Wealth Matters: Younger Generations’ Approach to Investing

The reports by Fidelity, U.S. Trust and Pershing show how the younger generations want to set themselves apart from the baby boomers. The reports yielded tips from which any generation could benefit but also contained some red flags indicating where the younger generations could stumble in the future from the same traits that seem like strengths today.

“When I was 25 years old, I wanted to emulate my parents,” said Craig D. Pfeiffer, a former vice chairman of Morgan Stanley and the founder and chief executive of Advisors Ahead, which trains advisers to work with younger clients. “I can remember proudly telling my father that I opened an account at a national financial services firm. When we wanted to buy our first home, we sought out our parents’ real estate agent. Today there is great pride in saying ‘I don’t have an account where you have one, and I’m proud that I’m not doing what you did.’ ”

That’s all well and good — and youthful rebellion is to be expected — but the decisions chronicled in these reports will affect the financial success of these generations for years. While some choices seem to be positive, others are going to take more time to play out. Here’s a look at some of the more interesting findings.

HAVING A SAY Fidelity’s Millionaire Outlook found that Gen X and Gen Y were deeply engaged in managing their money, though that engagement was not necessarily paired with a deep knowledge of investing.

The report said that nearly three-quarters of the young millionaires surveyed said they felt knowledgeable about investing, found it enjoyable and were actively involved in it. Yet that group also reported making 30 trades a month on average, meaning they may be less aware of fees and the risks of short-term speculation.

“Thirty a month is a big number,” said Bob Oros, executive vice president of Fidelity Institutional Wealth Services. “But I would look at it less as an absolute number. They’re actively engaged in how their assets are managed.”

Mr. Pfeiffer, who participated in the introduction of the Pershing report on the need to bring younger financial advisers into the advisory business, equated the heightened interest to the do-it-yourself movement in home repair. “They go to Home Depot and Lowe’s and try to fix it themselves,” he said. “Then they call the plumber to fix what they did. There is absolutely great risk around do-it-yourself.”

Rahul Shah, a founder of Peninsula Wealth in San Francisco said his clients broke down along generational lines and by wealth level. He said that Facebook employees with wealth exceeding $20 million had found advisers to help them manage the complexity, while those with a couple of million dollars were trying to figure it out themselves.

“There are a few who say, ‘Is there an app for this that can do this for me?’ ” he said. “Whether there is an app for that or not, everyone is going to behave emotionally when they’re managing their own money.” He said he would manage his client’s money better than his father’s money because he had an emotional attachment to his father’s money.

He added that many Google millionaires discovered this the hard way in 2008, when the financial markets collapsed four years after the company’s public offering.

SEEKING VALIDATION When Gen X and Gen Y investors ask for help, they want an adviser to collaborate with them and, in some cases, validate their decisions. The Fidelity report found that nearly all millionaires in this cohort worked with advisers — compared with just two-thirds of millionaire baby boomers — but that six in 10 said they used their adviser for a second opinion on investment decisions.

This article has been revised to reflect the following correction:

Correction: September 20, 2013

An earlier version of this article contained an incorrect photo credit. The photo is by Wendy Carlson, not Andrea Bruce.

Wealth Matters: Seeking Investments That Are Profitable and a Little Bit Green

SARAH KUPFERBERG’S youthful rebellion was slightly unconventional — she wanted to invest in green companies, not the big industrials her parents had preferred. But like most novice investors, she stumbled along the way, once putting money into a company that was trying to use buoys to turn ocean waves into electricity.

“When I started investing in companies on my own, I made a lot of bad choices,” Ms. Kupferberg, an ecologist who works on issues related to energy and power. “These were companies at the leading edge of technology. They weren’t great investments.”

Today, Ms. Kupferberg, 50, said she has taken a more pragmatic approach to investing. She is no longer looking for companies at the vanguard of the green movement. Instead, she’s interested in those that are making a profit while also acting in a way that takes into account sound environmental, social and governance practices.

A focus on these factors — known by the shorthand E.S.G. — is a distance from the pure green investments that had less to do with returns. She has invested in Starbucks (even though she prefers to drink Peet’s Coffee) because of its policies toward its employees, like health benefits for part-time workers.

Applying an E.S.G. screen in this instance is a way to look at how companies in similar sectors compare, said Matthew W. Patsky, chief executive of Trillium Asset Management. He drew a contrast between Starbucks and McDonald’s, which does not offer health care benefits for part-time workers. Ms. Kupferberg’s view of looking for the best-behaved companies in a sector is consistent with others who are using their investment dollars to try to push companies toward more socially responsible policies. Rebekah Helzel, a retired proprietary trader for an investment bank, for example, said her focus was on eliminating “carbon-based business models” from her investment portfolio. Yet she has invested in United Parcel Service, which, of course, moves packages around the world in planes and trucks.

“They have a lot of carbon in their business model but they have done remarkable things to reduce it,” Ms. Helzel said. She mentioned their use of new technologies to reduce their carbon footprint but also the company’s oft-cited mapping technology to allow drivers to make as many right-hand turns as possible on their routes.

And many of those who embrace green have distanced themselves from the view that to be environmentally conscious is to lack investment rigor.

“This doing good while doing well thing is getting to be a bit out of date,” said Garvin Jabusch, co-founder and chief investment officer at Shelton Green Alpha Fund. “We’re looking past mere tree-huggery.”

He said E.S.G. investors needed to focus on ways to generate electricity and recycle existing products that could save resources, make a profit and be widely used.

While most E.S.G. investors are not ready to give up on tree-hugging altogether, they are taking an approach that has come a long way from simply screening out certain companies — like oil and gas, military and tobacco. They are moving toward companies that are just as focused on being profitable businesses as operating in a way that is generally better all around.

But this approach lends itself to questions — at least it did for me.

First, let’s talk returns. Are they as good as a portfolio without an E.S.G. screen? The short answer is yes. But that does not mean the returns are always spectacular.

Joseph F. Keefe, president and chief executive of Pax World Management, a mutual fund company focused on E.S.G. investments, said there was no evidence that managers focused on companies committed to improving environmental, social and governance factors were at a disadvantage.

He said that the company’s Global Environmental Markets Fund has outperformed the MSCI World Index since the fund was started in March 2008. A newer fund that invests in exchange-traded funds with the same screen has also outperformed a broader index.

“Do we have funds that are underperforming?” Mr. Keefe asked. “We sure do. We’re in the stock-picking business.”

Advisers who have been taking E.S.G. factors into consideration for years bristle at the suggestion that their process is somehow less rigorous or still based on excluding certain sectors.

Wealth Matters: Fertility Treatments Produce Heirs Their Parents Never Knew

While this may sound bizarre, posthumously conceived children can become a quandary for the rich and the not-so-rich alike. The problem is always about money. The rich worry about who will get their assets after they are dead, while people of more meager means have turned to the courts in the hope of collecting federal benefits.

“We’re going to see a flurry of activity on this, because new technologies are ballooning,” said Sharon L. Klein, managing director at Wilmington Trust and chairwoman of the trusts, estates and surrogate’s courts committee of the New York City Bar Association.

“You read about women in their late 20s and early 30s who are saving their eggs and want to focus on their careers and haven’t met the right partner yet,” she said. The woman’s eggs could be used to produce a child even if the woman never wanted the eggs used after her death.

The law is clear on one thing: when a trust document does not address the issue, Ms. Klein said, “children born with the new technology are entitled to inherit with the same rights as a natural-born child.”

Consider the example of a sick person who, before undergoing chemotherapy that will cause sterility, donates sperm or eggs to be frozen, in hopes of having children later. The patient intends to have the children after recovery. But should the patient die without something in writing stating this intent, the surviving partner could have a claim on that genetic material and could use it to produce a child.

Other possibilities exist. A couple who has embryos left over after having children through in vitro fertilization could, instead of destroying them, donate them to a woman, essentially giving her a child they created. That could have unintended consequences. “It’s not inconceivable now that if the father and mother of that embryo were to strike it rich, the child born of that other woman could say, ‘Those are my genetic parents,’ ” said John M. Olivieri, a partner at White & Case. And if the child says that, chances are he or she would ask for a share of the genetic parents’ wealth.

“Posthumous reproduction is the perfect storm of competing interests,” said Susan M. Wolf, professor of law, medicine and public policy at the University of Minnesota School of Law. “There’s the surviving partner who wants to reproduce, the interests of the deceased while they were alive or as they memorialized them, the pre-existing kids who don’t want their interest diluted and finally the kids who are brought into the picture but who may be financially most at risk.”

Several lawsuits have already tested this issue, and many more have been settled privately, lawyers said.

