Data & Research October 26, 2011

Finding Time to Plan is Uncommon among Americans

According to a report from HSBC, many Americans are unwilling to allot enough time to long-term financial planning, leaving them at risk for a fiscally challenging retirement.
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The report, “The Future of Retirement: The power of planning,” found that four in 10 (38%)  survey respondents said they would prefer to spend their time seeking professional financial advice on their immediate, rather than future, needs. The research shows that most people aren’t interested in extended meetings with their financial adviser: only around one in 10 (13%) prefer longer meetings and 17% would like more than one appointment to review their goals and financial plan.

Younger demographics are more likely to cite a lack of time as a reason for not having a financial plan, with 12% of those in their 30s saying they don’t have time to seek advice.

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HSBC said the results prove a ‘planning premium’; Americans with a financial plan have 2.2 times more money saved for retirement than the average U.S. employee.  Americans with financial plans have accumulated on average $127,000 in their savings and investments for retirement, compared to the average U.S. household with $56,000. Non-planners have around $23,000.

In addition to the financial premium, Americans with a financial plan have an “emotional premium” as well, says HSBC; they are more likely to associate retirement with freedom, excitement, and hope. Almost half (44%) of non-planners link retirement to financial hardship, while this is a concern for less than quarter of planners (19%).

For further information on this and previous reports, visit www.hsbc.com/futureofretirement.

Compliance October 26, 2011

Goldman Sachs Director Surrenders in Insider Trading Case

Rajat K. Gupta has been accused of leaking confidential information while serving as a director at Goldman Sachs Group Inc. and Procter & Gamble Co.
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Gupta, the highest-ranking corporate executive to become embroiled in the government’s attempt to root out insider trading, faces a six-count indictment, the Wall Street Journal reports. Federal prosecutors in Manhattan alleged that Gupta, former head of global consulting firm McKinsey & Co., leaked details about the companies’ financial condition and an investment by Warren Buffett’s Berkshire Hathway Inc. to former hedge-fund titan Raj Rajaratnam. The Galleon Group founder was sentenced earlier this month to serve 11 years in prison for insider trading, the news report said.  

Gupta surrendered to the Federal Bureau of Investigation and was charged with one count of conspiracy to commit securities fraud and five counts of securities fraud. He faces up to 20 years in prison on each fraud charge.  

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The Securities and Exchange Commission (SEC) also separately brought related civil insider-trading charges against Gupta and added additional civil allegations against Rajaratnam regarding alleged improper trades in P&G.  

The criminal charges against Gupta come amid the government’s crackdown on what it describes as rampant illegal trading on Wall Street. Since late 2009, federal prosecutors in Manhattan have charged 55 individuals with insider trading, resulting in 51 convictions or guilty pleas (see “SEC Snags More in Galleon Insider Trading Scandal“). 

According to the WSJ, the charges against Gupta show the government believes he provided inside information to Rajaratnam because of their friendship and business relationships rather than receiving direct payments for the information. According to the indictment, Gupta allegedly gave Rajaratnam details he had learned at Goldman board meetings in 2008 about a $5 billion investment in the bank by Buffett's Berkshire Hathaway Inc. and about Goldman's first ever quarterly loss as a public company. Gupta has denied previously denied those allegations.  

Gupta also allegedly leaked information about the corporate earnings of Procter & Gamble in January 2009, where he also served on the board, according to the indictment.  

McKinsey hasn't been accused of any wrongdoing in the insider-trading matter. McKinsey couldn't immediately be reached for comment.   

Neither Goldman nor P&G has been accused of any wrongdoing in the insider-trading matter. Both firms declined to comment to the Wall Street Journal. 

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