13 Investigates: New England financial advisor admits he stole $645000 from …

BOSTON (WGME) – A New England financial advisor is going to prison for stealing hundreds of thousands of dollars from his clients.

Its taken me awhile to get myself back on my feet. Im still not on my feet, fraud victim Dorothy Kerzner said.

Kerzner has a hard time accepting she lost more than $250,000 to a man she trusted with her investments.

I had confidence in him. He came to my house. I went to his house, she said.

She considered John Babiarz her financial advisor and a friend. He was her advisor for many years until an investigator came to her door to tell her a significant portion of her life savings was gone.

Babiarz told Kerzner he was liquidating some of her investments to purchase Facebook stock for her portfolio. Instead, he used that money to purchase a new home for his family — in cash.

I could not get Dorothy to understand what had happened to the bulk of her life savings until I showed her a copy of the check and on the reverse of the check and she saw her endorsement and then the deposit stamp of that deposit going into an attorney account. Thats the time she realized she was defrauded, postal inspector Fred Busch said.

Dorothy was not alone. Seven victims lost about $650,000 dollars in just 12 months.

He would have them send checks to him or do electronic funds transfers into his own account. That is how he would embezzle the money. He was very unsophisticated but these investors were very trusting. These people knew his family, they had known him for years, invested with him for years had no reason at all to worry about him, Busch explained.

Postal inspectors say Babiarz was a legitimate advisor at one time, but an online search would have shown that he was no longer registered with the state.

Babiarz pleaded guilty to wire fraud and aggravated identity theft and was sentenced to four years in prison. He was also ordered to pay more than $645,000 in restitution to his victims.

This case is an important reminder to check before you invest. Its worth an online search or phone call before you decide to use any financial professional to make sure that person is properly licensed to do business in Maine.

13 Investigates: New England financial advisor admits he stole $645,000 from elderly

10 Common Credit Score Myths People Tell Me

Lets face it, credit scores can be a mystery, and theres a lot of misinformation out there. While it is important to have good credit, you can’t believe everything you hear – because the wrong step, even with good intentions, could send your credit in the wrong direction. Here are just a handful of the myths that I’ve heard from consumers about credit scores.

Myth 1: I believe I have good credit.

FACT: This is always a doozy, since so many people tell me all the time they “have good credit.” Believing and knowing are not the same thing, and you shouldn’t just assume your credit score is OK. Also, just because you had good credit five years ago doesn’t mean you do now. Make sure to get copies of your free annual credit report from all three major credit reporting agencies every year, review the report and also periodically check your credit scores.

Myth 2: Closing a lot of credit cards will improve my credit score.

FACT: You’d think having a ton of credit cards would have a negative impact on your credit score and closing them would raise it. Unfortunately, it doesn’t work that way. One of the major factors of your credit score is your debt-to-credit ratio, and closing too many cards at once can drastically change your ratio, which can cause your score to drop. For example: You have $5,000 in debt and $20,000 in available credit between your credit cards. Closing several of those cards would cause your available credit to drop to $10,000, putting a huge dent in your debt-to-credit ratio. Also, the closed account will drop off your credit reports in about 10 years, and from then on you’ll no longer benefit from the age of that account, nor its positive payment history – which are also factors in your score.

My advice? If you really do feel the need to close your credit cards, pay off your balances and stash away the cards so you aren’t tempted to use them. Close one every few months and monitor your credit reports and credit scores for the impact. Remember, even if you’re not using a card, you should make sure you look at your statements to check for fraudulent activity.

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Myth 3: Checking my credit report or credit score will reduce my score.

FACT: So many of my clients have no idea what their credit score is because they thought checking it would hurt it. Looking at your own credit report or score isn’t like sneaking a peek at your notes during a test, you’re allowed to be in the know. While it’s true that if a lender checks your credit report or credit score, it results in a “hard inquiry,” which causes a small, temporary drop in your credit score. However, when you check your own, it’s called a “soft inquiry,” and it has no effect on your score. You can get two of your credit scores for free every month on Credit.com.

