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- Americans Want To Quit Their Vices - And Advisors Can Help
Americans Want To Quit Their Vices - And Advisors Can Help
Retirement can be brighter with less spending on “vices” today
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Happy Sunday, and welcome to Benzinga’s financial advisor newsletter!
Today, we’re looking at a new survey showing that spending on “financial vices” is surprisingly common — but also something many Americans want to cut down on. The opportunities for advisors here are huge, but the details vary depending on the age and income of clients.
So, let’s get to it!
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INDUSTRY CHATTER
Fully one-third of Americans are planning to reduce how much they spend on “financial vices” because of the economy, according to research from Bankrate.com, with important implications for advisors and their clients.
The survey distinguished six different vices — alcohol, lottery tickets, casino games, tobacco, sports gambling, and marijuana — and showed that 84% of Americans spend money on at least one of them. 32% do so at least once a week, half do so monthly, while 11% take on debt to partake of their vices.
Households with higher income, as well as Baby Boomers, preferred alcohol and gambling, while lower-income households were more likely to spend on tobacco or marijuana.
The surprising prevalence of spending on these financial vices is important to consider for financial and retirement planners. Cash is the most common form of payment for these activities, making it difficult to track how much clients spend on it. This in turn makes it hard to plan for these expenses, even before considering that clients may be reluctant to admit to some of this spending.
However, with one-third of respondents saying they plan to cut down on this spending, there’s an opportunity for advisors here to help people realize how much these vices cost, whether they really fit in with their clients’ long-term plans, and finding alternatives to or more structured ways of enjoying these activities.
For younger clients especially, who may not be as familiar with the power of compound interest, showing how much they could improve their future living standard by turning regular vice purchases into regular investments could be key.
MARKET RECAP
It's been a cautious week on Wall Street as earnings from mega-cap tech companies prompted investors to reassess their high expectations for future growth.
Alphabet Inc. (GOOG) and Amazon.com Inc. (AMZN) were the latest among Magnificent Seven stocks to fall short of lofty guidance forecasts, weighing on the broader market. Drugmaker Eli Lilly Co. (LLY) and financial stocks provided a cushion, helping offset some of the weakness in mega-cap tech.
On the macroeconomic front, January’s labor market data sent mixed signals. Nonfarm payrolls rose by 143,000, a sharp slowdown from December's 307,000 and well below economist forecasts of 170,000. Yet the unemployment rate edged lower and wages grew at a faster-than-expected pace.
A warning sign emerged Friday when the University of Michigan's consumer sentiment index revealed an unexpected decline in February, with the report highlighting an "unusually large" increase in year-ahead inflation expectations. The survey attributed much of this anxiety to higher tariffs under the Trump administration.
Gold, as tracked by the SPDR Gold Trust (GLD), surged to new all-time highs as investors sought protection against inflation and policy uncertainty. The precious metal repeatedly broke above $2,850 per ounce, marking its sixth consecutive week of gains and reinforcing its status as the go-to safe-haven asset amid an environment of economic risks.
Geopolitical developments also shaped market sentiment. During a meeting with Israeli Prime Minister Benjamin Netanyahu, Trump outlined a new vision for Gaza, suggesting the United States could “take over” and transform it into the "Riviera of the Middle East" while relocating Palestinians to Jordan and Egypt.
The U.S. Treasury announced fresh measures aimed at sanctioning Iran's oil export network to China as part of Washington's broader strategy to exert “maximum economic pressure” and prevent Iran from advancing its nuclear program.
On Friday, Trump hinted at plans to announce reciprocal tariffs as early as next week.
Ford's Outlook Disappoints
Ford Motor Co. (F)’s fourth-quarter earnings beat expectations, but its weak 2025 outlook and projected $5 billion-$5.5 billion losses in the electric vehicle segment sent the stock to the lowest level since January 2021. Analysts remain cautious, citing profitability concerns and competitive pressures in the EV market.
Inflation Expectations Spike
U.S. consumer sentiment fell to 67.8 in February, per the University of Michigan survey, missing forecasts. Inflation expectations rose to 4.3%, the highest since November 2023.
THE WEEK AHEAD
Economic Data
Monday: US consumer inflation expectations
Tuesday: EIA short-term energy outlook
Wednesday: US core inflation
Thursday: US initial jobless claims
Friday: US monthly monthly retail sales
Earnings
Click here for the full calendar of economic data and earnings reports.
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