In 2007, the New York County Surrogate’s Court decided in the case In re Martin B. that two posthumously conceived children could benefit from a trust created by their grandfather, Martin B., for his two sons and any grandchildren. (Real names were not used in the suit to protect the children.)

The case was brought jointly by Martin B.’s wife and the widow of their son, whose frozen sperm had been used to conceive two children three and five years after his death. They wanted to know whether the posthumously conceived children were descendants for the purpose of the trust.

The answer decided whether tens, if not hundreds, of millions of dollars from the estate of Martin B. went to those children or if all of it was divided among the surviving son and his children.

What made this case even more intriguing was that Martin B.’s wife had the ability to divide the assets in the trusts her husband set up as she saw fit. Lawyers on both sides said even if her posthumously conceived grandchildren were not considered, she could have cut her living son out of his inheritance.

This article has been revised to reflect the following correction:

Correction: August 30, 2013

An earlier version of this article included outdated information about the status of New York legislation that would set guidelines for the inheritance rights of posthumously conceived children. The state Senate did not take up the legislation in the most recent session, which ended in June; it is not awaiting Senate action in this session. 

Wealth Matters: A Guessing Game for Taxpayers on What They Owe

But for 2012, we overpaid our state and local taxes by a lot. Our accountant tried to comfort us: many of her clients did the same.

She said the negotiations at the federal level over the so-called fiscal cliff tax increases and budget cuts, which stretched into January, kept accountants from knowing who would be subject to the alternative minimum tax until just about the filing date for estimated taxes. The A.M.T., as it is known, ensures that people with a lot of deductions still pay federal tax. Those who fall into it lose various deductions, like state and local taxes and mortgage interest.

We made an estimated tax payment in January based on the worst-case situation, and when that didn’t happen, we discovered we had overpaid. But we also made the mistake of filing a paper return in New York, and the state has had huge delays in getting refunds to people who did not file electronically.

As we wait for that New York refund, I’ve thought about the increasingly confusing calculations that people who earn income from different sources — or have taxes withheld at different rates — have to make when it comes to paying estimated taxes.

“In years past, it was pretty easy to do a back-of-the-envelope calculation,” said Joshua Dubrow, a certified public accountant with Nussbaum, Yates, Berg, Klein & Wolpow of New York. “Now with these new rules, with investment income taxes, Obamacare, the phaseout of deductions, not even the sharpest and most accurate practitioner can do a prediction.”

With the next estimated payment due on Sept. 15 — and the end-of-year reckoning not too far away — here are some things to consider and a few tips for the areas where you can have control over your tax payments.

TECHNOLOGY IS NO ADVANTAGE Filing electronically usually gets you faster processing, but it is not always possible. Allison P. Shipley, principal in PricewaterhouseCooper’s Private Company Services practice, said people with complicated earnings and income had to file paper returns because their tax preparer’s e-filing software might not accept a certain form or there might be limits to the number of a form that can be submitted. She said that the Internal Revenue Service required that other forms be mailed in, like the one for noncash charitable contributions.

Those who file electronically are not guaranteed a quick refund. My accountant said a client filed his 2012 federal return electronically and included routing information to get his five-figure refund wired to his bank account. Instead he received a letter saying the return could not be processed electronically. The reason? The amount on the refund no longer matched the amount on the return. Eventually he received the refund by mail, less $7.49 for unpaid taxes from 2010.

WATCH STATE PENALTIES There are three ways to pay estimated taxes, and you can select a new method each quarter. You can pay in 100 or 110 percent of last year’s tax (depending on your income), pay 90 percent of this year’s tax or “annualize” your tax. With this last method, if you made $50,000 in the first quarter you would pay tax at a rate based on an annual income of $200,000. If in the second quarter you made $40,000, you would adjust your tax to an income of $180,000 and so on.

The goal is usually the same: to pay just enough to make sure you don’t get hit with a penalty. Yet some times, it makes sense to pay that penalty and hold on to the cash, said Elda Di Re, a partner in Ernst & Young’s personal financial services group. For example, when you don’t have the money to pay the tax on time or when you believe you can get a high return on the money. At 3 percent for federal taxes, she called the penalty “not a bad borrowing rate.”

Wealth Matters: From a Prominent Divorce in the Affluent Class, Lessons for All

Over the years, I’ve tried to avoid writing about big money divorces like this. I’ve just been a bit prudish about something that is at best sad and at worst tragic. I always think of the children. But there is certainly plenty of practical advice to be gleaned from such an emotional issue, which is why lawyers and financial planners should tune in to the salacious gossip.

What little is known — or can be logically assumed — about the Murdoch divorce provides lessons for people with far less money.

There are at least four areas in the Murdoch divorce that other affluent people need to consider if they find themselves served with divorce papers.

AGREEMENTS In the Murdoch case, there is reportedly a prenuptial agreement and two postnuptial agreements that modify the original contract.

Ilan Hirschfeld, national leader of the marital dissolution practice group at Marcum, an accounting firm, said postnuptial agreements generally solidify the prenuptial agreement and make the separation of assets cleaner. But if there is only a prenuptial agreement and it is very old, he would use forensic accounting to challenge it.

“If I’m representing the Mrs. and she’s not happy because her husband is making 10 times what he was making in the beginning, I’ll go back and say, ‘Did you disclose all the assets?’ or ‘Was she properly represented?’ ” he said.

David Aronson, a founding partner of Aronson, Mayefsky & Sloan, took the opposite position. He said people who entered into prenuptial agreements lightly or without proper counsel could be sorely disappointed.

“Prenuptial agreements are routinely enforced in New York, even if they appear to be bad deals,” he said, adding that the few recent cases in which they were overturned were “still exceptions to the rule.”

One type of prenuptial agreement that could draw more scrutiny, Mr. Aronson said, is one drawn up to protect the earnings of the higher-earning spouse when both people were younger. “That’s a very bad deal for the spouse who is never going to earn a lot of money,” he said.

ASSETS Dividing assets between spouses is rarely as simple as deciding to split it 50-50 — or even 60-40. A lot depends on what kinds of assets are involved.

Appraisers and lawyers draw a distinction between passive and active assets. A passive asset would be a house or a stock portfolio, but not all of them can be parceled out.

Jason M. Katz, a private wealth adviser at UBS Wealth Management, said a municipal bond portfolio could be tricky to divide without slighting one spouse because bonds have different maturities and credit quality.

More difficult are investments in hedge funds and private equity. He said couples would have to wait until the next withdrawal period to get their money from a hedge fund, but with private equity they did not have the same option and could be in it for years, depending on how long the fund holds on to its investments. A way around this could involve one spouse trading away rights to it for something else, like a beach house.

A business, on the other hand, is an active investment, and the percentage a spouse is entitled to depends on how much he or she contributed to the business.

In the case of anyone who enters a marriage with an existing business, as Mr. Murdoch did with News Corporation, the calculation of what percentage of the business Mrs. Murdoch could be owed starts on the day they were married and ends with the value of the company on the day they filed for divorce. This is tricky: She traveled with Mr. Murdoch on business, particularly to her native China, and famously smacked a guy trying to throw a pie in his face. But what could she or any one person contribute to the success of a global company like News Corporation?

The calculation changes if the business was started while the couple was married. Mr. Hirchfeld said that a spouse of a business owner who stayed home and raised the children is generally awarded somewhere between 30 to 35 percent of the business.

Wealth Matters: What to Do When a Friend Pitches an Investment Idea

“It’s Question 1 at the cocktail party,” he said. “If someone like me doesn’t ask this question, they’re silly.”

Mr. Liss is a founder of Closeline, a nationwide title insurance company. He is wealthy, so people think he has money to invest in their ideas. He has learned that how he responds to them takes more than a little thought.

He said he knew not to turn down a request on the spot. He sees no reason to offend the person and he has had success with investments that have come to him through friends. Yet Mr. Liss has also lost friends and money in investments that fell at his feet, so he has grown more circumspect in the two decades since he started his company.

Others have learned the same lesson. “The first thing I tell clients is, ‘One of the things that happens when you’re successful is somehow, some way, someone is going to ask you for money, and it’s going to be someone you know,’ ” said Jeff Leventhal, a managing director at HighTower Bethesda, who has focused his advisory practice on working with entrepreneurs.

The decision to decline or invest, say those with deep pockets, requires as much an analysis of the offer and the person making it as an assessment of the pain of losing a friend if the investment turns sour.

PARRY THE PITCH Chat Reynders, chief executive of Reynders McVeigh Capital Management, said he had grown cautious of the typical party pitch since the 2008 financial crisis. They seem to be thinner.

