DailyFinance.comhttp://www.dailyfinance.comDailyFinance.comhttp://o.aolcdn.com/os/df/2013/img/2-dailyfinance_logo_m.pngDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2013 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/Goldman Pushes Hedge Funds for Your 401(k)http://www.dailyfinance.com/2013/05/24/hedge-funds-ordinary-investors-401k/http://www.dailyfinance.com/2013/05/24/hedge-funds-ordinary-investors-401k/http://www.dailyfinance.com/2013/05/24/hedge-funds-ordinary-investors-401k/#commentsFiled under: , , , ,

A Goldman Sachs Group Inc. logo hangs on the floor of the New York Stock Exchange in New York, U.S., on Wednesday, May 19, 2010. Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm's investment advice fared far worse. Photographer: Daniel Acker/Bloomberg via Getty Images
Alamy
By STEPHEN GANDEL

Usually Wall Street waits for a bubble before it pushes an investment on average Joes.

So it's certainly a change that the returns on the investment Wall Street is currently trying to sell to individual investors have stunk lately. Is that any better? Probably not.

Goldman Sachs (GS) recently announced it was launching its first mutual fund that invests directly in hedge funds. The private investment vehicles have typically been reserved for the ultra-rich. This Goldman fund, which will be called the Goldman Sachs Multi-Manager Alternatives Fund, will be open to anyone who can plunk down $1,000.

And Goldman is pushing the fund not just for risk-averse investors looking for a flyer for some extra cash, but as one that makes a sensible choice for your 401(k). According to a very reasonably worded press release, Goldman says the lack of access to hedge funds has left many investors with little exposure to alternative investments in their "retirement accounts." Says Goldman's Jason Gottlieb, who will be a co-portfolio manager of the fund, in the release, "Today's complex markets require sophisticated investment techniques that can enhance a traditional portfolio, and bring investors closer to their long term goals."

And if working longer is your goal, then hedge funds would be the investment for you, at least recently. Over the past five years, the average hedge fund, as measured by the HFRX Global Hedge Fund Index, has lost 9%. The S&P 500 (SPX) in the same time frame gained 21%. This year is more of the same. Hedge funds are up just over 5%; the market index, 14%. A recent study from Rob Arnott's Research Affiliates found that returns go down and risks go up when investors add hedge funds to a standard portfolio.

A mutual fund that invests in hedge funds could do even worse. That's because, unlike hedge funds, investors in mutual funds, based on the SEC's rules, need to be able to cash out whenever they wish. That doesn't work for every hedge fund strategy. "The challenge is that some of the best hedge fund strategies don't offer much liquidity," says Bob DiMeo, managing director at DiMeo Schneider, a consultant to institutional investors. "You still get the high fees, but instead you have an arm and a leg tied behind your back trying to get market beating returns."

The no-load Goldman mutual fund will have an annual fee of 3.3%, which is less than the average hedge fund, which takes 20% of profits on top of an annual 2% fee. But it's about three times what the average stock mutual mutual fund charges, and about 25 times the 0.13% a year that the average S&P 500 index fund charges.

Despite the poor performance, the amount of money pouring into hedge funds has continued to increase. Assets in the hedge fund industry have more than tripled in the past decade to $2.25 trillion. Much of the money coming into hedge funds recently have been from pension funds. Now Wall Street is betting it will be able to entice average investors as well.

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Along with Goldman, Morgan Stanley (MS) recently launched has its own hedge fund offering in the form of a mutual fund. But unlike Goldman's fund, Morgan Stanley's AIP Dynamic Alternative Strategies fund won't invest directly in hedge funds. Instead, it will invest in other mutual funds that are trying to mimic hedge funds, as well as Morgan's "proprietary hedge fund replication strategy." In April, the SEC approved plans by private equity firm Blackstone (BX) to launch its own hedge fund-like mutual fund.

"There's not a lot of money to be made in telling people not to invest in hedge funds," says Simon Lack, a former JPMorgan hedge fund executive and author of The Hedge Fund Mirage, which was published last year. "Eventually persistently poor performance will drive people out, but it takes time."

In the face of the recent poor returns, hedge fund defenders typically say something like, yeah but, lots of things, including real estate and commodities, do worse than stocks over long-periods of time. But you don't know what will do well when. So a portfolio invested in hedge funds along with stocks and bonds and that other assets will better weather the market's ups and downs, guaranteeing more of your money will be there when you need it. The problem is unlike those other things hedge funds aren't really a unique asset. They are just a way to invest in those other things and pay high fees to do it.

You know what's done a lot better than hedge funds recently? Mutual funds. So maybe what we really need is a hedge fund that invests in mutual funds. But that would be silly, right?

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]]>401kGoldman SachsHedge fundsInvestingMutual fundswall streetCNNMoneyFri, 24 May 2013 05:00:00 ESTThe Highest-Paid CEOs in Bankinghttp://www.dailyfinance.com/2013/05/23/highest-paid-bank-ceos/http://www.dailyfinance.com/2013/05/23/highest-paid-bank-ceos/http://www.dailyfinance.com/2013/05/23/highest-paid-bank-ceos/#commentsFiled under: ,

J.P. Morgan Chase's Jamie Dimon made $18.7 million last year, putting him fourth on the list of highest-paid chiefs in banking. Which CEOs made even more?

Gallery: Top-Paid Bank CEOs

1. Ken Chenault: $28 million2. Richard D. Fairbank: $22.6 million3. John G. Stumpf: $19.3 millionJamie Dimon: $18.7 million5. Lloyd C. Blankfein: $13.3 million

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]]>bankingceo compensationceosCNNMoney.comExecutive PayFinanceJamie DimonJPMorgan ChaseKenneth ChenaultLloyd BlankfeinRichard Fairbankwall street bonusesWells FargoCNNMoneyThu, 23 May 2013 16:14:00 EST'Grandparent Scams' Are Conning Thousands of Seniors Out of Cashhttp://www.dailyfinance.com/2013/05/23/grandparent-scams-con-seniors/http://www.dailyfinance.com/2013/05/23/grandparent-scams-con-seniors/http://www.dailyfinance.com/2013/05/23/grandparent-scams-con-seniors/#commentsFiled under: ,

Grandparent scam
Alamy
By MELANIE HICKEN

Across the country, law enforcement officials are warning seniors to beware of so-called "grandparent scams," in which fraudsters are impersonating a grandchild in distress -- and begging for cash.

Such scams have become increasingly common. In 2009, the Federal Trade Commission recorded 743 incidences of scammers impersonating a family member or friend in need of money. Since 2010, the FTC has recorded more than 40,000 and it is estimated that many more go unreported.

Ann and John Mykietyn never imagined they could be duped out of thousands of dollars. But then, last fall, they got a call from someone claiming to be their grandson, Daniel, that threw them into two days of panic.

