher government regulation of banks and Wall Street firms and 45.9% are against it. Among respondents, 39% characterized themselves as Republicans, 37% as independents and 9.8% as Democrats. The results show that financial advisers are largely divided on their views about the protests, which are gaining momentum across the globe. “That split is really surprising,” said Louis Harvey, chief executive of financial services market research firm Dalbar Inc. “Increased regulation on banks would drive the cost of banking at the retail level. Raising taxes on the most mobile segment of society is a little crazy, too: A lot of advisers I speak with worry that clients will move assets offshore.” The Occupy Wall Street protests, which just entered their fifth week in lower Manhattan, has spawned similar occupations in more than 100 U.S. cities and boomed to some 1,500 protests in 82 countries on Oct. 15, the group's “Global Day of Action.” Though Occupy Wall Street hasn't furnished an official list of demands, sympathizers have called for bringing back the Glass-Steagall Act of 1933, plus an enactment of the so-called Buffett Rule, a new tax to be assessed on individuals making more than $1 million a year. On the ground, demonstrators are protesting a variety of issues, including the dismal job market, student loan debt and Wall Street's role in selling doomed mortgage-backed securities. RELATED ITEM Video: Among the Occupiers (see below) Americans, by and large, are on the protesters' side. Fully 59% of some 1,007 adults participating in a United Technologies/National Journal Congressional Connection poll said that they agreed with the protesters, while 31% said they disagreed. Advisers, on the other hand, are less sympathetic. “I'm not a fan,” Marc S. Freedman, president of Freedman Financial Inc., said of the protests, including Occupy Boston, which is about 20 miles away from his office. “I think the leaders on the [House] Financial Services Committee have their eye squarely on the ball and when change is necessary, they're the people I want to go to for logical, intelligent conversation.” Peter Schiff, chief executive of broker-dealer Euro Pacific Capital Inc., said he planned to attend Occupy Wall Street with a sign that said, “I'm the 1%. Let's talk.” “They should protest the government,” he said. “I was against the bailout to begin with. If you don't like bailouts, get angry at the government.” RELATED ITEM Advisers, your turn to weigh in on OWS The protesters' requests weren't all that off the mark for some advisers, however. “What [the protesters] are saying is, ‘We watched you bail out the banks, but now that people are making big bonuses again, we can't find any jobs,'” said Meg Green, an adviser at an eponymous firm in Miami. She wouldn't mind paying a little more in taxes either, provided the tax increase came with spending cuts and immigration reform. “If people earning over $1 million had a little excise tax, I don't think that would hurt anyone who earns that much,” Ms. Green said. “It's very unpopular, but I'm one who'd be willing to pay, if you're willing to fix the other side — how we spend the money.” Still, some advisers expressed apprehension about the prospect of raising taxes on the wealthy. Rising taxes may not bother the most moneyed individuals, but could be detrimental for the less wealthy households and lead to less spending, they said. “There's a fine line between how much the taxes may rise and where does that stop in terms of injecting spending back into the economy,” said Richard Dragotta, a branch manager with LPL Financial. “If the wealthy don't spend, it won't trickle down.” For his part, Mr. Dragotta feels advisers are sufficiently regulated, but the more esoteric corner of the investment world could use more rules. “We're highly regulated because of events that have nothing to do with us or our clients directly; there's some inequity in that, in that I'm paying the price for things that have nothing to do with me,” he said. “Hedge funds, mortgage originators and the manipulation that goes on — that should have been regulated.” Finally, in spite of all the protests currently taking place across the country and around the world, most advisers believe the demonstrations will have little impact on where political parties stand. Forty-four percent of polled advisers believe Occupy Wall Street won't affect the positions of either political party, while 34.6% think it will move Democrats further to the left. A small percentage (12.8%) thought it would encourage Republicans to move to the center. “Do I think a bunch of guys hanging out in tents is going to change the political landscape or the tax code?” asked Mr. Freedman. “Absolutely not. At the end of the day, this too shall pass.”

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