“More often than not what you have is a situation where someone is reinventing himself or trying to get their feet beneath them, and they have an idea,” he said. Most times, he said, the person doesn’t understand how hard it will be to bring that idea to fruition.

He speaks from experience. He is now a successful investor in and producer of Imax films like “Whales"and “To the Arctic,” but he had a tough start. “I got the tar beaten out of me,” he said. “The difficulty was in learning what I didn’t know. I learned a lot about how hard it is to be an entrepreneur.”

The one investment in a friend’s idea that still haunts Mr. Liss was far easier to grasp than an Imax movie. It was an investment in a store that sold bedroom furniture for teenagers, and the friend had some experience in retail. Mr. Liss believed in him and trusted that he would treat him well.

“It wasn’t completely harebrained, but looking back, the business was completely weak,” he said. “We lost it all.”

The friendship also ended, but not because of the investment. Mr. Liss said it was his friend’s reaction to failure, which as an entrepreneur he knew was possible.

Then there are pitches that require a stone-faced adviser to hear out, like one for the mobile electrolysis machine. “They would come to your home to conduct electrolysis,” said John P. Rompon, managing partner at McNally Capital. “I get it conceptually, but from a business perspective, that dog don’t hunt.” His firm was charged with letting the person down gently.

DEVELOP A PROCESS Many pitches are for something an investor may actually need. Amy Renkert-Thomas, managing director of Withers Consulting Group, for 12 years ran Ironrock, her family’s paving stone company in Ohio, which was founded in 1866.

When she took over, as a member of the fifth generation to run the company, she found processes in place to evaluate direct pitches for investments. But when an uncle approached her, seeking to sell insurance, it was more difficult.

She said she fell back on the company’s processes to assess all investments. She went with a different insurer, and her uncle understood, she said. More important, he is still happy to see her at Thanksgiving.

“What saves a family is having a policy we follow,” she said. “Most family members are not that offended when you tell them that. If you said, ‘I don’t like you,’ that wouldn’t work as well.”

Drew McMorrow, president of Ballentine Partners, said a strict set of guidelines on when and under what conditions they would make additional investment could also save people from investing more than they wanted. One strategy, he said, was to have all investments pegged to a percentage of what the person could raise from other investors — for example, putting in 20 percent of every outside dollar raised.

Sharing the Wealth as a Comic Book Goes to Hollywood

But beyond the paltry pay, the C.E.O., Ross Richie, was able to offer the writer, Steven Grant, a deal that’s still not a given in the comics industry: a significant share in any movies, TV shows or video games that might emerge.

At the time, that possibility seemed slim. But this Friday, “2 Guns” will open as a live-action buddy film starring Denzel Washington and Mark Wahlberg. Because of Boom’s “creator share” model, Mr. Grant got a cut of the money that Universal Pictures paid for the rights to the movie. (The deal was just shy of seven figures, Mr. Richie says.)

“Ultimately, it’s become the most successful thing I’ve ever done,” said Mr. Grant, an industry veteran. The first issue of a comic book sequel, “3 Guns,” hits shelves next month, and Universal has the option to turn it into a film, too.

When print books are made into movies, it’s common for the authors to benefit from the deal. But that hasn’t necessarily been the case with comic books. In the early days, creators sold their rights for a pittance, not dreaming that their characters would endure for years and migrate to television, film and all manner of merchandise. Or creators’ efforts have been considered “work for hire,” so the intellectual property has stayed with the publishers.

The giants of the comics industry, Marvel Entertainment and DC Entertainment, both run boutique publishing imprints that give creators more control of their intellectual property. But Marvel and DC are known mainly for “corporate comics” — series with top-tier characters like Spider-Man, Captain America, Batman and Superman. Those characters’ decades-long vitality has primarily benefited the publishers.

The comic book industry had $700 million to $730 million in sales of single issues and collected editions last year, but that sum is dwarfed by the billions that the superheroes can draw at the box office worldwide: “Marvel’s The Avengers,” “Iron Man 3” and “The Dark Knight Rises” are among the top 10 highest-grossing films of all time, at more than $1 billion each in ticket sales.

Marvel, owned by Disney, and DC, a unit of Time Warner, each command nearly 40 percent of the comic book market. Smaller publishers print superhero comics, too, but they know they must go beyond the traditional business model to compete with the behemoths.

At Image Comics, which has a market share of less than 7 percent, creators have full control of their characters. Image is where Robert Kirkman’s “Walking Dead,” about a world overrun by zombies, began its lurch toward a pop-culture phenomenon. “The Walking Dead” has achieved a rare alchemy: it is a popular comic book series, its collected editions are top sellers, it has inspired novels and games, and it has become a critically acclaimed TV series (on AMC).

Another small publisher, Dark Horse, prints creator-owned material and has licensing deals to produce comics featuring characters from “Buffy the Vampire Slayer” and “Star Wars.” Boom, with a market share of just 1.5 percent, also does licensing deals, including one for “Adventure Time,” based on a show on Time Warner’s Cartoon Network. But it uses its “creator share” model to attract writers like Mr. Grant.

MR. GRANT, 59, has written for many comic book companies, including Marvel, where he wrote issues of “The Punisher,” and a reverent 64-page “Life of Pope John Paul II” in 1982. He had the idea for “2 Guns” in the mid-1990s but could find no takers for his pitch; publishers were mainly interested in superhero comics. Nevertheless, he wrote the script for the comic book in 2001 and shared it over the years with friends, Mr. Richie included.

Mr. Richie remembered “2 Guns” in 2005, when he founded Boom and was looking for comics to publish. “You understand we’re a tiny little company, and we don’t have any resources,” he recalled saying to Mr. Grant, who was equally downbeat, responding, “O.K., it’s your funeral” when he accepted Boom’s offer to publish his comic.

Boom has had some success in attracting Hollywood to its properties. In 2006, after a bidding war, Universal bought “Tag,” about an ancient curse passed on by touch, and “Talent,” about a plane crash survivor who can channel the skills of the other passengers. But when “2 Guns” was released in 2007 as a five-issue comic series, illustrated by Mateus Santolouco, no one in Hollywood was interested. The next year, however, when Mr. Richie was on the verge of selling “2 Guns” to another studio, Universal snapped it up.

“We are always looking for great source material and especially something that could be developed to be a potential franchise,” Jeffrey Kirschenbaum, co-president of production for Universal Pictures, said in an e-mail. And the “2 Guns” plot, with its dual leads, he said, offered a good opportunity for two A-list actors to work together.

Wealth Matters: Seeking Light Amid the Heat of Energy Investments

It took last week’s heat dome, with the searing heat outside and that equally uncomfortable arctic blast when you walked inside, to get me thinking about energy — and not just how much of it I was consuming. I started wondering about the investment opportunities and the associated risks around the boom in oil and gas production and the push for alternative sources of energy. So many people seemed so sure that investing in energy was the way to go, and naturally that spooked me.

The United States is set to become the world’s leading producer of natural gas in 2015 and oil in 2017, according to the International Energy Agency, and there is money to be made in getting both out of the ground, to the coasts and on ships. Some energy companies and new technologies will surely be wildly successful, while others that seem promising will no doubt fail. But as people rush to invest in energy, how should they think about what they are doing?

“The energy renaissance is very similar to the Internet renaissance that started to develop in 1985,” said Anton Bayer, chief executive of Up Capital Management. “In order to find the next Apple, you need to find the next industry. Then you need to drill down to find where the innovation is.”

I thought that was an apt way of describing this moment. Looking back, it’s easy to talk about what a great investment Apple has been, but as a youngster in the early 1980s my bet would have on the Commodore 64, with its eight-tracklike game cartridges, that I had in my bedroom.

What do investors need to keep in mind when they are looking for the Apple of energy, not the Commodore?

Finding Energy The technology that has allowed horizontal drilling — as opposed to drilling straight down — has radically changed how oil and natural gas are extracted. Yet drilling has always been boom and bust; five years ago, the price of natural gas was over $13 per million British thermal units before beginning a steady fall to its low of less than $2 per million B.T.U. in April 2012.

There are less speculative ways to benefit than investing in the exploration and production boom. Jason T. O’Connell, director of equity research at Boston Private Bank & Trust, said he had been talking to clients about companies like Schlumberger, Cameron International and Dril-Quip that make the equipment to reach the oil.

“It’s become a lot harder to get this stuff out of the ground or from under the sea,” Mr. O’Connell said. “There is an increasing capital intensity that’s a little more insulated from the price of oil.”

He said he was also interested in companies that work in areas related to drilling, like those that look to reduce the environmental impact of newer types of drilling, such as hydraulic fracturing, which pumps high-pressured fluids into rock to increase a well’s production. Fracking has helped increase the productivity of wells, but it has drawn concern about what the process does to drinking water and the areas around wells.