He told them he had been in a car accident while at a bachelor party in Mexico and needed $1,800 to get out of jail. The next day, he called back frantic that his wallet had been stolen and he needed $2,400 to get a new passport.

Anxious to help their grandson return home, they sent two MoneyGram cash transfers to Mexico. They even sent a third after a man called claiming one of the transfers had been rejected. But when they never heard back, they realized that the caller hadn't been their grandson after all. The New Jersey residents had lost nearly $7,000 to a scammer.

"You get angry at yourself for being so foolish, but you're in a panic mode," Ann Mykietyn said. "You don't want any harm to your grandchild. "

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They filed a report with local police, but their cash was already long gone. Police told them there is little chance their money will be recovered.

Warnings about grandparent scams have been issued by law enforcement and Better Business Bureaus across the country in recent months.

"It's everywhere. It's an epidemic," said Jean Mathisen, manager of the AARP's Fraud Fighter call center, which has fielded hundreds of calls about grandparent scams so far this year.

While law enforcement officials have been cracking down on grandparent scammers operating out of boiler rooms in Canada, new criminals continue to pop up, said Steven Baker, director for the FTC's Midwest Region.

Exactly how much has been lost to these scammers is unknown, but it's estimated to be in the tens of millions of dollars or more. One Michigan couple lost $33,000 of their life savings when a man pretending to be their grandson called, asking for cash to help him pay a fine and post bond to get him out of a Canadian jail.

The typical M.O.: "Grandma (or grandpa), are you there?" a caller will say, prompting the senior to reveal a name or other identifying information. The caller then says they were in a car accident, mugged or incarcerated in a foreign country -- all emergencies prompting an urgent need for cash.

Typically, the caller begs for secrecy, in order to prevent a quick phone call to the grandchild's parents to verify the story. When asked why their voice sounds funny, they'll usually claim their nose or mouth is injured. Once a victim wires money, more calls may follow, employing other callers who pose as attorneys, bail bondsmen or doctors.

Security officials at money transfer services, Western Union and MoneyGram, say they work with law enforcement whenever possible.

Western Union's transfer forms specifically warn senders not to send money for an unconfirmed emergency related to a grandchild or other family member. The company also trains employees to look for warning signs and gives them the authority to refuse transactions that they believe are fraudulent.

MoneyGram also has a fraud warning on transfer forms and says it can put holds on transfers that raise red flags. Because once a transaction goes through, "it's picked up in minutes and it's gone," said Kim Garner, senior vice president of Global Securities and Investigations.

Scammers are getting more sophisticated, however. In some cases, police suspect con artists are using online obituaries and social networking sites to profile their victims.

In the Mykietyn's case, the caller somehow knew to call John Mykietyn "Gramps," when he answered the phone. It was the detail that hooked him, he says.

"The other grandchildren call me Grandpa," he said.

Tips to Protect Against Grandparent Scams
  • Be suspicious of anyone who calls unexpectedly asking for cash.
  • Verify any supposed emergency, by calling friends and family, before wiring money.
  • Develop a secret code or "password" with family members that can be used to verify a true emergency.
  • Limit personal information, such as vacation plans, shared on social media sites.
For more tips, visit the Better Business Bureau's Scam Stopper site. To report a scam, contact the Better Business Bureau or the FTC.

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Preventing and Reporting Senior Scams

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]]>Better Business Bureaugrandchildrengrandparent scamsgrandparentsmoney transferMoneyGramphone scamsretirementscamsseniorsWestern UnionCNNMoneyThu, 23 May 2013 13:42:00 ESTTop 5 Most Valuable Global Brandshttp://www.dailyfinance.com/2013/05/21/most-valuable-global-brands/http://www.dailyfinance.com/2013/05/21/most-valuable-global-brands/http://www.dailyfinance.com/2013/05/21/most-valuable-global-brands/#commentsFiled under: , , , , , ,


Apple remains the top global brand with an estimated value of $185 billion, according to an annual ranking by WPP and Millward Brown. Which other companies have brands worth billions?

Gallery: The Five Most Valuable Global Brands

1. Apple2. Google3. IBM4. McDonald's5. Coca-Cola


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]]>AppleCoca Cola CoEmerging marketsFast FoodFinanceGoogleIBMIndiaiPad MiniITVLenovoMcDonaldsmost valuable brandsProject GlassCNNMoneyTue, 21 May 2013 11:34:00 ESTDon't Worry About Today's Retirees: Boomers Are Fine, (but Gen X Isn't)http://www.dailyfinance.com/2013/05/20/boomer-retirees-ready-genx-recession-impact/http://www.dailyfinance.com/2013/05/20/boomer-retirees-ready-genx-recession-impact/http://www.dailyfinance.com/2013/05/20/boomer-retirees-ready-genx-recession-impact/#commentsFiled under: ,

Retirement golf course
Alamy
By NIN-HAI TSENG

When the nation's financial system almost crashed back in 2008, it's easy to see why anyone approaching retirement would have panicked. They saw their lifelong savings plummet as home and stock prices spiraled. For 60-somethings, it seemed there wouldn't be enough time to make up all their losses.

As it turns out, today's retirees have it better than generations before them, according to a new report. Baby boomers lost big when the housing bubble went bust, but they also gained big during the dotcom and housing bubbles of the early to mid 2000s. And so oddly enough, this gave them a decent cushion to comfortably kiss their days working full-time goodbye.

These boomers, or those born between 1946 and 1955, may be the last group on track with enough retirement savings to last them through their golden years, according to a report released Thursday by Pew Charitable Trusts, a Washington D.C.-based public policy think tank.

They are retiring with a bigger nest egg than those born around the Great Depression between 1926 and 1935, as well as the generation born around World War II between 1936 and 1945, according to Pew. What's more, they are better off today than Gen-Xers or today's 40-somethings born between 1966 and 1975.

Pew's study looked at how the Great Recession affected the wealth and retirement plans of baby boomers, compared with Americans younger and older than them. It divided the baby-boom generation into two groups: early boomers, who were born between 1946 and 1955 and late boomers, who were born between 1956 and 1965. While early boomers may be retiring comfortably, late boomers will struggle.

Before the economic downturn in December 2007, early boomers had more savings than generations before them. By the time they approached retirement in their late fifties and sixties, their median wealth was just over $241,000. By contrast, war babies when they were at those ages had $170,604, and Depression babies had $162,222.

What's interesting is that boomers weren't always on track to retire with more savings. In their forties and fifties, war babies had higher median wealth, $156,521, than boomers with $131,761. The difference is that during the dotcom and housing expansions, boomers between their forties and sixties saw their assets grow by 83%. By contrast, war babies saw only 9% growth between the same ages a decade earlier.

While that's good news for today's retirees, the next generations face less certain futures.

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Over the past two decades, Depression and war babies have been shedding debt while boomers and Gen-Xers have been accumulating it. Everyone lost money during the Great Recession, but Gen-X took the hardest hit. Boomers may have lost 28% of their median net worth, but Gen-Xers, who had less time to build their savings, lost nearly half (45%) of their wealth or about $33,000.

