Survey finds 41 percent expect tax changes to
help economy, 35 percent see a negative impact
Tax season is never easy for investors, but this year promises
to be especially challenging as taxpayers think about their 2017
returns and plan for next year's filing.
As a result of the sweeping Tax Cuts and Jobs Act that took
effect Jan. 1, Americans are coming to grips with how the changes
affect their wallets and mapping out steps to take this year.
Though most Americans say they don’t completely understand how they
will be affected, they do know they trust financial advisors more
than any other source to guide them, investors reported in a recent
TD Ameritrade Institutional1 recent survey.
Americans & Taxes: An Individual Investor Survey, conducted
for TD Ameritrade Institutional in late January, asked 1,000
investors with at least $10,000 in investable assets how they felt
about the new tax law, its expected impact on the economy and what
steps they may take in 2018 as a result of new rules.
The first order of business: getting up to speed on all the
changes. Just 25 percent of investors surveyed said they completely
understand how the new law impacts them personally, while 17
percent don’t understand the changes at all. Asked which sources of
information they trusted most, the top choice was financial
advisors, 25 percent, higher than accountants, 14 percent, and
tax-preparation services, 11 percent.
“There are plenty of experts offering their views on the new tax
code and how investors should respond, yet we find, once again,
that investors want advice and guidance from someone they trust,
especially in times of uncertainty and change," said Tom Nally,
president, TD Ameritrade Institutional. "People want to know that
someone has their back. More often than not, that trusted
individual is their personal financial advisor."
Of course, individual investors should consider the role and
qualifications of any professional discussing taxes, including
accountants, registered investment advisors and others.
Impact on Economy and Households
Nearly six in ten of American investors said the tax law should
impact their take-home pay one way or the other: 35 percent expect
to see fatter paychecks, though 22 percent believe they now will
take home less. Investors should soon be in a position to see for
themselves the paycheck impact of the new law.
Views on whether the new tax laws benefit the country are mixed
as well. Just 41 percent believe they will benefit the U.S.
economy; 35 percent say they will have a negative impact.
One thing that most people, regardless of income level or
investable assets, agree upon is that wealthier households will
definitely benefit more from tax cuts. Indeed, 63 percent said that
those who make more money than they do will benefit more, and 55
percent say "very wealthy people" will benefit the most.
These results reinforce an earlier TD Ameritrade Institutional
survey of registered investment advisors (RIAs) who said the new
tax plan would be the Number One item impacting client portfolios
in 2018.2
Taking Action
Whether investors believe they are tax plan experts or that they
need a lot more information, the survey found that most plan to
pursue a number of steps this year to navigate the new tax
landscape:
- Increase allocations to
equities. Some Americans have an increased appetite for
investing more in equities, whether that is via individual stocks
(30%), stock mutual funds (23%), or stock ETFs (15%).
- Put more into tax-advantaged
retirement plans. Fifty-seven percent will consider
contributing more to retirement accounts; in fact, one in five are
definitely doing so.
- Consider relocating. Roughly a
quarter of those surveyed are contemplating moving to an area of
the country with lower taxes.
Sentiment Shaped by Political Views
Though feelings on the new tax laws were mixed, the survey found
that an investor's disposition toward the new code is closely tied
to their party affiliation, state residence and personal wealth.
The survey found that while 29 percent of investors overall “hate”
the new tax plan and 22 percent “love” it, nearly half, 49 percent,
said they had no strong opinion.
Thoughts on the tax plan
Party Affiliation Republican
Democrat Independent Love it 42%
9% 20% Hate it 8% 49% 26% Neutral
50% 42% 54%
Thoughts on the tax plan Investable Assets
<$100K $100K-$249K $250K+
Love it 20% 22% 30% Hate it 29%
34% 27% Neutral 51% 44% 43%
Negative sentiment is stronger among investors who live in
high-income, high-tax states -- California, Connecticut,
Massachusetts, New Jersey and New York – where 40 percent of
respondents “hate” the new tax plan.
Likewise, 44 percent of high-tax state residents expect to pay
more in taxes, compared with a third of Americans overall. Half of
the respondents in these four states believe the new tax law will
negatively impact their state, compared with 37 percent overall.
The impetus to pick up and move is felt more strongly among
high-tax state residents, where 32 percent are considering
relocation, versus 24 percent of the overall survey.
“This survey supports what RIAs have been telling us: investor
demand for financial planning and investment advice has surged
because of the new tax plan," said Nally. "Investors rely on RIAs
for guidance on how to navigate change and stay on track with their
financial goals."
About the SurveyThe TD Ameritrade Institutional Americans
& Taxes: An Individual Investor Survey was developed to
understand the views of U.S. investors on the recently enacted Tax
Cuts and Jobs Act advisors. Results are based on responses to an
online survey fielded by Koski Research, on behalf of TD Ameritrade
Institutional, from January 18 through 22, 2018. Survey
participants were at least 18 years of age, with a minimum of
$10,000 in investable assets. The margin of error is +/- 3%.
TD Ameritrade Institutional and Koski Research are separate and
unaffiliated and not responsible for each other’s services or
policies.
TD Ameritrade does not provide tax advice. We suggest investors,
including clients of registered investment advisors, consult with a
tax-planning professional with regard to their personal
circumstances.
1TD Ameritrade Institutional is a division of TD Ameritrade,
Inc., a brokerage subsidiary of TD Ameritrade Holding
Corporation
2TD Ameritrade Institutional 2018 RIA Sentiment Survey, January
2018
About TD Ameritrade InstitutionalTD Ameritrade
Institutional is a leading provider of comprehensive brokerage and
custody services to more than 6,000 fee-based, independent RIAs and
their clients. Our advanced technology platform, coupled with
personal support from our dedicated service teams, allows
investment advisors to run their practices more efficiently and
effectively while optimizing time with clients. TD Ameritrade
Institutional is a division of TD Ameritrade, Inc., a brokerage
subsidiary of TD Ameritrade Holding Corporation.
About TD Ameritrade Holding CorporationTD Ameritrade
provides investing services and education to more than 11 million
client accounts totaling more than $1 trillion in assets, and
custodial services to more than 6,000 registered investment
advisors. We are a leader in U.S. retail trading, executing more
than 700,000 trades per day for our clients, nearly a quarter of
which come from mobile devices. We have a proud history of
innovation, dating back to our start in 1975, and today our team of
10,000-strong is committed to carrying it forward. Together, we are
leveraging the latest in cutting edge technologies and one-on-one
client care to transform lives, and investing, for the better.
Learn more by visiting TD Ameritrade’s newsroom at www.amtd.com, or
read our stories at Fresh Accounts.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
/ SIPC
Source: TD Ameritrade Holding Corporation
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version on businesswire.com: http://www.businesswire.com/news/home/20180301005105/en/
TD Ameritrade InstitutionalJoseph Giannone,
201-369-8705Communications + Public
Affairsjoseph.giannone@tdameritrade.com
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