He said he liked companies like Waste Connections and Clean Harbors that could benefit from energy companies paying them to prevent damage and also to clean up if damage occurs.

Christopher Grisanti, co-founder of Grisanti Capital Management, said he believed that companies that refine oil, like Valero Energy, Marathon Petroleum, HollyFrontier and Western Refining, are going to do well, even though the sector has struggled this year.

“In the past, refiners have needed a robust economy to make strong profits, but because of the new export market brought about by the American oil renaissance, refiners are making a lot of money right now, in a mediocre economy,” he wrote. “As the U.S. economy strengthens, the refining industry should enter a sweet spot of profitability.”

Yet Matthew Rubin, director of investment strategy at Neuberger Berman, said he had urged clients to look at companies with track records, and warned about those that have rushed to make money in the Bakken shale around North Dakota.

“The evolution of wealth there is being talked about as the new Saudi Arabia,” Mr. Rubin said. “Where the dangers and pitfalls exist is looking at companies that are much more speculative in nature, that don’t have the technology to do the fracking.”

Moving Energy Once the oil or natural gas is out of the ground, it has to go somewhere.

Economic View: Wealth Taxes: A Future Battleground

The mathematical reality is that wealth is becoming more important, relative to income. In a new paper, “Capital Is Back: Wealth-Income Ratios in Rich Countries 1700-2010,” Professors Thomas Piketty and Gabriel Zucman of the Paris School of Economics have performed the heroic task of measuring wealth for eight leading economies: the United States, Canada, Britain, France, Italy, Germany, Japan and Australia.

Their estimates reveal some striking trends. For instance, wealth accumulation in these eight countries has risen relative to yearly production. Wealth-to-income ratios in these nations climbed from a range of 200 to 300 percent in 1970 to a range of 400 to 600 percent in 2010. Behind the changing ratios is some bad news, namely that slow productivity growth and slow population growth have depressed income growth, but also some good news — that relative peace and capital gains have preserved wealth.

Focusing on the wealth of economies lets us reframe our recent debates about government debt in useful ways. A look at the ratio of debt to gross national product, for example, can be scary, but the ratio of debt to wealth is far less forbidding. If, say, a nation’s debt-to-G.D.P. ratio is 100 percent — often considered a dangerous level — and national wealth is 10 times yearly national income, the debt-to-wealth ratio is thus 10 percent, which is comparable to owing $100,000 on a $1 million home. Not so scary.

Using the wealth numbers provided by Professors Piketty and Zucman, we can understand how Japan, despite a debt-to-G.D.P. ratio of more than 200 percent, can maintain low interest rates; Japan has a wealth-to-income ratio of about 600 percent. In essence, creditors think the Japanese political system will be able to drum up enough support for the requisite taxes, pulled out of national wealth if necessary, when the time comes.

But don’t relax too quickly, because fiscal problems remain very real for many countries. While virtually every government could pay off its debts by taxing wealth, such taxes are often politically unacceptable. In other words, fiscal problems are best regarded as problems of dysfunctional governance. In the recent elections in Italy, the incumbent government lost voter support partly because it addressed the nation’s revenue problems by levying a wealth tax on real estate; the policy remains contentious and may yet be repealed or limited.

And here is a related issue: If there is enough national wealth to pay off debts, it may be harder to arrange bailouts from outside.

In the European Union, countries like Germany may regard the union’s more troubled nations as shirking their fiscal duties, and that makes cooperation harder to achieve. Italy, for instance, is in a fiscal crisis, but it also has an especially high wealth-to-income ratio, at 650 percent, indicating that it could pay off its debt if more of that wealth were taxed. Germany, by contrast, has a much lower wealth-to-income ratio: 400 percent. And though the professors caution that the German data, in particular, may be incomplete, the figures do lend support or at least plausibility to the recent argument that Germany shouldn’t be viewed as the rich uncle of Europe.

Some forms of wealth taxation take hidden forms, such as financial repression. This occurs when a nation’s citizens are required to hold deposits in banks under unfavorable terms — meaning at low interest rates. The banks, in turn, may be required to buy government debt to help finance a budget deficit. For better or worse, this is likely part of a longer-run resolution of fiscal problems in the periphery of the euro zone.

In the United States, wealth taxes are currently limited to a few levies, such as property taxes and inheritance taxes. Capital gains taxes that aren’t indexed to inflation also serve as an implicit wealth tax, because they dig into the body of a person’s capital. Most likely those rates will rise. Like the bank robber Willie Sutton, revenue-hungry governments go “where the money is.”

The coming battles over wealth taxation may prove especially bitter and polarizing. Most wealth has already been subjected to income and other taxes, perhaps multiple times. It doesn’t seem fair to the holders of that wealth to suddenly pay additional taxes on assets that they thought were in the clear, and such taxes would signal that previous policy has failed.

Higher wealth in a nation means that there is more to take, and growing inequality means there are more problems that its government might seek to remedy. At the same time, however, this new economic configuration will mean greater political influence for the holders of that wealth, and that will make higher wealth taxes harder to achieve.

Historically, economists — including me — have generally favored taxes on consumption, on the grounds that they would do the least damage to long-term savings, investment and economic growth. Yet in some eyes, rising wealth will become a tempting target for short-term political gain. And note that while most Republicans currently oppose consumption taxes, they may dislike the relevant alternative, namely wealth taxes, even more.

Get ready to choose a side.

Tyler Cowen is a professor of economics at George Mason University.

Economic View: Wealth Taxes: A Future Battleground

The mathematical reality is that wealth is becoming more important, relative to income. In a new paper, “Capital Is Back: Wealth-Income Ratios in Rich Countries 1700-2010,” Professors Thomas Piketty and Gabriel Zucman of the Paris School of Economics have performed the heroic task of measuring wealth for eight leading economies: the United States, Canada, Britain, France, Italy, Germany, Japan and Australia.

Their estimates reveal some striking trends. For instance, wealth accumulation in these eight countries has risen relative to yearly production. Wealth-to-income ratios in these nations climbed from a range of 200 to 300 percent in 1970 to a range of 400 to 600 percent in 2010. Behind the changing ratios is some bad news, namely that slow productivity growth and slow population growth have depressed income growth, but also some good news — that relative peace and capital gains have preserved wealth.

Focusing on the wealth of economies lets us reframe our recent debates about government debt in useful ways. A look at the ratio of debt to gross national product, for example, can be scary, but the ratio of debt to wealth is far less forbidding. If, say, a nation’s debt-to-G.D.P. ratio is 100 percent — often considered a dangerous level — and national wealth is 10 times yearly national income, the debt-to-wealth ratio is thus 10 percent, which is comparable to owing $100,000 on a $1 million home. Not so scary.

Using the wealth numbers provided by Professors Piketty and Zucman, we can understand how Japan, despite a debt-to-G.D.P. ratio of more than 200 percent, can maintain low interest rates; Japan has a wealth-to-income ratio of about 600 percent. In essence, creditors think the Japanese political system will be able to drum up enough support for the requisite taxes, pulled out of national wealth if necessary, when the time comes.

But don’t relax too quickly, because fiscal problems remain very real for many countries. While virtually every government could pay off its debts by taxing wealth, such taxes are often politically unacceptable. In other words, fiscal problems are best regarded as problems of dysfunctional governance. In the recent elections in Italy, the incumbent government lost voter support partly because it addressed the nation’s revenue problems by levying a wealth tax on real estate; the policy remains contentious and may yet be repealed or limited.

And here is a related issue: If there is enough national wealth to pay off debts, it may be harder to arrange bailouts from outside.

In the European Union, countries like Germany may regard the union’s more troubled nations as shirking their fiscal duties, and that makes cooperation harder to achieve. Italy, for instance, is in a fiscal crisis, but it also has an especially high wealth-to-income ratio, at 650 percent, indicating that it could pay off its debt if more of that wealth were taxed. Germany, by contrast, has a much lower wealth-to-income ratio: 400 percent. And though the professors caution that the German data, in particular, may be incomplete, the figures do lend support or at least plausibility to the recent argument that Germany shouldn’t be viewed as the rich uncle of Europe.

Some forms of wealth taxation take hidden forms, such as financial repression. This occurs when a nation’s citizens are required to hold deposits in banks under unfavorable terms — meaning at low interest rates. The banks, in turn, may be required to buy government debt to help finance a budget deficit. For better or worse, this is likely part of a longer-run resolution of fiscal problems in the periphery of the euro zone.