True, this generation has a few more years to rebuild their savings, but they likely won't be able to replace their income as well as as boomers have. Going by the theory that people should have enough savings and wealth to replace at least 70% of their income in retirement, Gen-Xers are in a rough spot. Late boomers are on track to replace nearly 70% to 80% of their income in retirement. By contrast, Gen-Xers, at the median, are expected to replace only about half of their income in retirement.

As Pew notes, all this gives policymakers more reason to pay special attention to the obstacles that today's 40-somethings face as they head into retirement.

What's also worth noting is that if Gen X faces so much uncertainty in their golden years, millennials born in the 1980s and 1990s may have it worse if the job market doesn't turn around soon. Many started their careers after the bust of the dotcom and housing bubbles and barely, if at all, benefited from those good old days. Many also entered the early part of their working years during one of history's deepest recessions. True they have many more working years ahead of them, but studies have shown that spells of joblessness early on could have lasting negative impacts on future earnings and employment.

In recent years, ownership of homes and stocks, which have historically made up the bulk of American wealth, has steadily declined. If the trend continues years from now, it's worth watching how millennials will fare as they approach retirement, particularly as the future of social security becomes even less certain.

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1. Tennessee2. Louisiana3. South Dakota4. Kentucky5. Mississippi

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]]>baby boomersDepressionFinanceGen XGeneration XGreat DepressionGreat RecessionMillennialsretirementretirement savingsThe Pew Charitable TrustsWorld War IICNNMoneyMon, 20 May 2013 14:37:00 ESTThe Year's Most Outrageous Tax Cheatshttp://www.dailyfinance.com/2013/05/20/tax-cheats-fraud/http://www.dailyfinance.com/2013/05/20/tax-cheats-fraud/http://www.dailyfinance.com/2013/05/20/tax-cheats-fraud/#commentsFiled under: ,

From a restaurant owner who hid cash receipts in "seasoned octopus" boxes to a self-proclaimed governor of Alabama who buried gold coins in his yard, here are some of the wildest tax fraud investigations the IRS has undertaken in the past year.

Gallery: Most outrageous tax cheats

Hiding boxes of Draining an adopted child's trust fundStealing $3 million from an armored truckCan't pay taxes, I'm unconsciousBurying gold coins in yard



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]]>CNNMoney.comcrimeIdentity theftIRStax fraudCNNMoneyMon, 20 May 2013 14:33:00 ESTHow I 'Stole' $14 Million From a Bank: A Security Tester's Talehttp://www.dailyfinance.com/2013/05/16/14-million-bank-heist-security-compass/http://www.dailyfinance.com/2013/05/16/14-million-bank-heist-security-compass/http://www.dailyfinance.com/2013/05/16/14-million-bank-heist-security-compass/#commentsFiled under: , ,

Bank receipt
Security Compass
By Steve Hargreaves

In early 2010, Nish Bhalla sat down at his computer with one objective: steal a huge amount of money from a bank.

It wasn't a typical heist. Bhalla is the chief executive of Security Compass, a company that tests security systems at banks, retailers, energy companies and other organizations with sensitive data. His clients -- including the bank branch in the United States that he targeted in his 2010 attack -- pay him to break into their systems.

It can be easier than most people think. The alleged thieves who made headlines last week for their $45 million bank heist used a similar type of attack that "created" money out of nowhere.

Bhalla talked CNNMoney through his caper. Here, in four easy steps, is how he made himself into a millionaire.

Step one, get access. Bhalla had one big advantage on actual thieves: His client gave him access to the bank's internal network. For real-world crooks, there are some surprisingly easy ways to get in.

It's possible, Bhalla said, to gain access in some places simply by logging on to the bank's wireless network -- an amenity more and more banks are providing as a service to customers. Once you're on the bank's Wi-Fi, the internal and external networks are frequently not segregated enough. It can be possible to fool the bank's other computers into thinking that your computer is a bank computer, a process known as "arp spoofing."

Another on-ramp: Someone posing as a janitor could insert a thumb drive into a teller's system and reboot it using a new operating system, which would enable them to access the hard drive of the teller's system. From there, user names and passwords are often readable.

Because he could simply log straight into his client's network, Bhalla and his assistantsskipped the "get physical access" step and dove straight into finding the money.

Step two, start exploring. Bhalla used "sniffer" software, available online for free, to map out which of the bank's systems were connected to each other.

Then he "flooded" switches -- small boxes that direct data traffic -- to overwhelm the bank's internal network with data. That kind of attack turns the switch into a "hub" that broadcasts data out indiscriminately.

The machines that the tellers use quickly became Bhalla's prime target. Again, the sniffer software was deployed to look for login information and passwords in the data flood. Eventually, one hit. He was inside a teller's machine.

Step three, move up the ranks. Amazingly, the information being sent between the tellers' computers and the branch's main database was not encrypted. This meant passwords and bank account numbers were all out in the open.

Step four, cash in. Rather than steal money from depositors' accounts, Bhalla just invented a new account for himself.

"We went into the database where the accounts are and set up an account with $14 million," Bhalla explained. "We just created $14 million out of thin air."

If he wanted to, he could have walked into any bank branch, transferred the money to an offshore account, and never have had to work again.

Instead, he went to an ATM to print out a record of his ill-gotten wealth.

"The bank executives were extremely surprised," Bhalla said. "Their faces were shocked."

The bank promptly deleted Bhalla's bounty, he said, and took steps to shore up its network.

In the heist that came to light last week, federal officials say the thieves hacked into networks at firms that process transactions for pre-paid debt cards and manipulated accounts to create high spending limits. From there, it was just a matter of making physical debt cards for those accounts and going around to ATMs to withdraw the cash.

"They just updated the database with that debit-card information," Bhalla said. "That's how simple it was."

In many cyber bank heists, including the recent $45 million scam, it's hard to pin down who is ultimately liable for any losses.

It's typically not individual customers. U.S. law protects consumer checking and savings accounts from losses stemming from fraud. Business accounts, though, have fewer protections.

Bhalla said some financial institutions have insurance to cover the losses -- but he noted that insurance companies are reluctant to issue policies with high coverage limits because the risks in this area area still poorly understood.

In the end, he said the losses are likely borne by a combination of the company, insurance firms and governments.

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Gallery: Why Your Bank Thinks Someone Stole Your Credit Card

Test PurchasesBuying in the Bad Part of TownStuff You Might SellBuying CashOut-of-the-Ordinary Spending Behavior

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]]>bank fraudcyber securitysecurity compassCNNMoneyThu, 16 May 2013 10:00:00 ESTSeven Fortune 500 Companies That Secretly Run Your Lifehttp://www.dailyfinance.com/2013/05/15/fortune-500-companies-secretly-run-your-life/http://www.dailyfinance.com/2013/05/15/fortune-500-companies-secretly-run-your-life/http://www.dailyfinance.com/2013/05/15/fortune-500-companies-secretly-run-your-life/#commentsFiled under: , ,

These companies may not get a lot of attention, but they define the course of our lives in more ways than you might imagine.