Myth 4: My income affects my credit score.

FACT: I’ve had a surprising number of people mention that their low income has damaged their credit. The amount of money you make can only affect your credit score if your income affects your ability to pay your bills. Your income itself, however, is not listed on your credit reports, nor is it a factor in your score – so it has zero impact on your credit score.

Myth 5: I don’t have to worry about my credit score because my significant other has a good score.

FACT: Do you not have to worry about your health because your partner is in good health? This is a terrible motto to live by. Your spouses’ good credit score is not a shield you can both hide behind. And contrary to what some may think, credit scores only reflect an individual’s credit – so your spouse’s good credit is not counted as yours. And if you take out a mortgage together, for example, both spouses’ credit will need to be checked. Furthermore, if you were to ever end your relationship, or if your spouse passes away, your score will become all the more important.

Myth 6: With a bad credit score, I can never get a loan.

FACT: This isn’t true, there are plenty of companies out there willing to give loans to people with poor credit. However, the loans will most likely have higher interest rates and require you to either put up collateral or put money down. Make sure to be aware of “predatory lending” offers, where loan amounts and repayment terms like interest rates are very high.

Myth 7: How I manage my bank accounts, investments and other personal finances impact my score.

FACT: Anything pertaining to your bank accounts, investment accounts or transactions made in cash have no effect on your score. That said, overdrafts can have an effect if your bank provides you with a line of credit in the event that you overdraw – then that line of credit may show up on your reports. You should make sure all accounts are closed properly and all fees are paid off. Unpaid fees can also end up on your report if sent to collections.

Myth 8: Disputing an account will make it come off of my report.

FACT: Disputing an account with the credit bureau will certainly do one thing result in them investigating your claim. However, if they find the account or the information to be accurate, the information will not be removed.

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Myth 9: I don’t need to worry about my credit report because I will not be applying for any new credit.

FACT: This is like saying you don’t have to worry about your weight because you don’t plan on going to the doctor anytime soon. Just because you don’t think you’ll be applying for credit soon doesn’t mean you should forgo maintaining good financial habits.

Lenders aren’t the only ones to check your credit. Insurance companies and potential employers may check and having bad credit can keep you from getting a good insurance rate or a new job. It also takes time to improve credit, which could take years, so don’t put off managing your credit responsibly.

Myth 10: Credit scores are locked in for six months.

FACT: Your credit score changes as soon as data on your credit report changes. Which could be on a daily or weekly basis, depending on when creditors report the information to the credit bureaus. This is why staying financially responsible, and checking it often, is important to maintaining good credit.

These myths aside, the best way to keep yourself in the know is to do your homework. Keep track of your debts, and review your credit report at least yearly and compare it to your financial history. All it takes is a little initiative and less reliance on hype to maintain a good credit score and good financial health.

More on Credit Reports amp; Credit Scores:

  • How to Get Your Free Annual Credit Report
  • How Do I Dispute an Error on My Credit Report?
  • What’s a Bad Credit Score?

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1 in 10 Millennials Overdraft More Than 10 Times a Year

Its perhaps not surprising that the older folks get, the better they are at handling money and avoiding penalty fees. But you might be surprised at how stark the difference is between younger and older generations when it comes to that super villain of financial penalties, the checking account overdraft.

Young adults aged 18-25 are four times more likely than folks 62 and over to suffer 10 overdraft fees or more every year, according to data from a Consumer Financial Protection Bureau report.

In fact, more than one in 10 members of the under-25 crowd pays 10 or more overdraft fees annually. And about four in 10 pay at least one overdraft fee each year.

At about $34 each, thats a budget-killer for students and young adults trying to find their way into the workplace.