In the United States, wealth taxes are currently limited to a few levies, such as property taxes and inheritance taxes. Capital gains taxes that aren’t indexed to inflation also serve as an implicit wealth tax, because they dig into the body of a person’s capital. Most likely those rates will rise. Like the bank robber Willie Sutton, revenue-hungry governments go “where the money is.”

The coming battles over wealth taxation may prove especially bitter and polarizing. Most wealth has already been subjected to income and other taxes, perhaps multiple times. It doesn’t seem fair to the holders of that wealth to suddenly pay additional taxes on assets that they thought were in the clear, and such taxes would signal that previous policy has failed.

Higher wealth in a nation means that there is more to take, and growing inequality means there are more problems that its government might seek to remedy. At the same time, however, this new economic configuration will mean greater political influence for the holders of that wealth, and that will make higher wealth taxes harder to achieve.

Historically, economists — including me — have generally favored taxes on consumption, on the grounds that they would do the least damage to long-term savings, investment and economic growth. Yet in some eyes, rising wealth will become a tempting target for short-term political gain. And note that while most Republicans currently oppose consumption taxes, they may dislike the relevant alternative, namely wealth taxes, even more.

Get ready to choose a side.

Tyler Cowen is a professor of economics at George Mason University.

Wealth Matters: For a Fee, Seeking Owners of Unclaimed Money

His father had kept meticulous records, Mr. Sinclair said, and little had changed since his death several years earlier. Mr. Sinclair and his two siblings were also skeptical of the fee the company, Legal Claimant Services, a division of Keane, was seeking: 36 percent of the account’s value.

But this spring, Mr. Sinclair said, Keane told them the unclaimed money was $148,400 in stock. He and other family members decided they needed to account for everything so they could finally close their mother’s estate. At $1.5 million, it was small by federal standards but large enough to owe Ohio estate taxes. So on May 24, Mr. Sinclair, as the executor, signed a contract with Keane to get details on the unknown account for a 25 percent fee.

“Within a matter of days, I got a letter from them detailing what they had found, right down to the numbers on the stock certificates,” he said. “My stomach fell out of my body. I e-mailed them back and said, ‘This is stock we’ve always been aware of, and you didn’t find it.’ ”

The stock, for First Bancorporation of Ohio, which is now part of FirstMerit Bank, was in his mother’s safe deposit box, where it had been for years, he said. Nonetheless, Keane still expected its $37,100 fee.

Stephen Lochner, a representative for Keane, wrote in e-mails shown to The New York Times that the company had based its claim on the fact that $11,400 in dividend checks on the stock had never been cashed. “Please realize that knowledge of the asset or possession of shares doesn’t take away the fact the account is dormant, needs attention and subject to abandoned property laws of the state,” Mr. Lochner wrote.

“If you wish to retain the account, I can provide an updated set of documents for you to complete,” he added. “The revised documents will give you the option to retain most of this account and we can update the address and registration.”

When Mr. Sinclair balked at a fee being charged on the whole account — and not the dividend check, which he admits he did not know about — Mr. Lochner suggested Keane’s general counsel talk to Mr. Sinclair’s lawyer. The company contends the contract is clear about the basis for the fee. The two sides have been locked in a legal dispute, which only this week seemed headed toward a resolution.

It may strain credulity that a company could charge a fee for saying it found something in a person’s safe deposit box. But the amount of unclaimed property in the United States is rising and so, too, is the pressure on companies to find owners of dormant accounts. This has given rise to locator companies that look for account owners and often charge them a fee for informing them about an account.

The National Association of Unclaimed Property Administrators, the membership organization of state unclaimed property offices, estimated that $41.7 billion is sitting in state coffers, where it goes if it has been unclaimed after a period of years. But the amount of unclaimed property that has not reached that point is certainly higher. (In 2011, only $2.25 billion in 2.5 million claims went back to people.)

Common types of unclaimed money include paychecks, utility deposits and life insurance policies as well as bank, 401(k) and brokerage accounts.

Kristina Koutrakos, a managing director at Manchester Capital, which manages money for people with $10 million to $400 million in assets, said that when new clients came to the firm, 30 percent of the time, they had forgotten about some asset. A separate 30 percent of the time — albeit with some overlap — her company finds property that clients never knew they had.

“We’ve found all kinds of stuff, from a $15 stock certificate to 25 acres of land in North Carolina,” she said. “People lose 401(k)’s if they’ve moved around a lot. They forget about stock options or old country club investments.”

Manchester does not charge its clients an additional fee for the search, only a fee to manage money.

Wealth Matters: How to Avoid an Estate Battle After You Die

But two years after the death of that woman, Huguette Clark, the last surviving daughter of William A. Clark, who made a fortune in copper mining, her $300 million estate is still being disputed. And the battle has plenty of lessons for people with far less money.

At issue in Mrs. Clark’s case are two wills signed six years before her death in 2011. The first would have left most of her fortune to 21 distant relatives she did not know, may never have met and did not list by name. The second, signed a month later, increased the bequest for her caregiver, gave money to a goddaughter and established a foundation at her mansion in Santa Barbara, Calif., for her art and doll collection. The distant relatives got nothing.

The dueling wills have become part of a highly publicized court case involving Washington’s Corcoran Gallery of Art and one of Claude Monet’s Water Lilies paintings, valued at the time of Mrs. Clark’s death at $25 million. The case has also ensnared New York’s Beth Israel Medical Center, accused of pressing Mrs. Clark to make a big donation.

Documents full of intrigue have been filed in court — including a new cache just this week challenging the Corcoran Gallery’s claims — in preparation for a trial in September. The relatives could receive millions of dollars each if one or both wills is overturned or a settlement is reached. The caregiver and charities Mrs. Clark gave her money to could get nothing. Then there are the millions of dollars in legal fees to law firms and the tens of millions of dollars in estate taxes to the federal government, which will rise substantially if more money goes to the heirs than to charitable organizations.

“What we’re trying to do is make sure this case is being litigated with the right parties and not people who are trying to align themselves for ulterior motives,” said a lawyer, John D. Dadakis, in explaining the latest filings against the Corcoran. Mr. Dadakis is a partner at the law firm Holland & Knight, which is representing Mrs. Clark’s estate

It’s a big mess. But the dispute over Mrs. Clark’s two wills has implications for people with far less money. When is a person too old to decide her affairs? How can you insure that your money goes to the people and institutions you want to get it? Is there a way to prevent expensive lawsuits?

“People are living longer and they’re having periods of diminished capacity that are more and more common,” said Alan F. Rothschild Jr., a lawyer in Columbus, Ga., and a former chairman of the American Bar Association’s real property, trust and estate law section. “The litigation in this area is increasing because people are willing to sue more, even family members and the banks.”

Here is a look at some common issues raised in Mrs. Clark’s case.

DISPUTING HEIRS Challenges to wills by distant relatives are so common that lawyers have a nickname for those people: “laughing heirs” — as in they will be laughing all the way to the bank if their challenge succeeds.

“People tend to come out of the woodwork and believe that they’re closer than they are and should have some claim,” said a litigator who specializes in contested wills who spoke anonymously because other lawyers at her firm worked with some of the heirs in the Clark case. “The most often-challenged wills are those for people who don’t have direct, obvious heirs.”

A more common situation arises when a parent treats children differently. The trickier cases are those in which family members have had a falling out.

Paige K. Ben-Yaacov, a partner in the private client section of Baker Botts, said she counseled clients not to divide their estates unevenly. “They’re just making matters worse and opening the estate up to litigation.”

In Mrs. Clark’s case, she did not name her relatives in her wills because she did not know most of them. For people who intentionally leave out children, Ms. Ben-Yaacov advises creating a trail of estate documents over many years laying out their wishes in detail.

Mrs. Clark’s second will was in effect for six years before she died — normally long enough to establish that this was her intent, had she not been 98 when she signed it.

Wealth Matters: Taxes Influence Investment Strategy, and Not Always for the Better

That may not be a good thing for their portfolios.

“Clients are definitely asking, because it’s a real issue in today’s environment,” Michael N. Bapis, a managing director and partner with the Bapis Group at HighTower Advisors, said. “We try to keep them focused on the goals — preserving what they have, capturing some of the upside, limiting the downside. At the end of the day, we can’t change the tax laws.”

When asked about how tax rates would affect an investment, he said his advice was almost always the same. “If it doesn’t make sense for your portfolio, then it doesn’t make sense,” he said, even if there is tax savings. “If it does make sense, regardless of the tax consequences, we’re going to put it in your portfolio.”

Last week, I looked at how the changes to the tax code were affecting how people thought about their estate plan. This week, I’m looking at how tax increases can influence people’s investing behavior.