Gallery: Fortune 500 Companies That Secretly Run Your Life

Johnson ControlsCHS Inc.United TechnologiesAmerisourceBergenADM

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]]>AirbusAlliance BootsAmerisourceBergenCHS IncExpress Scripts IncFinanceFortuneFortune 500HumanaJohnson ControlsMcKessonNorth AmericaPratt WhitneyUnited TechnologiesCNNMoneyWed, 15 May 2013 05:00:00 ESTAmerica's 10 Most Profitable Companieshttp://www.dailyfinance.com/2013/05/10/most-profitable-companies/http://www.dailyfinance.com/2013/05/10/most-profitable-companies/http://www.dailyfinance.com/2013/05/10/most-profitable-companies/#commentsFiled under: ,

It was a banner year for these Fortune 500 companies. Learn why their profits soared.

Gallery: 10 Most Profitable Companies

1. Exxon Mobil2. Apple3. Chevron4. J.P. Morgan Chase & Co.5. Wells Fargo


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]]>AppleaQuantiveBerkshire HathawayChevronCNNMoney.comearningsExxonMobilfannie maeFinanceFortune 500Ginni RomettyIBMiPadJ. P. MorganJamie DimonJPMorgan Chaselondon whaleMicrosoftPfizerSteve JobsWalmartWarren BuffettWells FargoCNNMoneyFri, 10 May 2013 05:00:00 ESTA Davos Grows in the Desert: Why the SkyBridge Conference Mattershttp://www.dailyfinance.com/2013/05/09/skybridge-conference-davos-las-vegas/http://www.dailyfinance.com/2013/05/09/skybridge-conference-davos-las-vegas/http://www.dailyfinance.com/2013/05/09/skybridge-conference-davos-las-vegas/#commentsFiled under: , , , ,

Anthony Scaramucci, managing partner of SkyBridge Capital introduces a panel moderator at the SkyBridge Alternatives (SALT) conference in Las Vegas, Nevada, U.S., on Wednesday, May 11, 2011. Ronda Churchill/Bloomberg News
Getty Images
By KATIE BENNER

Hedge fund-of-funds manager Anthony Scaramucci is often referred to by his nickname, "the Mooch." His hair is coiffed, his shirts are pink, and he likes to spout eyebrow-raising quotes with the recklessness of a man who's living in a powder keg and giving off sparks. Take, for example, what he told New York Magazine : "I am a total shit-stirrer ... My middle name could be Shit-stirrer, except then my initials on my shirt would be a.s.s., and I can't have that."

In other words, Scaramucci isn't who you'd imagine as the creator of an event that finds statesmen like Bill Clinton and Colin Powell rubbing shoulders with economist Austan Goolsbee and Hollywood director Oliver Stone. Yet his SkyBridge Alternatives Conference (SALT), named for his firm Skybridge Capital, has grown from just another hedge fund pow-wow in Las Vegas into a gathering of influential thinkers, politicians, and philanthropists -- all with a celebrity sheen.

At this year's event, which kicked off Tuesday and runs through Friday, participants will hear former Israeli Prime Minister Ehud Barak discuss geopolitics with Leon Panetta. They'll watch Obama advisor Robert Wolf moderate a discussion on citizenship vs. partisanship between Scott Brown, Barney Frank, Harold Ford, and Karl Rove. Between sessions, SALT-goers might run into Al Pacino. Or watch him speak later, after which the band Train will perform. Also on the speaker list are Wall Street players like Mike Novogratz, Dan Loeb, John Paulson, and Sam Zell.

This lineup sets SALT apart from the long list of global hedge fund confabs. Such events usually are thrown by conference companies and driven by sponsors. Or they're hosted by investment banks and act as marketing exercises for hedge fund managers who want to attract new investors.

To be sure, SALT is still a flurry of hedge fund activity -- with money managers and bankers and reps from the big institutional investors networking by the pool. And there are plenty of panels with names like "Covering Your Assets: A Crash Course on Investing in a Macro Driven Environment" and "From Peril to Profit: the Art of Activist and Distressed Investing."

But SkyBridge believes that SALT has the potential to become a place for big ideas with wide appeal. "We invite the people who organize conferences that we admire and can learn from," says Victor Oviedo, a SkyBridge partner who helped conceive of SALT. "We're not at the level of a Davos or a Sun Valley or Milken Conference, but we're working toward that and learn a lot from those events."

SALT has grown from 500 attendees in 2009 to more than 1,800 this week. And, as at Davos or Sun Valley, some of the hottest events are not on the SALT agenda, but are the exclusive cocktail and dinner parties thrown by banks and financiers during the event. And SALT is giving more time to philanthropy, hosting a spinning class to benefit cancer research and having Human Rights Campaign president Chad Griffin discuss how business is supporting the fight for gay civil rights.

When asked why he and SkyBridge started SALT, Scaramucci said: "Originally I just wanted to raise the profile of my firm and the industry."

And Scaramucci wanted to defy president Obama, whom he supported in 2008 but then abandoned in 2012 in favor of Mitt Romney. It was February of 2009 and Obama had just excoriated bailed-out financial firms for misusing taxpayer money. "You are not going to be able to give out these big bonuses until you pay taxpayers back," Obama had said at a town hall meeting. "You can't get corporate jets. You can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayers' dime."

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Unsurprisingly, lots of firms cancelled events in Vegas, and the industry took cover. "I wanted people to know that we, at SkyBridge and as an industry, were still alive," Scaramucci says.

So Scaramucci and Oviedo decided to throw a big conference in Las Vegas where hedge fund managers could meet and try to make sense of what had happened in the marketplace.

"Not understanding the system as a whole had led to problems of the meltdown in the first place," Oviedo says. "That's why we decided to have speakers who could discuss geopolitics and public policy, since what happens in the Middle East or Korea affect the economy and investment strategies." By 2011 it was clear that those big-picture discussions were among the most popular, along with panels on philanthropy.

SkyBridge is still learning as it goes along, planning SALT based on what firm employees find interesting and on participant feedback. "I want people with a point of view who will spark conversation," says Scaramucci. "It's an ideological conference." Oviedo, who is a Democrat, adds that he has been careful to feature speakers from across the political spectrum to provide a balanced debate.

Make no mistake, SALT has been SkyBridge's most successful marketing tool. When the firm opened in 2005 it had three employees and no assets. After the financial crisis put many funds-of-funds out of business, industry insiders debated the future of firms like SkyBridge, and some investors left. But SkyBridge now has about $7.6 billion in assets under advisement or management, even though Scaramucci remains a polarizing figure.