Overdrafts the modern term for bouncing a check can happen in numerous ways, including automatic bill-pay and debit card purchases that send an account into the red. Consumers who opt into their banks overdraft protection often find they pay $34 in fees for charges that send their accounts only a few dollars past a $0 balance. The CFPB says the average amount that is overdrawn from an account to cause the fee being charged is $24.

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The cost of borrowing such small sums is astronomical.

Put in lending terms, if a consumer borrowed $24 for three days and paid the median overdraft fee of $34, such a loan would carry a 17,000% annual percentage rate, the CFPB says.

Banks collected about $32 billion in overdraft fees during 2013, according to Moebs Services.

On a positive note, consumers ability to avoid overdraft fees clearly improves with age. Only 27% of the 45-62 crowd pay even one overdraft fee each year, and only 15% of the 62-and-over crowd does so. And a tiny 2.8% of that oldest group pays 10 or more overdrafts.

We find that the share of accounts in higher overdraft categories generally declines with account holder age, the CFPB says in its report.

One potential reason that overdrafts could be common among the younger set: Colleges and the Department of Education use debit cards to distribute financial aid, and some of those cards have less-than-ideal terms including numerous fees according to a report issued last week by the CFPB.

How to Avoid Overdraft Fees

Paying the occasional overdraft fee, while an expensive mistake, isnt the end of the world. The real trouble starts when such fees become a bad habit, an all-too-common problem – which clearly happens to that 10.7% of young people who end up paying at least 10 overdraft fees each year. One easy tip to avoid that: Reject your banks overdraft protection, so debit card purchases that exceed your balance are simply declined. Its still possible to bounce a check, but much less likely to pay a series of overdraft fees for other kinds of electronic transactions.

Consumers who opt-in for overdraft fee services are paying significantly more for their checking accounts than non-opted-in consumers, the CFPB says. On average, opted-in accounts pay almost $260 per year in overdraft and NSF fees compared to just over $35 for non-opted-in accounts.

Prior to 2010, most banks automatically enrolled consumers in overdraft protection. That year, new Federal Reserve regulations required banks get an affirmative “opt-in” for the service. Many financial institutions aggressively market it as a convenience, and it’s possible you have agreed to it without realizing that. It’s best to check.

Better still is to opt for a different kind of overdraft protection that links your checking account to a savings account or credit card, and draws from one of your accounts to cover any potential shortfall. The fee is usually only a couple of dollars for the automated transfer. The distinction between these two overdraft-related services can be confusing, but here’s a simple guide – if you’re borrowing the bank’s money, it’s expensive. If you’re borrowing from yourself, it’s cheap.

More Money-Saving Reads:

  • What’s a Good Credit Score?
  • What’s a Bad Credit Score?
  • How Credit Impacts Your Day-to-Day Life

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America Movil doesn’t rule out Telekom Austria capital hike for expansion

VIENNA (Reuters) – Telekom Austrias majority shareholder does not rule out a further capital increase to fund European acquisitions, according to a newspaper interview published on Thursday.

Mexicos America Movil wants to use the business, in which it bought around 60 percent last year, for further expansion into central and eastern Europe, though Telekom Austria told Reuters last month it had little room to buy new assets.

America Movils Chief Financial Officer Carlos Garcia Moreno told Austrian magazine News on Thursday he expected several years of consolidation in the European telecommunication market.

If there are opportunities for Telekom (Austria) to grow through acquisitions, the situation will be judged accordingly and the topic (of a) capital increase will also be considered, he said.

America Movil fully supported a 1 billion euro (783 million pounds) capital increase conducted by Telekom Austria in November to reduce debt and invest in infrastructure.

Part of America Movils strategy could be to bring together Telekom Austria businesses in different countries under a single brand, Moreno said. Telekom Austria operates in Austria, Macedonia, Belarus, Croatia, Bulgaria, Slovenia, Serbia and Liechtenstein.