The tax rates on investments have increased significantly from last year. Depending on a person’s income, taxes on long-term capital gains and dividends are now as high as 23.8 percent, an increase of 59 percent over last year’s rate. Taxes on investments that are held for less than a year that incur short-term capital gains tax or investments subject to income tax rates have increased for top earners by 24 percent, to 43.4 percent (with the Medicare surtax included) from 35 percent.

Those are substantial increases, but focusing on them alone can obscure a fuller analysis of risk. Investors can end up paying no taxes on an investment, but that may be because they lost money on it, or they may pay lots of taxes on a large gain that they might not have achieved otherwise. This is why advisers stress that taxes should not be the first concern when deciding whether to buy — or not buy — an investment.

If there is one investment that has been promoted as great for minimizing taxes and achieving a large gain, it is master limited partnerships. Most are involved in the transportation or storage of oil and natural gas. What makes them appealing, from a tax perspective, is that a large portion of the dividend they pay is treated as a return of principal and is not taxed.

But in the rush for one type of tax savings, investors can end up paying other taxes. Master limited partnerships with pipelines that run through several states can incur state tax bills for investors, though usually only when the income goes above a certain threshold.

The bigger tax concern generally comes when investors sell their partnerships, since the part of the dividend that was not taxed for years reduces the original price of the investment. Greg Reid, a managing director at Salient Partners and chief executive of the firm’s $18 billion master limited partnership business, said an investor who bought a partnership and sold it five to 10 years later could be faced with two types of taxes. The first is income tax, because the original purchase price would have been reduced by the amount of principal returned in the dividends. The second is capital gains tax on the increase in the value of the investment itself.

Another way to look at these partnerships is to consider the solid and increasing dividends they have paid over the last 25 years, often 6 to 7 percent.

“The baby boomers are going to need a lot of income to live,” Mr. Reid said. “M.L.P.’s are particularly great for older people who are retiring. They have a growing income stream.”

As for avoiding high taxes, the solution is to give the partnership to charity or die with it in your estate. Both may be viable options for investors in their 70s and 80s but are probably less attractive to people in their 30s.

Municipal bonds, which have long been attractive to wealthier investors because the interest they pay is not taxed by the federal government, pose a different sort of risk.

Mr. Bapis said he was concerned that investors who were not paying attention to the broader economic news were not aware of the current risks of buying an existing municipal bond. With yields on many municipal bonds extremely low — around 0.75 percent for five-year bonds and 1.74 percent for 10-year bonds, according to Bloomberg — even a small increase in their price, which would cause the yield to go down, would cause a loss of principal.

Racial Wealth Gap Widened During Recession

“It was already dismal,” Darrick Hamilton, a professor at the New School in New York, said of the wealth gap between black and white households. “It got even worse.”

Given the dynamics of the housing recovery and the rebound in the stock market, the wealth gap might still be growing, experts said, further dimming the prospects for economic advancement for current and future generations of Americans from minority groups.

The Urban Institute study found that the racial wealth gap yawned during the recession, even as the income gap between white Americans and nonwhite Americans remained stable. As of 2010, white families, on average, earned about $2 for every $1 that black and Hispanic families earned, a ratio that has remained roughly constant for the last 30 years. But when it comes to wealth — as measured by assets, like cash savings, homes and retirement accounts, minus debts, like mortgages and credit card balances — white families have far outpaced black and Hispanic ones. Before the recession, white families, on average, were about four times as wealthy as nonwhite families, according to the Urban Institute’s analysis of Federal Reserve data. By 2010, whites were about six times as wealthy.

The dollar value of that gap has grown, as well. By the most recent data, the average white family had about $632,000 in wealth, versus $98,000 for black families and $110,000 for Hispanic families.

“The racial wealth gap is deeply rooted in our society,” said Caroline Ratcliffe, one of the authors of the Urban Institute study. “It’s here, it’s not going away, and we need to care about it.”

Many experts consider the wealth gap to be more pernicious than the income gap, as it perpetuates from generation to generation and has a powerful effect on economic security and mobility. Young black people are much less likely than young white people to receive a large sum from their parents or other relatives to pay for college, start a business or make a down payment on a home, for instance. That, in turn, makes their wealth-building prospects shakier as they move into adulthood.

Two major factors helped to widen this wealth gap in recent years. The first is that the housing downturn hit black and Hispanic households harder than it hit white households, in aggregate. Many young Hispanic families, for instance, bought homes as the housing bubble was inflating and reaching its peak, leaving them saddled with heavy debt burdens as house prices plunged in places like suburban Phoenix and inland California.

Black families also were hit disproportionately by the housing collapse, because heading into the recession housing constituted a higher proportion of their wealth than for white families, leaving them more exposed when the market crashed. Higher unemployment rates and lower incomes among blacks left them less able to keep paying their mortgages and more likely to lose their homes, experts said.

Discriminatory lending practices were also a factor. “We know that communities of color, their rate of subprime or predatory loans was twice what it is in the overall population,” said Tom Shapiro, the director of the Institute on Assets and Social Policy at Brandeis University.

Black families also suffered bigger hits to their retirement savings, the Urban Institute found. On aggregate, the value of black families’ retirement accounts shrank 35 percent between 2007 and 2010, while white families’ accounts actually gained 9 percent over the same period. With lower earnings and higher unemployment rates leaving them with a thinner safety net to begin with, black families were more likely to take funds out of the market when it was depressed, leaving them out in the cold as the market recovered.

“That reservoir of what you can dig into for emergencies and contingencies is a lot shallower in communities of color,” Professor Shapiro said. “That pushes black families to sling off assets, like I.R.A.’s or stocks, that you might have had another goal in mind for.”

Wealth Matters: Technology’s Impact on the Value of Financial Advice

But is the technology good enough to replace guidance from financial advisers? Or is technology actually good for advisers because they can use it to do their jobs better?

Several new reports look at what technology will mean for an adviser, who, at his or her best, protects people from their worst investment ideas. And that brings up a corollary question: What will this trend, and enormous investment, in technology mean for the clients, the people whose money is at stake?

It seems almost heretical to propose that technology will not make an existing service better. But after reading the reports and talking to advisers who have embraced technology, I was not sure that this emphasis was going to be better for clients.

The report from Accenture looked at how younger clients sought relationships through technology and how advisers had to be available to provide it.

“When we talk to firms, they think social media is a new thing, and they’re trying to control the risk of it,” said Alex Pigliucci, global managing director of the wealth and asset management business at Accenture. “I see these tools as an advantage today. They’re not something to plan for in the next five to 10 years.”

“The Out-of-Sync Advisor,” a report by Deloitte, imagined technology bringing clients who were managing their own money back to advisers and then allowing those advisers to give people with a couple of hundred thousand dollars the type of high-quality advice reserved for people with hundreds of millions of dollars.

Ed Tracy, leader of the wealth management and private banking practice at Deloitte, said this would be possible only if all the clients’ financial information was already in the system so the advisers could spend their time together talking about the clients’ goals.

Fidelity’s annual broker and adviser sentiment index, released late last year, tried to put a dollar amount on all of this: technology-adept advisers who were focused on clients in their 30s and 40s managed, on average, $8 million more than colleagues focused on baby boomers. Their clients also had slightly larger accounts. (Not in the data was how technology contributed directly to this.)

But is there any practical value to investors in this push for more technology? In some areas, yes. In others, it remains to be seen.

Patrick O’Connor, senior vice president for wealth, retirement, portfolio solutions at Raymond James, said some of the best technological innovations reminded him of a recent visit to his new dentist.

Instead of pointing to a murky X-ray and telling him to floss, his dentist wheeled around a monitor that showed his teeth — and the problems with them — from various angles. A bit more brushing here and flossing there, and the image changed to show healthier teeth.

“She was giving me more ownership of my teeth,” Mr. O’Connor said. “I’ve been much more diligent about flossing and paying attention to those areas. Before, I would have ignored her. I’d been lectured to for 10 years.”

Technology, he said, can do much the same thing for investors, showing them how they are doing and the consequences of their spending and saving. The technology also becomes the bearer of bad news, not the adviser. “Instead of saying, ‘Sorry you’re in the red,’ I become the facilitator in getting you from the red to the green,” he said.

And technology can help clients reduce mundane and time-consuming tasks and increase the amount of time they can talk about the things that matter most to them.

“If someone had my data, understood my goals, had buckets in my portfolio and I knew if I was on track or off track and they only spent three hours a year with me, I’d feel a lot better than I would with someone I sat down with who said, ‘Tell me what’s going on,’ ” Mr. Tracy said.

Wealth Matters: Smart in Medicine or Law, but Not in Managing Money Money Advice for Doctors and Lawyers and the Rest of Us

But their attitudes toward money and investing can create financial challenges later in life.