And SkyBridge's big conference has pushed into Asia, holdings its first SALT Singapore last fall. "We still don't have a plan for what SALT will become," says Oviedo. "We're still just focused on making the type of conference we want to attend. So expect more speakers who think outside the box of the financial world. Expect discussions and debates about things that hedge fund managers don't think about every day. And expect memorable storytelling and ideas."

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1. Get blocked by Warren Buffett2. Get followed by Warren Buffett3. Set up a meeting with Warren Buffett IRL4. Get retweeted by Warren Buffett5. Hack Warren Buffett's account

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]]>Anthony ScaramucciHedge FundsLas VegasSkyBridge Alternatives ConferenceSkybridge CapitalCNNMoneyThu, 09 May 2013 11:53:00 ESTHow Much Does Your Money Manager Cost You?http://www.dailyfinance.com/2013/05/08/money-manager-fees-underperformance-Charley-Ellis/http://www.dailyfinance.com/2013/05/08/money-manager-fees-underperformance-Charley-Ellis/http://www.dailyfinance.com/2013/05/08/money-manager-fees-underperformance-Charley-Ellis/#commentsFiled under: , ,

UNITED STATES - OCTOBER 06: Charles Ellis, consultant and author, talks with reporter Christine Harper prior to an event in New York, U.S., on Monday, Oct. 6, 2008. (Photo by Daniel Acker/Bloomberg via Getty Images)
Daniel Acker/Bloomberg via Getty ImagesCharles Ellis, consultant and author, talks with reporters.
By PENELOPE WANG

Charles Ellis may not be a household name, but he commands the respect of many savvy investors.

He shook up Wall Street in 1975 with a landmark article in a financial trade journal that attacked the notion that professional money managers consistently beat the market.

Nonprofessionals stand even less chance of outperforming the benchmarks, argued Ellis, so individuals need to rethink their approach to building wealth. That influential piece was the basis for Ellis's classic investing book, "Winning the Loser's Game," the sixth edition of which is due out in July.

Founder of the financial consulting firm Greenwich Associates, Ellis has also served as a director of Vanguard. Today he still worries about investing costs, as well as the challenges that aging boomers face from low bond yields, uncertain stock returns, and dubious financial come-ons.

Ellis, 75, spoke recently with MONEY magazine editor-at-large Penelope Wang. Their conversation has been edited.

Despite recent highs, bear markets and crises have made our readers nervous about stocks. What's your advice for them?

Ben Graham said that people pay too much attention to what the market is doing currently. And he wrote his wonderful book "Security Analysis" in 1934. If people look backward, they will have one set of views. As they look forward, they'll have another.

What kind of returns should people expect?

Seven percent annual average returns for stocks over the next decade is the consensus among the investing pros I talk to. Minus inflation and expenses. So you're looking at a real return of 5 percent or less, which is not a lot. But over time you can still do pretty well.

So they should be buying stocks?

They should absolutely invest in a low-cost index fund. But nonprofessionals should forget about stock picking. For an individual investor, it's like my saying, "I'd like to play football with the NFL." You've got to be kidding.

You don't recommend giving money to pros to manage either.

Most active managers underperform because of fees. Some 80% of them would slightly beat the market, but after fees, their returns end up being below the market.

You've said that people should think differently about fund costs.

We've been describing fees in a way that really is nonsense. We ought to look at fees not in terms of assets, but as a percentage of the incremental returns of a fund -- how much extra return you can expect over a comparable index fund.

Think of the 7% expected long-term returns of stocks. A 1.5% fund expense ratio is a big fraction of that 7%.

Now compare that with an index's expected returns. How much more can you expect from an actively managed fund? Your fee wipes out any advantage -- assuming you get those extra returns. Fees as a percentage of incremental returns are unbelievable.
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Let's turn to bonds. What's your take on them, given ultra low rates?

The best piece of advice I could give long-term investors today is don't own bonds. And if you do own them, you probably ought to move out of them.

Right now the Federal Reserve is set on keeping rates down. The yield on a 10-year Treasury bond is under 2 percent. When yields go back to their historical average of 5.5 percent, an intermediate bond fund could go down 25 percent in value. People who are putting their retirement money into safe -- quote, unquote safe -- bonds can get hurt badly.

So someone with half of his or her money in bonds should move it into cash?

Moving entirely out of bonds into money funds or bank CDs may be too extreme for some people. But you can diversify more. You could look at foreign bonds or dividend-paying stocks, though you will be taking on more market risk than you would with CDs. Or you could perhaps stick with a short-term bond fund, which would fall less if rates were to rise. There's no simple answer.

How and when might bond investors get hurt?

The Fed has enormous information about the economy, and two smart people heading it: vice chair Janet Yellen and chairman Ben Bernanke. They will just likely judge that the time has come to stop pushing rates down. They'll look for signals like lower unemployment and higher inflation. I would expect to see rising rates in the next three, five, 10 years.

So what should pre-retirees do if they don't know how to be invested for retirement?

One thing they should beware of: Bad guys are tracking who's getting close to retirement. And they're targeting people with pitches -- mail, email, phone calls.

You get a lot of very sexy propositions: "Now is the time for you to break free" and "You're entitled to control of your investments." "This is, after all, your money. You should get it done your way."

All this "you, you, you" stuff. The truth is, in all too many cases, people will get stuck with something that costs way too much and won't deliver on promises.

How can you avoid getting stuck?

Anyone rolling over an IRA needs to be super-careful. If you hear from someone that you don't know or someone from a firm you've never heard of, check them out. There are a lot of tough players out there who are selling all types of products and who don't really worry about what happens to you.

So if you're being offered something, ask the salesperson to put the numbers in writing and ask him, "Would it be a good idea if I run this by my accountant or my lawyer?" If he doesn't like that idea, that tells you something.

It's not just about a particular product, but also about how you buy it. Low-cost annuities are a good idea, but sales commissions often make them not that good a deal when you purchase them.

You should check fees rigorously. There are usually several ways to buy anything.

You also think that people should adjust their timetable for investing.

For someone around the age of 60, a 30-year time horizon for investments is perfectly sensible. If you have a younger spouse, it could be even longer than that.

You can change your behavior by thinking really long term. You can stop being flustered so much about daily market moves or even what the market does this year.

The longer your time horizon, the more you will surely invest in equities, which will help you build financial security. With a long time horizon, you will also focus more on protecting your family -- your spouse and your kids -- even after you're gone. I'd like to help my grandchildren get to college.