(Reporting By Angelika Gruber and Shadia Nasralla; editing by John Stonestreet)

Moody’s downgrades 3 Russian financial institutions’ long- and short-term ratings

Ratings remain on review for downgrade

London, 19 January 2015 — Moodys Investors Service has today taken rating actions on three Russian
financial institutions — namely Sberbank, Agency
for Housing Mortgage Lending OJSC and Vnesheconombank.

These actions follow the weakening of Russias credit profile, as
reflected by Moodys downgrade of Russias government bond rating to Baa3
from Baa2 on the 16th of January, 2015 and placing it on review
for further downgrade. For additional information, please
refer to the related announcement: https://www.moodys.com/research/–PR_316487

Specifically, today Moodys downgraded the supported senior unsecured
debt, local-currency deposit and issuer ratings of the three
government-owned Russian financial institutions that are rated
at the same level as the Russian sovereign due to government support assumptions.
The affected ratings remain on review for downgrade because of (1) the
review for downgrade of the sovereign debt rating; and (2) the considerations
that Moodys stated in a rating action last month on Russian financial
institutions, regarding the significant funding, asset quality
and profitability pressures that they now face as a result of Russias
challenging operating environment for the medium term (see Moodys
reviews for downgrade ratings of 16 Russian financial institutions
23 December 2014).


The weakening of Russias credit profile has prompted the rating actions
on the three financial institutions that are rated at the same level as
the government bond rating. While Moodys considers that the Russian
government will remain willing to assist these entities in the event of
need, its capacity to do so has declined, as expressed by
the downgrade of the government debt rating to Baa3 from Baa2 with a further
review for downgrade.


The key drivers of todays actions relate to the weakening of the sovereign
credit profile, as reflected in the downgrade of Russias government
bond rating. Therefore, Moodys considers that upward pressure
on the supported ratings of the three Russian financial institutions is
unlikely in the near term.

As expressed by the review for downgrade on the long-term ratings,
the three Russian financial institutions ratings could be downgraded
further in the event of any further downgrade of the government bond rating.
Downward adjustments could also be triggered by an erosion of the banks
standalone credit profiles.

List of affected ratings

Issuer: Agency for Housing Mortgage Lending OJSC

…. Long-term Issuer Ratings,
Downgraded to Baa3 from Baa2 RUR; Placed Under Review for further

…. Short-term Issuer Ratings,
Downgraded to P-3 from P-2; Placed Under Review for
further downgrade

…. Senior Unsecured Regular Bond/Debenture,
Downgraded to Baa3 from Baa2 RUR; Placed Under Review for further

…. Backed Senior Unsecured Regular Bond/Debenture,
Downgraded to Baa3 from Baa2 RUR; Placed Under Review for further

Issuer: Sberbank

…. Long-term Deposit Rating (Local
Currency) , Downgraded to Baa3 from Baa2 RUR; Placed Under
Review for further downgrade

…. Short-term Deposit Rating (Local
Currency) , Downgraded to P-3 from P-2; Placed
Under Review for further Downgrade

…. Senior Unsecured Regular Bond/Debenture,
Downgraded to Baa3 from Baa2 RUR; Placed Under Review for further

…. Backed Senior Unsecured Regular Bond/Debenture,
Downgraded to Baa3 from Baa2 RUR; Placed Under Review for further

…. Backed Senior Unsecured Medium-Term
Note Program , Downgraded to (P)Baa3 from (P)Baa2; Placed Under
Review for further Downgrade

…. Backed Short-term Program,
Downgraded to (P)P-3 from (P)P-2; Placed Under Review
for further Downgrade

Issuer: Vnesheconombank

…. Long-term Issuer Ratings,
Downgraded to Baa3 from Baa2 RUR; Placed Under Review for further

…. Short-term Issuer Ratings,
Downgraded to P-3 from P-2; Placed Under Review for
further downgrade

The principal methodology used in rating Agency for Housing Mortgage Lending
OJSC and Vnesheconombank was Government-Related Issuers published
in October 2014.