And the years of education that got them to where they are, their financial advisers say, can also stand in the way of their financial decision-making.

As Greg Erwin, managing principal at Sapient Private Wealth Management who works with doctors, put it, “A lot of these physicians would like to believe that investing and savings is pure science, and that’s not true. It’s an art form.”

Over the last two columns, I have looked at the behaviors of some highfliers — athletes and people who make their living drilling and transporting oil and gas; and those who have built their wealth in volatile fields like technology and real estate.

In each of those cases, I asked financial experts to share their insights into the financial and investing mistakes that are often typical of these clients.

In this column, I’m going to look at what the rest of us can learn from doctors and lawyers.

DO NO HARM Doctors have a reputation among financial advisers for spending every bit of money they make. They earn a lot, after all, and figure they can work a long time. But doctors who engage in this type of spending can forget how hard it will be to maintain their lifestyle in retirement without millions of dollars saved.

“Doctors can have a sense of entitlement,” said Lewis Altfest, chief executive of Altfest Personal Wealth Management, who has a specialty in advising doctors.

“Doctors are highly respected in their communities. They have historically been among the most gifted intellectually and they’re not afraid to exercise it.”

(He has dentist clients as well, but said they generally acted more like accountants than doctors: conservative and more risk-averse.)

While doctors are certainly smart, their medical ability does not necessarily translate to financial acumen.

Mark Gurland, 59, a hand surgeon in New Jersey who is married to a psychiatrist, said he had a theory about doctors’ financial behavior. Since most do not finish their internships and residencies until age 32 — if they have gone straight through from college — they have been living cloistered existences even as their college friends have been working for at least a decade.

“When they’re done, my feeling is, there is this repressed self-sacrifice and when money appears, they’re living in huge houses and driving the fanciest new cars,” he said. “They have a lot of money they worked hard for, and they’re spending it.”

On the investment side, he said, doctors often believe that their knowledge of medical issues translates into something seemingly simpler, like investing.

Dr. Gurland, who has always been a saver, said he had been guilty of making investments on a tip or a hunch. A cardiologist friend persuaded him to invest in fiber optic cables a decade or so ago: he said he doubled his money and then lost almost all of it. When he invested in a company that was promoting a drug for hand surgeries, he thought he had a winner but lost money on that one as well.

Now, he said, he defers to his adviser on investments and thinks of some of his most annoying patients who try to tell him what’s wrong with them.

“Every day, we see patients in today’s world who seemingly know more about medical conditions than the doctor,” he said. “Why? Because they went on the Internet and read about this.”

Mr. Erwin, the adviser, said he tried to offer doctors a financial plan that dealt with their desire for rewards. At the same time, he lets his clients know about the risks inherent in not saving and in trying to fit in time for investing when they have an all-consuming job.

“They’re very methodical thinkers, but they’re also extremely busy,” Mr. Erwin said.

He said he spent time coaching his doctor clients not to get swayed by a friend who thinks they should invest in something they know nothing about or has an opinion about timing the market.

But doctors generally get two important things right. Doctors, particularly those with a unique specialty, buy disability insurance because they know that if they can’t work as a hand surgeon, for example, their income will plummet, even if they can still work as a doctor in a different capacity.

Wealth Matters: An Argument for Focusing Charity Dollars

But these requests for money, from the checkout line to the mailbox, can pull well-intentioned people in too many directions and turn an act of generosity that should lift the spirits of the donor and help a worthy cause into another stressful obligation.

This onslaught and a story I was told this week — more about that later — got me thinking about the argument for focused giving, for picking an area that you care about and putting most of your philanthropic dollars into it. This is something my wife and I have done for many years and have found very rewarding: it has made us more knowledgeable, passionate and involved in the area we support.

Patrick Rooney, associate dean for academic affairs and research at Indiana University’s School of Philanthropy, said he did not want to deter people from giving away their money however they wanted. But he added, “You’re better off to target three, four or five charities and give larger gifts to a small number of charities as opposed to giving a large number of small checks.”

Part of the reason is that a single larger gift could do more good. But that was not the only benefit. “From the recipient organization’s perspective, having a gift from $1, $100, $1,000, to $100 million, there are some transaction costs,” Mr. Rooney said. “You’ve got to book it, deposit it, acknowledge the donor and cultivate the donor for future gifts. If you have a lot of checks for $5 and $10, you have a lot of transaction costs for a relatively small gift.”

The other side of this debate is equally valid: it’s your money, and if you want to give a little bit to 27 different groups, that’s your choice. As Melissa Berman, president and chief executive of Rockefeller Philanthropy Advisers, told me: “Philanthropy is voluntary. When someone tells you how your money is supposed to be used and in what proportion, that’s called a tax.”

I can appreciate both sides. But I spent this week talking to a group of people focused on one cause — breast cancer research. Their desire to support this cause, which has had great success, made an interesting argument for being more selective with donations. Here’s the story.

THE LUNCH Addressing about two dozen women over lunch in late November, Leonard A. Lauder, chairman emeritus of Estée Lauder, told how he had bought his wife, Evelyn, a piece of jewelry every time she finished a round of chemotherapy and they thought she was better.

Mrs. Lauder, who learned she had breast cancer in 1987 and survived it, started the Breast Cancer Research Foundation in 1993, with the goal of raising funds for research that would eradicate the disease. Last year, she died of ovarian cancer.

A few weeks before she died, Mr. Lauder said, he found her standing in their kitchen one night wearing a ring he had bought her.

“She said, ‘I’ll never have a chance to wear this ring. so I’m wearing it tonight,’ ” Mr. Lauder told me. “When she died, I had all this jewelry. I didn’t feel right giving it to someone. I thought, ‘What should I do with the jewelry?’ ”

He decided to auction it off and give all the money to the foundation. He said he got Sotheby’s to waive the commission it charges sellers so that any money raised would go to a new fund at the foundation to focus on the genetic links between different types of cancers.

Among those in the audience of prospective bidders that day was Cindy Citrone. Mrs. Citrone’s mother and father died of cancer, and she is active in various cancer charities in Connecticut, where she lives. She also sits on the board of visitors of M. D. Anderson Cancer Center in Houston. Cancer charities are something she and her husband, Rob, who runs a hedge fund, support in many different ways.

She was moved by Mr. Lauder’s account of how he wanted his gifts to his wife to be passed on as part of a continuing contribution to the fight against cancer. “After hearing him tell this story of love and the legacy of joy,” she said, “I came home and wanted to be part of it.”

This article has been revised to reflect the following correction:

Correction: December 21, 2012

A picture caption with an earlier version of this column misspelled the surname of the Breast Cancer Research Foundation’s scientific adviser. He is Larry Norton, not Nortan.

Wealth Matters: As End of Gift Tax Exemption Nears, Ways to Use It Proliferate

Back in December 2010 President Obama and House Speaker John A. Boehner reached an agreement to raise the exemption levels on estate and gift taxes to $5 million a person as part of a deal to extend the Bush-era tax cuts. (This year, that rate was adjusted upward for inflation to $5.12 million.)

As I have often written, this was an amazing giveaway to the superrich. But it also provoked anxiety among those at the next level down — the merely very rich — for whom giving away as much as $10 million a couple, to avoid higher taxes when they die, was not as simple a matter. The gifts represented a larger percentage of their net worth.

Now, with a little more than two weeks left in the year, tax lawyers and advisers say the wealthy are scrambling to make gifts before the exemption expires.

“We are having this come up daily,” said Mitchell A. Drossman, national director of wealth planning strategies for U.S. Trust. “One of the first things I’m asking is, ‘Why are they warming up to this idea now? Is it that they didn’t want to make the gift? They didn’t know how? They didn’t get around to it?’ ”

With so little time left, advisers have come up with quick and easy ways to get the gift done for tax purposes this year.

A simple solution is to forgive any loans made to family members. This is a fairly painless way to use up some of the gift tax exemption because most parents never expected their children to repay those loans and would have forgiven those loans at death anyway.

While giving cash outright is easy, few wealthy people want to do that. The exemption may be at a historically high level, but the wealthy still want to give assets that will continue to grow.

Leiha Macauley, a partner and head of the Boston office at Day Pitney, says one solution is to set up a trust that allows someone to put in cash now and exchange it for other assets in the future, when the person has had enough time to have the assets properly appraised. Using the so-called power of substitution means that cash can become just about anything else next year.

“The power of substitution is key when we’re so pinched for time,” she said. “Appraisals are not coming out quickly enough. And people giving right up to the limit makes us nervous, because what if the appraisal says something is worth $6.2 million and then the I.R.S. says you owe tax?”