See More from CNNMoney:
Fortune 500: 20 biggest stock gainers
20 biggest stock losers
Best big companies to work for

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]]>Ben BernankebondsBuy and Holdcharles ellisFederal Reserve SystemFinancegreenwich associatesindex fundsinvesting advicemoney managementretirement planningSecurity AnalysisstocksTreasury NotesWall StreetCNNMoneyWed, 08 May 2013 10:50:00 ESTBest States for Retirement Aren't the Ones You Might Thinkhttp://www.dailyfinance.com/2013/05/07/retirement-best-states/http://www.dailyfinance.com/2013/05/07/retirement-best-states/http://www.dailyfinance.com/2013/05/07/retirement-best-states/#commentsFiled under: , , , ,

Tennessee
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By MELANIE HICKEN

Despite its overwhelming popularity with retirees, Florida may not be the best place to spend your golden years, according to a report released by Bankrate Monday. Instead, Tennessee and Louisiana topped Bankrate's list of the 10 most retiree-friendly states, which equally weighted cost of living, taxes, access to healthcare, crime rates and climate.

Some chillier spots, including Nebraska and North and South Dakota also made the list. They may not be dream retirement destinations, but these states are actually ideal for retirees because of their lower taxes and cost of living and lack of crime, according to Bankrate, a financial information website.

"If you can bear [South Dakota's] temperatures, it's a pretty good place to live on a fixed income," said Chris Kahn, an analyst at Bankrate.

Florida, meanwhile, is notably absent from the top 10. While it boasts warm weather and reasonable state and local tax rates, a relatively high cost of living and crime rate sunk the "Sunshine State" to nineteenth place, Kahn said.

These 10 states, however, offer a better balance between affordability and quality of life in retirement, according to Bankrate.

Gallery: Best States for Retirement Aren't the Ones You Might Think

1. Tennessee2. Louisiana3. South Dakota4. Kentucky5. Mississippi


To compile the list, Bankrate analysts ranked climate using average temperatures over 30 years (1981-2010) and valued cost of living with statistics from the Council for Community and Economic Research. Taxes were ranked using the Tax Foundation's analysis of state and local tax burdens. Access to healthcare was based on hospital beds per 1,000 residents and doctors per 100,000 residents from the Kaiser Family Foundation and U.S. Census Bureau, while crime rates were ranked using violent and property crimes per 100,000 people from the 2011 FBI Uniform Crime Report.

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]]>AlabamaBankrate Incbest places to retireFloridaKentuckyMississippiNebraskaNorth DakotaretirementRetirement PlanningSouth DakotaTax FoundationTennesseeUnited States Census BureauVirginiaWest VirginiaCNNMoneyTue, 07 May 2013 05:00:00 ESTFortune 500: America's Largest Companieshttp://www.dailyfinance.com/2013/05/06/fortune-500-americas-largest-companies/http://www.dailyfinance.com/2013/05/06/fortune-500-americas-largest-companies/http://www.dailyfinance.com/2013/05/06/fortune-500-americas-largest-companies/#commentsFiled under:

Gallery: Fortune 500: America's Largest Companies

10. Ford Motor9. Valero Energy8. General Electric7. General Motors6. Apple

See the full list: Fortune 500: America's largest companies

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]]>Appleberkshire hathawayChevronExxon MobilExxonMobilFinancefordFortune 500GEGMPhillips 66ValeroWalmartCNNMoneyMon, 06 May 2013 12:47:00 EST5 Ways to Cut the Cost of Allergy Reliefhttp://www.dailyfinance.com/2013/05/03/allergy-relief-save-money/http://www.dailyfinance.com/2013/05/03/allergy-relief-save-money/http://www.dailyfinance.com/2013/05/03/allergy-relief-save-money/#commentsFiled under: ,

Shutterstock, tomsza
By ANNE C. LEE

Looking for allergy relief? Prescriptions, rather than OTC remedies, are often more effective and cheaper in the long run.

1. Avoiding treatment can be costly

Nearly a third of adults have allergies. Suffer through the symptoms, and you could pay the price at work. During allergy attacks, one study found, employees lost more than two hours of productivity a day.

If you regularly take over-the-counter pills, get tested to pinpoint your allergens and fine-tune treatment.

The common skin-prick test is faster than a blood test and may save you a second office trip, says North Aurora, Ill., allergist Sakina Bajowala.

2. A prescription pays in more than one way

What your doctor prescribes may be more effective. For example, steroidal nasal sprays like Flonase beat OTC sprays, which shouldn't be used for more than a few days because they're habit forming, says Richard Madden, a physician in Belen, N.M.

Even when an OTC drug like Claritin or Zyrtec works fine for you, ask for a prescription anyway. That way, you can pay for the pills with the pretax dollars in your flexible spending account.

3. Shots pay off over time

Your doctor may suggest immunotherapy -- shots one or two times a week for up to eight months, tapering down to monthly over three to five years. A recent study in the Journal of Allergy and Clinical Immunology found that immunotherapy patients saw 38% lower treatment costs owing to fewer overall doctor visits and drugs.

"You put in your work and expense upfront and get all the benefit down the road," says Bajowala.

4. An alternative treatment is on you

Acupuncture, biofeedback, hypnosis, and even eating local honey are touted as treatments, but there's little clinical data to prove widespread effectiveness over the long term. While your insurance may pay for a $100 acupuncture session for back pain, allergies are less likely to be covered.

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One homebrew that gets a thumbs-up from doctors: nasal irrigation. No need to spring for a $100 contraption -- a $20 drugstore variety with distilled water is fine for most.

5. For gear, there's no need to splurge

The best air purifier is your air conditioner, says Gaithersburg, Md., allergist Jacqueline Eghrari-Sabet. Just add a HEPA filter to trap pollen, dust, and mold spores. With no AC, a basic $50 HEPA air purifier works fine, especially in small rooms.

When you're allergic to heavier allergens that settle quickly -- like dust mites and cat hair -- air purifiers may not help much, though. Get a HEPA filter for your vacuum and clean often.

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]]>accupunctureallergy seasonflexible spending accounthealth caremedicationprescriptionsave moneysavingsspringCNNMoneyFri, 03 May 2013 11:30:00 ESTApple Raises $17 Billion in Largest Corporate Bond Sale Everhttp://www.dailyfinance.com/2013/05/01/apple-raises-17-billion-in-largest-corporate-bond-sale-ever/http://www.dailyfinance.com/2013/05/01/apple-raises-17-billion-in-largest-corporate-bond-sale-ever/http://www.dailyfinance.com/2013/05/01/apple-raises-17-billion-in-largest-corporate-bond-sale-ever/#commentsFiled under: , , ,

Apple bond sale
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By

Apple sold $17 billion worth of bonds late Tuesday in the largest sale of corporate bonds ever. The company offered both fixed and floating rate bonds, with maturities of of 3, 7, 10 and 30 years. At $17 billion, the offering trumps Roche Holdings' $16.5 billion bond sale in 2009, according to data from Dealogic.

Apple saw strong demand for its bonds, which were rated Aa1 by Moody's and AA+ by Standard & Poor's.

"Whenever a company that's so highly rated comes to market, it's a big deal," said Jody Lurie, a fixed-income analyst at Janney Montgomery Scott.