The principal methodology used in rating Sberbank was Global Banks published
in July 2014. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.


For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moodys
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support providers credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.

The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moodys disclosures on the lead
analyst and the Moodys legal entity that has issued the ratings.

Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating

Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moodys legal entity that has issued
the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.

Irakli Pipia
Vice President – Senior Analyst
Financial Institutions Group
Moodys Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Yves J Lemay
MD – Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moodys Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moodys downgrades 3 Russian financial institutions long- and short-term ratings

Charlotte charter school faces state action amid financial shortfall

The state could move to shut down a Charlotte charter school as it struggles with low enrollment and significant financial shortfalls.

If Entrepreneur High School closes, it would be the third Charlotte charter school to close within the past year amid financial problems, raising questions about state oversight of charter schools.

Entrepreneur High has only $14 in its bank account, the school#x2019;s chairman, Robert Hillman, told the state#x2019;s charter school advisory board Monday.

The school also only has about 30 students attending classes, well below the minimum of 65 set by state law. By the end of the year, the state Department of Public Instruction projects a deficit of at least $400,000. Entrepreneur High had projected having 180 students this year.

The board removed its founder and principal, Hans Plotseneder, on Christmas Eve, according to documents from the Department of Public Instruction.

Hillman told the board that Entrepreneur High is in early discussions with a management company to take over the school. The board also is trying to drum up a corporate sponsor or receive a lifeline from the Raza Development Fund, a community investment organization that helps charter schools serving Latinos. Entrepreneur High is located on Central Avenue and has targeted the Hispanic community.

#x201C;The ship is clearly not right at this point,#x201D; Hillman said. #x201C;Something needs to be done.#x201D;

The advisory board voted Monday to recommend that the state Board of Education either terminate the school#x2019;s charter or find another board to take the school over. The Board of Education is slated to discuss the issue in February and decide in March.

#x201C;It#x2019;s just been a hot mess. It#x2019;s been very bad. It#x2019;s embarrassing to see a situation get here this quickly,#x201D; state board member Becky Taylor said. #x201C;I just don#x2019;t see how we can continue on with this school.#x201D;

Should the school fail, Entrepreneur High would be the second new Charlotte charter to close its doors this school year. Concrete Roses STEM Academy shut down in September, just a few weeks into the school year. Another Charlotte charter, StudentFirst Academy, closed in April after financial troubles in its first year.

Entrepreneur High#x2019;s experience again calls into question how the state approves new charter schools. The state legislature lifted its long-standing cap of 100 charters in 2011. Since then, the state has approved dozens of new charter schools each year.

Charter school advisory board members said at Monday#x2019;s meeting that they had serious questions about Entrepreneur High#x2019;s viability when they recommended it move forward in December 2013. Just two months before, the school#x2019;s board had dissolved itself and Plotseneder was forced to recruit new members.

In July, Entrepreneur High was one of the least prepared to open charter schools in the state. A #x201C;ready to open#x201D; report compiled by the NC Office of Charter Schools said it had made only #x201C;slight progress#x201D; and a meeting with state officials was needed.

Hillman did not immediately respond to an interview request from the Observer on Monday. Plotseneder said he felt the charter school advisory board did the right thing.

#x201C;We need to end these ridiculous management problems,#x201D; he said, referring to Entrepreneur High.

Quick troubles

Entrepreneur High opened in August as a vocational school focused on advanced manufacturing and business creation. It quickly ran into trouble.

Charlotte-Mecklenburg Schools acknowledged taking some of Entrepreneur High#x2019;s ideas when the district created an advanced manufacturing and entrepreneurship school at Olympic High, creating a #x201C;rivalry#x201D; between the charter school and CMS, Plotseneder said at the time.

Entrepreneur High#x2019;s building was not complete by the start of the school year, leading parents to withdraw their children.

