Monday's Weekly Adviser column looked at some of the ways a banker can advise customers on investment decisions without stepping over the line into being an unauthorized investment adviser.

We talked about risk, about watching out when a deal looks too good, about avoiding going into debt to invest, and about how to look realistically at the tax consequences of what you do.

Let's continue with more safe advice a banker can give.

* Choosing a broker. A banker cannot suggest an individual broker, but he can let the customer know what options are available to him.

Naturally, if the bank has its own brokerage operation it can explain its advantages.

But every banker asked for advice owes it to the customer to explain the difference between a discount broker and a full-service broker -- whether the banking company offers both services or not.

Basically, a discount broker offers lower commissions, often substantially lower than a full-service broker. But the discount house is merely an order taker when it comes to investment advice. It cannot legally provide suggestions as to what to buy. For that you need the full-service operation.

You can explain this as being fair -- you get what you pay for.

* Mutual fund choices. Similarly, even if a bank offers its own mutual fund or funds, if a customer wants advice on how to pick a fund, it would seem most ethical for the banker to explain the pros and cons of the various types.

Basically they are these:

Loads or no entrance fee, just the management fee.

Which is better? This is debatable, with some holding that load funds offer better performance and others disagreeing with this boast.

But the investor must also consider the other expenses -- the 12b-1 fees charged for promotion of the fund to others, and any exit fees.

If the investor plans to stay in a fund for a long time, paying an up-front fee once may be better than perpetual 12b-1 fees.

And the banker must also warn that most true no-load funds can only be bought directly from the fund.

No broker will advise you which to buy. Since brokers get part of a load, naturally they are most likely to push the load funds.

* Funds versus direct investment. A banker owes it to inform the customer who has asked for advice that a fund has a continual charge, while direct purchase of a stock or bond does not.

The customer must decide whether the professional management offered by a fund is worth the perpetual drain on income that the management fee and 12b-1 fee, if any, cause.

* Watch for any funny stuff. Any customer who suggests that he or she might be interested in options, futures, or other derivatives, should be warned: If you don't understand it, don't buy it.

They should be told that, with small exceptions, such as selling an option on a stock already owned, these are gambles on short-term price movements rather than long-term serious investments.

Similarly, tax shelters are efforts to beat a tax system that is smarter than we are. If it is not a good investment, you must explain it is not a good tax shelter either.

Even if you write off more than your investment, something that is ever harder to do under new tax laws, the IRS makes you pay taxes on the "profit" when it goes from its negative-cost basis back to zero when it ends or goes bankrupt.

Zero coupon bonds need a similar warning. Although at first it may look good to pay $20 for an investment that will be worth $100 in 20 years, you must remind the advice seeker than meantime the rate is locked in, and cannot change if interest rates rise.

Thus, periodic interest payments cannot be reinvested at a higher yield, as can be done with regular bonds.

More important, unless the zero coupon is tax exempt bond or you put it in your pension, you have to pay taxes yearly on money you don't get. No wonder they can rise in value so nicely.

* How to make charitable contributions. Make sure that your customers understand the value of giving appreciated stock instead of cash to charity.

The math is simple:

I give $10,000 and I am in a 39% tax bracket. My net cost is $6,100, as I save $3,900 in taxes.

I give $10,000 of stock, for which I paid say $1,000 a number of years ago. I still get the $3,900 tax deduction.

But in addition, I save the capital gains tax I could have to pay if I sold the stock and took the proceeds.

Since the capital gains tax rate today is 28%, if I sold the stock I would have to pay $2,520 in capital gains taxes (28% on $9,000) and would only have $7,840 left to use.

Now take the $7,480 I have forgone by giving the stock away and subtract from that the $3,900 I save in tax payments by giving the stock to charity. My total cost in money I don't get to use of the gift is $3,850 for a gift that allows the charity to receive $10,000.

In sum, it costs me only a little more than a third of what the charity gets! And this forgets added state tax consequences too!

Is this legal and ethical. Certainly.

Taxpayers need not pay one cent more in taxes than they are legally required to pay.

Does it cheat the charity? No. The charity gets the same $10,000 under either approach.

Can your customer give a small amount to one charity by sending in a small number of shares?

Sure, most charities have finance committees ready to handle this. (In fact, as a community banker, you probably head this finance committee.)

WARNING: Don't sell the stock and then send the money. This kills the entire process. The charity must get the stock itself and it must do the selling.

The result: Your customers can get more "bang for the buck" in charitable giving, which means they are likely to give a larger amount than otherwise to help the charity.

FURTHER WARNING: If the gift is not marketable securities with a available price tag on them but rather tangibles that are not easily marketable, tell the donor to check his accountant first.

In this case, the process is by no means so clear-cut, easy, and foolproof.

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