Apple (AAPL) did not immediately respond to a request for comment. The deal's underwriters, Goldman Sachs (GS) and Deutsche Bank (DB), declined to comment.

Standard & Poor's and Moody's have already given Apple high credit scores, though Fitch has said the company's business model is not consistent with a AAA rating.

Related: Which is worth more, coffee w/Tim Cook or a Lamborghini?

There are only a handful of companies that have AAA ratings, so Apple's AA rating will make it popular with insurance companies and other institutions that need to hold high-quality assets, said Lurie. "Everyone wants a bite of the Apple," she said, adding that the order book for Apple's offering is rumored to have already reached $40 billion.


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Apple said earlier this month that it would tap the bond market as part of a plan to increase its share buyback program to $60 billion and boost its third-quarter dividend. The move is unusual for Apple, which has not sold debt to the public since 1996.

Apple has amassed a cash hoard worth $144 billion as of the first quarter. However, much of that cash is stashed in overseas accounts, which means Apple would face a hefty tax bill if it were to bring the money home.

Apple joins a growing number of major technology companies that are taking advantage of record low interest rates. Microsoft (MSFT), for example, sold $2 billion worth of bonds last week.

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]]>ApplebondsCorporate BondsCorporateBondsdebtdividendGoldman SachsGoldmanSachsGoogleinterest ratesinvestorsMicrosoftoffshoreshare buybackstock buybackCNNMoneyWed, 01 May 2013 10:19:00 ESTAre Free Online College Courses Worth Your Time?http://www.dailyfinance.com/2013/04/30/free-online-college-courses-credit/http://www.dailyfinance.com/2013/04/30/free-online-college-courses-credit/http://www.dailyfinance.com/2013/04/30/free-online-college-courses-credit/#commentsFiled under: , , , ,

free online college courses
Darron Cummings/AP
By Kim Clark

Two things about higher education have become clear. First, your children need it more than ever to stay competitive -- and so might you, if you need to upgrade for a fast-changing job market. Second, the model colleges use to deliver that education is broken. Rising tuition, high student debt, and stingier funding for public colleges are making it more difficult for families to keep up.

So it's hard not to get excited about this: Right now, for the unbeatable price of $0, Massachusetts Institute of Technology professor Anant Agarwal is teaching a class on circuits and electronics to thousands of people online -- no MIT application required. Harvard, Princeton, Michigan, and other top schools have also started open courses for everyone.
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The academic world is buzzing with the notion that this could change, well, everything. "We are at a pivotal moment," says former Princeton president William Bowen. "Two forces are combining: extraordinary technological progress with economic need."

True, it's a long way (and many spinning "video loading" icons) from here to a day when students can put together respected degrees with Ivy simulations.

While logging in is free and easy, getting official credit for what you learn still isn't. Online courses have bugs, including raucous student discussion boards and clumsy grading systems, and for many they are an inferior substitute for real classrooms. Yet there's promise here for adults who want a new career skill, for traditional students looking for learning aids, and for anyone hoping to speed the path to a degree. More change is coming.

Here's what you and your kids should know to make the most of it.

You Can Really Sit In on Courses with MIT Profs

Agarwal's course is known in education jargon as a MOOC, or massive open online course. Web courses and online degrees have been around for years. As the name implies, MOOCs are different for their size (with tens of thousands of students at a time), their free price tag, and, frankly, the cachet of the schools that started them.

A typical massive online class includes several short recorded lecture modules each week and reading assignments. You'll chat with other students online, and there's homework, which may be graded by a computer or by peers. Some classes offer a few online meetings in which professors address questions posed by students. Although there may be a weekly schedule, it's flexible.

"I completed the first three weeks of classes while patrolling the Bering Sea," says Coast Guard Lt. Cmdr. Greg Tozzi, who took a finance course taught by a Georgia Tech professor.

Tozzi's class wasn't delivered by Georgia Tech, but through a website called Coursera.org, which offers more than 300 classes from 62 schools. Two Stanford professors kicked off the for-profit venture with more than $22 million raised from colleges and Silicon Valley venture capitalists. (Where profits will come from, as with lots of tech startups, is hazy.)

Harvard and MIT have started a similar nonprofit hub at edX.org, where you can learn Greek classics from a Harvard prof or quantum mechanics via Berkeley.

Don't want to wait for a course to start? Carnegie Mellon has free self-paced courses that you can try anytime at oli.cmu.edu, and so does the nonprofit Saylor.org.

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]]>careercollegeeducationfree online college courseshigher educationInternetstudent debtCNNMoneyTue, 30 Apr 2013 11:00:00 ESTA Bright Spot from Federal Budget Cuts: Fewer IRS Auditshttp://www.dailyfinance.com/2013/04/29/a-bright-spot-from-federal-budget-cuts-fewer-irs-audits/http://www.dailyfinance.com/2013/04/29/a-bright-spot-from-federal-budget-cuts-fewer-irs-audits/http://www.dailyfinance.com/2013/04/29/a-bright-spot-from-federal-budget-cuts-fewer-irs-audits/#commentsFiled under: , , , ,

Internal Revenue Service
AP
By BLAKE ELLIS

Thanks to the government's spending cuts, you may have a smaller chance of being audited this year.

The cuts, known as the sequester, will wipe $600 million from the IRS's budget this year, forcing the agency's nearly 100,000 employees to be furloughed without pay for up to seven days.

Five furlough days have been identified so far -- beginning on May 24 and they will be spread out among separate pay periods, according to the National Treasury Employees Union.

Not only will these furloughs shrink paychecks for IRS workers, but they will also make it harder for taxpayers to receive the assistance they need, and enforcement efforts will be significantly reduced as well, IRS Acting Commissioner Steve Miller said in congressional testimony earlier this month.

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"[W]ithout a change in the current budget environment, the American people will see erosion in our ability to serve them, and the federal government will see fewer receipts from our enforcement activities," he said.

Translation for taxpayers: You're less likely to be audited, said Mark W. Everson, vice chairman of tax service firm alliantgroup and former head of the IRS.

"Of course this has an impact on the number of audits," said Everson. "If you have someone working on 20 audits, if they're not working as many days it's going to take longer to finish those and they're not starting new ones."

The irony is that by limiting audits, the sequestration is limiting the revenue that flows into the government's coffers, he said.

Audits have already been on the decline due to budget cuts at the IRS over the last few years. Last year, for example, the number of audits dropped by 5% to about 1.5 million.

Your odds of being audited still rise significantly with the more income you have, however. While the overall chance of being audited is 1%, those odds jump to 18% for people with income of $5 million or more and 27% for taxpayers earning $10 million or more.

But if you do get audited, don't think the IRS is going to be lax just because it's squeezed on resources.

"The [IRS] won't start [as many] new audits, but I think it will be equally rigorous in the ones it conducts, so don't think that they won't be as thorough as they once were," said Everson.