The school projected enrollment of 180 students and was funded based on that count. Last week, the state was told 49 students enrolled but a headcount showed only 31 students in classrooms. Charter schools are required to have at least 65 students.

Because of low enrollment, the state froze Entrepreneur High#x2019;s access to cash in September. The school has been on probation with the state charter school office since then.

Charter schools are funded by tax dollars, and receive money based on how many students attend. The state gives its first allotment before classes start and adjusts the money flow based on how many students show up to class.

Alexis Schauss, director of school business for the NC Department of Public Instruction, told the advisory board Monday that Entrepreneur High is unlikely to make it through the year without a significant infusion of cash from an outside source.

The school owes more than $275,000. Based on the enrollment, the state will give it monthly allotments of $41,000 beginning in February. That is not enough to meet the school#x2019;s payroll.

Where now?

Elaine Worthey, who has stepped into the principal#x2019;s role, said school leaders will hold interest meetings every Saturday to try to recruit students.

The school also is working to get its financial systems back in order after its bookkeeper left in March. Hillman said his review of the finances shows no impropriety.

#x201C;There were no trips to Vegas, there were no hot tubs anywhere,#x201D; he said. #x201C;It is our desire to complete this school year and start next year.#x201D;

By the end of 2015, Entrepreneur High wants to add board members with financial and legal expertise, Hillman said.

But charter school advisory board members were more concerned about the school#x2019;s financial viability in the next six months. Members said if they want the state Board of Education not to shut the school down, leaders should secure a hard commitment of money from a company or investment group by the February meeting.

#x201C;It breaks my heart to see y#x2019;all standing here today, and it#x2019;s actually worse than we thought it was,#x201D; Taylor said.

China and the final frontier of financial reform

China and the final frontier of financial reform

Authors: Yiping Huang, Peking University; Ran Li, Peking University; and Bijun Wang, CASS

In late 2013 the Chinese authorities put together a reform agenda for the financial sector, focusing on reducing entry barriers, liberalising market mechanisms and improving financial regulation. This could be the final frontier of China’s financial reform, which — according to the plan — should make critical progress by 2020.

So why did the leaders decide to accelerate reform efforts in this area?

China’s financial reform started in 1978. Reforms in the past, however, have exhibited a unique pattern of being strong in building a comprehensive framework and growing transaction volume but weak on liberalising market mechanisms and improving corporate governance. The Chinese financial system already resembles a modern financial sector in advanced economies. Quantitative indices show the size of Chinese financial assets is very large. However, China still lags significantly in freeing up key financial market prices, especially interest and exchange rates. Most commercial banks still behave more like SOEs than listed companies.

This unique pattern of financial reform is closely related to the overall asymmetric liberalisation approach adopted by the Chinese government. While most products have been fully liberalised, factor markets remain heavily distorted. These distortions are like subsidising the corporate sector while taxing households. This asymmetric approach is behind China’s peculiar economic model with both strong growth performance and serious structural imbalances.

Repressive financial policies — such as controls over interest rate, exchange rate, credit allocation and capital mobility — are important forms of factor market distortions. The degree of financial repression in China today is not only higher than the world average but is also higher than average for low-income countries.

Surprisingly, such policy distortions in the financial market did not prevent rapid economic growth. In fact, earlier empirical works confirm that financial repression actually played a positive role in supporting economic growth, at least during the early reform years.

So why is the status quo no longer an option? First, the growth impact of repressive financial policies has changed from positive to negative. Second, repressive financial policies already contribute increasingly to macro-economic and financial risks. Important examples include growing banking risks and property bubbles. And, third, many of the policy restrictions are no longer sustainable, giving rise to the major concerns of ‘hot money’ and the rapidly growing ‘shadow banking’ system.