Typical assets that people swap in later include a home, which they then rent back from the trust, or a large life insurance policy, which can be purchased with the cash. But Andy Katzenstein, a partner in the personal planning department at the law firm Proskauer Rose, said he had clients ready to swap more nontraditional assets into trusts. One has a collection of Ferrari sports cars, while another couple has art that is valuable but that they no longer like displaying in their house.

These assets also have the virtue of being relatively painless to part with. The man with the Ferraris can pay the trust rent when he drives one of the cars. (The rent further reduces the estate’s value.) The couple with the art already had it in storage.

But Mr. Katzenstein cautioned those choosing this option to know the law, particularly if they plan to keep using these assets. “The devil is in the details,” he said. “If you don’t follow the rules you get into trouble. Make sure you have a real lease, you pay the rent every month and it also has to be fair market rent.”

Mark E. Haranzo, a partner at the law firm Withers Bergman, said he had suggested to clients with private companies that they use the cash as essentially a down payment on a loan to put all or part of their company into a trust for their children. He said the general rule of thumb was to put down 10 percent of the value of the company and then use the company’s profits to pay off the loan.

For the really rushed, Mr. Katzenstein said, another option is to include the power to rewrite the terms of the trust next year if their lawyer does not have time to customize a trust for them before the end of the year. This is done by naming someone to the role of “trust protector” and allowing that person to rewrite the trust at a later date.

Wealth Matters: Safeguarding Assets Against the Hazards of a Lawsuit

The short answer is that someone’s money can never be completely protected from creditors, but there are steps that can be taken to discourage people from pursuing you.

“There is no such thing as asset protection,” said Jason Cain, head of the family wealth planning group in the central region for Credit Suisse Private Bank. “What there is is good business and estate planning that as a byproduct insulates your assets from future, potential creditors.”

Or as Amy Jetel, a partner in the law firm of Beckett, Thackett & Jetel in Austin, Tex., said, such protection is like setting up a series of hurdles. “They can be knocked over, but every time you knock one over, it costs the creditor $500,000,” she said. “So they might say, ‘I’m going to settle.’ They want the easy stuff.”

While this may sound like the realm of just the truly wealthy, asset protection is something that people with a nice home and a couple of cars should consider, particularly if they can imagine being sued. Certain professionals who are well off but far from rich, like lawyers, architects and doctors, are at a higher risk of being sued. And naturally, children who inherit money from parents or grandparents can become targets for lawsuits and higher divorce payouts, advisers said.

So how should people think about what they might need?

R. Hugh Magill, chief fiduciary officer at Northern Trust, said that putting a proper plan in place took time but needed to start with an assessment of what people had and how likely it was that someone would sue them for it.

“So much of the literature about asset protection starts with the assumption that you need an asset protection trust,” Mr. Magill said. “I don’t want to start with the solution. I want to start with the risk.”

Insurance is the first level of protection. After the necessary home and auto policies, the most crucial thing is to have an umbrella policy that limits liability. Think of it as protection against the unexpected, like someone falling down your stairs or being hit by the car driven by your child.

“We view lawsuits as probably the most dangerous thing that our clients face,” Jeremiah Hourihan, executive vice president at Chartis Private Client Group, said. “The No. 1 risk is a car accident where you or a family member causes harm to someone else. Those are the most frequent incidents we see.”

He said the company’s most common liability policy was for $10 million. Depending on how many homes and cars people have, he said, it generally costs about $2,000 to $3,000 a year for $10 million in umbrella coverage. He said yachts, boats or Jet Skis increased the cost.

These policies can also be written to include separate coverage for legal fees from a lawsuit as well as to protect people who serve on nonprofit boards and fear the group’s coverage is inadequate if they are sued, Mr. Hourihan said.

Another easy step is to see what is automatically protected by the states where you live. Florida and Texas, for example, have homestead laws that allow primary residences to be excluded from lawsuits. Illinois and Pennsylvania have laws that protect the equity in a home when it is owned jointly if one spouse is sued.

Retirement assets, like 401(k) plans, and some types of insurance also have some protection from creditors.

Money put in trusts for heirs is another way to shield assets. If they are worded to give plenty of discretion to a trustee in making distributions, trusts can also serve double duty and protect children from lawsuits or divorce settlements, Mr. Magill said, and be more discreet and effective than prenuptial agreements.

People who work in certain professions, like lawyers, architects and engineers, also face liability by the nature of their work. They could be named as a party in a lawsuit, even if they did nothing wrong.

“Let’s say the architect designs the building and the engineers do the drawings and there was a problem with the load-bearing structure,” Mr. Magill said. “So it’s whoever gets sued, they’re going to name the architect.”

This article has been revised to reflect the following correction:

Correction: November 2, 2012

An earlier version of this story misidentified the law firm where Amy Jetel is a partner. It is Beckett, Thackett & Jetel  in Austin, Tex., not Schurig, Jetel, Becket & Thackett.

Wealth Matters: Advisers Caution Against Hasty Decisions in Advance of Tax Changes

But financial advisers say that in their rush to do something this year, investors may end up with regrets.

“Any time you make a decision purely for tax reasons, it has a way of coming back and biting you,” said Mag Black-Scott, chief executive of Beverly Hills Wealth Management. “Could you be at a 43 percent tax on dividends instead of 15 percent? The straight answer is yes, of course you could. But what if that doesn’t happen? What if they increase just slightly?”

Various proposals are on the table, but the taxes the wealthy say they worry most about are an increase in the capital gains rate to 20 percent from 15 percent, which would affect investments like stocks and second homes; an increase in the 15 percent tax on dividends; and a limitation on deductions, which would effectively increase the tax bill. For the truly wealthy, there is also the question of what will happen to estate and gift taxes.

In addition, the health care law sets a 3.8 percent Medicare tax on investment income for individuals with more than $200,000 in annual income (and couples with more than $250,000). Taking taxes on capital gains as an example, Ms. Black-Scott, who started her career at Morgan Stanley in the late 1970s, said people needed to remember that the rates were 28 percent when Ronald Reagan was president. “If they go from 15 to 20 percent, is it really that bad?” she asked. “You need to say, ‘Do I like the stock?’ If you do, why would you get rid of it?”

Here is a look at some of the top areas where short-term decisions based solely on taxes could end up hindering long-term investment goals.

APPRECIATED STOCK Many people have large holdings in a single stock, often the result of working for a company for many years. And the stock may have appreciated significantly over that time. But if they are selling now solely for tax reasons, advisers say they shouldn’t. The stock may continue to do well and more than compensate for increased capital gains.

But there is an upside to an increase in the capital gains rate: wealthier clients may finally be pushed to diversify their holdings. “If you have 75 percent of your wealth in one stock, then it’s a really appropriate time to think about this,” said Timothy R. Lee, managing director of Monument Wealth Management. If the increased tax rate “is a motivating factor for some people, O.K. Letting go of that control and the pride that goes with it is a really difficult decision.”

Selling stock now may also make sense when it is in the form of stock options set to expire early next year. “Do you want to take the risk the price will drop in January?” asked Melissa Labant, director of the tax team at the American Institute of Certified Public Accountants. “What if we have a fiscal cliff or a change in the markets? If you’re comfortable, do it now.”

Some investors may also fear that higher taxes will drive all stocks down. Patrick S. Boyle, investment strategist at Bessemer Trust, said there was no historical link between tax increases and stock market performance.

In the most recent three tax increases, he says, “the market has actually gone up in the six months before and after.” He added: “It’s not that tax rates aren’t important. They are. It’s just that there are so many other things going on that are more important than tax policy.”

MUNICIPAL BONDS Bonds sold to finance state and local government projects are tax-free now and will be tax-free next year. That is no reason to load up on them.

Tax-free municipal bonds have always been attractive to people in higher-income tax brackets. Now, advisers fear that individuals just above the $200,000 threshold, people who say they do not feel wealthy but will probably be paying higher taxes on their income and investments, will try to offset that increase by moving more of their investments into municipal bonds.

Beth Gamel, a certified public accountant and executive vice president at Pillar Financial Advisers, imagined a case where people in higher tax brackets, thinking they were acting rationally, sold stocks this year to take advantage of the lower capital gains rates and then, to avoid higher taxes next year, put all or some of that money into municipal bonds. Maybe they outsmart the tax man, but they do so at risk to their retirement.

“It will be very difficult for them to reach their long-term goals,” she said, “because the yield on muni bonds is lower than stocks over time.”

Or as Will Braman, chief investment officer of Ballentine Partners, said of this trade-off: “It’s not about minimizing the taxes but maximizing the after-tax returns.”

He suggested that people use their deductions to reduce what is owed from taxable securities.