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]]>Auditausteritybudget cutsGovernment cutsIRStaxesCNNMoneyMon, 29 Apr 2013 10:41:00 ESTFitness Gadgets: Cheaper Than a Personal Trainerhttp://www.dailyfinance.com/2013/04/29/fitness-gadgets-cheaper-than-a-personal-trainer/http://www.dailyfinance.com/2013/04/29/fitness-gadgets-cheaper-than-a-personal-trainer/http://www.dailyfinance.com/2013/04/29/fitness-gadgets-cheaper-than-a-personal-trainer/#commentsFiled under: , ,

Need some help getting off the couch, but you're not ready to spring for a personal trainer?

Whether you're gearing up for a big race or trying to fit in a weekly power walk, there's a fitness device for you.

Gallery: Fitness gadgets: Cheaper than a personal trainer

You want to walk more: Fitbug AirYou're an all-around fitness fanatic: Fitbit OneYou're an outdoor-sports nut: RunKeeperYou run marathons -- or at least 5Ks: Garmin Forerunner 10More from CNNMoney:

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]]>fitnesssaving moneyCNNMoneyMon, 29 Apr 2013 10:40:00 ESTAnother Top JPMorgan Chase Executive Departshttp://www.dailyfinance.com/2013/04/28/jpmorgan-chase-frank-bisignano-resigns/http://www.dailyfinance.com/2013/04/28/jpmorgan-chase-frank-bisignano-resigns/http://www.dailyfinance.com/2013/04/28/jpmorgan-chase-frank-bisignano-resigns/#commentsFiled under: ,

Getty Images

By Hibah Yousuf

Another one of Jamie Dimon's key executives is leaving JPMorgan Chase, the firm announced Sunday.

Frank Bisignano, co-chief operating officer along with Matt Zames, is leaving the bank to run First Data Corp., a payments processing company owned by private equity firm KKR. Zames, who now appears to be the clear frontrunner to lead JPMorgan Chase & Co. (JPM) when Dimon retires, will be the sole COO of the bank.

"I am pleased that Matt Zames is expanding his role," Dimon said in a statement. "He is a proven business executive, who has performed exceptionally well since coming into his corporate role in May of last year."

Several recent departures at JPMorgan have been related to the London Whale trading scandal, which led to about $6 billion in losses and sparked several Congressional hearings.

But Bisignano's reputation was not tarnished by those losses.

"I have worked with Frank for many years, and he has proven himself time and again as a highly talented executive willing to take on difficult challenges and get the job done," said Dimon.

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]]>executivefrank bisignanojamie dimonjpmorgan chaselondon whalematt zamesCNNMoneySun, 28 Apr 2013 16:30:00 ESTMillions Eligible for Obamacare Subsidies, but Most Don't Know Ithttp://www.dailyfinance.com/2013/04/23/obamacare-subsidies-millions-eligible-dont-know/http://www.dailyfinance.com/2013/04/23/obamacare-subsidies-millions-eligible-dont-know/http://www.dailyfinance.com/2013/04/23/obamacare-subsidies-millions-eligible-dont-know/#commentsFiled under: , , , ,

MIAMI, FL - FEBRUARY 21: Dr. Martha Perez examines Maria Lebron in a room at the Community Health of South Florida, Doris Ison Health Center on February 21, 2013 in Miami, Florida. Florida Governor Rick Scott reversed himself on Wednesday and now is callling for an expansion of Medicaid to Florida residents under the federal Affordable Care Act. (Photo by Joe Raedle/Getty Images)
Joe Raedle/Getty Images
By Tami Luhby

Nearly 26 million Americans could be eligible for health insurance subsidies next year, but most don't know it.

That's because relatively few people are familiar with provisions in the Affordable Care Act, aka "Obamacare," that will provide tax credits to low- and middle-income consumers to help them purchase health coverage through state-run insurance exchanges.

Most of those who will be able to claim the subsidies are in working families with annual earnings between $47,100 and $94,200, according to a recent analysis by Families USA, a consumer advocacy group. More than a third of those eligible will be young adults between ages 18 and 34.

"There's a huge number of people who can get coverage this way and can get significant help," said Ron Pollack, executive director of Families USA. "It's not just for the poor. It reaches deeply into the middle class."

Here's how the subsidies will work:

Starting in October, those looking to buy individual health insurance can enroll in plans offered through state-based exchanges, with coverage beginning in January. Consumers buying individual plans will be able to choose between four levels of coverage: platinum, gold, silver and bronze. The plans will differ in their premiums and out-of-pocket expense burdens.

People who are not in a government health insurance program, such as Medicaid or Medicare, and do not have access to an affordable plan at work may be eligible for help paying their premiums. The assistance is available to those with incomes of up to four times the federal poverty level -- this year, that's $45,960 for an individual or $94,200 for a family of four -- and will be scaled to ensure that folks don't pay more than a designated percentage (the exact target varies by income level) of their earnings toward the premium. The subsidy will be paid directly to the insurance company.

Related: 6 companies cashing in on Obamacare


The federal subsidies will be pegged to the cost of a "silver" plan, which will vary depending on where consumers live. Insurers will soon submit to the states and federal government details of the plans they'll offer in the exchanges, including the premium costs, but consumers may not learn the specifics until open enrollment starts in October.

Families USA crunched the numbers for a few different scenarios. By its estimates, a family of four earning $94,200 and purchasing a silver-level plan carrying a $12,500 annual premium will get a subsidy worth $3,550, which limits the cost of the premium to 9.5% of the family's income.

The government hasn't yet released its own estimates on how many Americans will be eligible for the subsidies, but Families USA believes that up to 26 million citizens will meet the criteria.

Not everyone eligible for those subsidies will actually sign up, though. The Congressional Budget Office is forecasting that only 6 million people will receive subsidized coverage through an exchange next year. It expects that number to grow to 22 million by 2017.

Many Americans are still in the dark about Obamacare provisions that could help them, said Matthew Buettgens, senior research analyst at the Urban Institute.

"Outreach is going to be crucial to creating viable exchanges in the early years," he said.

It will be a heavy lift. Only 62% of Americans are aware that subsidy assistance is available to individuals under the health reform law, according to a March Kaiser Family Foundation poll. And about two-thirds of the uninsured say they don't understand how Obamacare will affect them.

All Americans are required to carry health insurance as Jan. 1, 2014, or face financial penalties, but if enrolling in coverage through the state exchanges is too expensive or too confusing, uninsured individuals might choose to skip it and pay the fines instead. That could lead to fewer healthy people enrolling -- which would make coverage in the exchanges more costly for everyone, since they would become populated primarily by people with greater medical needs.

"You want a broad range of people to enroll," Buettgens said.

Gallery: Obamacare Myths

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]]>FinanceHealthhealth care reformhealth insuranceObamacarePatient Protection and Affordable Care ActCNNMoneyTue, 23 Apr 2013 16:06:00 EST