All this suggests that the authorities have no alternative other than completing the transition to a market system in the financial sector. The official plan covers 11 specific areas, including reducing entry barriers, liberalising interest and exchange rates, developing multi-layer capital markets, achieving capital account convertibility, and strengthening financial regulation, among others. All of these pursuits are centred around two key tasks: interest rate liberalisation domestically and currency internationalisation externally.

Both of the above tasks have a large number of prerequisites. For instance, before fully liberalising interest rates, an effective reform of commercial banks is necessary in order to avoid reckless competition after reform, and a new monetary policy instrument is needed if the People’s Bank of China’s (PBC) base interest rate regulation is to go ahead. For renminbi internationalisation it is necessary, but not sufficient, to have: sustainable growth of the Chinese economy; an open, large, efficient and liquid financial market; and the credibility of China’s economic, legal and political systems.

While financial liberalisation is critical, it can also raise financial volatility. One big issue is whether China will be able to avoid a financial crisis. This is possible but is dependent on how it implements reforms. In the near term, the Chinese government still has a sound fiscal system to contain financial risks in individual areas, but the system could become risky if the central government’s credibility is overdrawn. If this is not addressed quickly, it could amount to a big problem.

At the moment, policymakers are still building consensus on pace, extent and sequence of various reform measures. In particular, whether China should move rapidly toward full capital account convertibility is still a subject of major debate. Yet, in the meantime, financial reform is already picking up the pace. PBC Governor Zhou Xiaochuan indicated that it would take one to two years to liberalise interest rates. Some officials also suggested that the central bank may withdraw from daily intervention in the foreign exchange market, allowing market forces to determine the exchange rate.

But there are still important hurdles for the authorities to overcome in the near term. Introducing the deposit insurance mechanism has been talked about for years. But it still hasnt happened yet. Establishing market-based interest rates is also dependent on successful resolution of the moral hazard problem. How to allow default of some debt and trust products without causing systemic risk remains a tough challenge for policymakers in the coming year.

Yiping Huang is Professor of Economics at Peking University and the China Economy Program at the ANU.

Ran Li is a PhD Candidate at the National School of Development, Peking University, and currently visiting the Australian National University

Bijun Wang is a senior research fellow at the Institute of World Economics and Politics, Chinese Academy of Social Sciences

It’s Time to End Financial Advisers’ 1% Fees

But there’s a risk they could also lose larger clients–depending on what these larger clients need and what these traditional advisers offer. Thanks to online advisers, helping investors build globally diversified portfolios has become a low-cost, commodity service. But many clients need more than just a portfolio design: They might require handholding when the market declines and they could need help with other financial issues.

“If someone is in their 20s, what’s the advice? ‘Save as much as you can and put it in stocks,’ ” notes

Mitch Tuchman,

managing director at Rebalance-IRA.com. “Once you get to middle age, things become much more complicated.”

Rebalance-IRA.com aims to distinguish itself from other online advisers by giving clients their own dedicated financial adviser. For 0.5% a year, that adviser helps clients design a portfolio, juggle goals, coordinate different accounts, and figure out how to make their money grow and then draw it down in retirement.

For traditional advisers to continue charging 1%, they’ll likely need to offer even more, including detailed advice on estate planning and tax issues, as well as full-blown financial plans.

What if traditional advisers continue to offer portfolio building, the occasional in-person meeting and a client dinner once a year? They shouldn’t be surprised if clients head elsewhere.

Consolidator to acquire network Financial Ltd in £2.7m deal

Tavistock will initially hand over £1.5 million to Standard Financial Group. It will pay £500,000 in cash and put up a further £500,000 in working capital for the new business.  

Tavistock has also paid £500,000 in relation to Standards support services arm IFA Compliance Limited. The consolidator will not keep this business and has instead sold it back to former Financial Ltd chief Charlie Palmer. Of the £500,000, £488,000 will be used by IFA Compliance to pay off loans which it owes to other companies within the Standard group. Palmer will retain control of IFA Compliance but will not join the new business.