Reviewed by Erika Rasure
Fact checked by Vikki Velasquez

Variable annuities are insurance contracts that provide tax-deferred growth of assets that can later generate a guaranteed income stream, thus making them popular vehicles for financing retirement.

Like other investment products, variable annuities can be held as either qualified or non-qualified for tax purposes.

Qualified contracts—those held in individual retirement accounts (IRAs) or other tax-advantaged plans, like 401(k)s—are subject to the same required minimum distribution (RMD) rules as other investments in qualified retirement plans. Non-qualified contracts offer tax-deferred growth of after-tax funds and have no required withdrawals until annuitization, as defined by the annuity’s contract.

Roth IRAs have no minimum distribution requirement until after the death of the account owner. A surviving spouse who inherits a Roth IRA is not subject to required minimum distributions. All other beneficiaries of inherited Roths are required to take distributions, either based on their own life expectancy or the five-year rule.

Key Takeaways

• An annuity is typically not subject to required minimum distributions (RMDs) unless it is held in a qualified account such as a traditional 401(k) or a traditional individual retirement account (IRA).
• Qualified variable annuities held in qualified accounts are subject to required minimum distributions (RMDs) beginning when the account owner is 73 years old.
• Roth IRAs and Roth 401(k)s are not subject to RMDs while the account owner is alive.
• If you fail to take an RMD, you must pay the Internal Revenue Service (IRS) a penalty equal to 25% of the RMD amount. If corrected promptly, the penalty may be reduced to 10%.

Effects of Required Minimum Distributions (RMDs)

The Internal Revenue Service (IRS) generally requires owners of IRAs and other qualified retirement accounts to begin taking withdrawals once they reach the age of 73. The amount of this RMD is determined by an age-based divisor and the balance in the account. A hefty penalty of 25% is imposed if the minimum is not withdrawn, but this penalty can be reduced to 10% if corrected promptly.

Under certain circumstances, the penalty may be waived if the account owner can show the IRS that not taking the payment was due to an error and that they are doing what is necessary to remedy the error. The account owner must submit a letter of explanation along with IRS Form 5329.

Having to take withdrawals can create fear for retirees as life expectancies lengthen and the possibility of outliving retirement savings increases. The guaranteed lifetime income rider available for purchase on some variable annuity policies can help solve this problem.

RMD Effects on Benefits

Distributions can negatively impact investment performance and sometimes other benefits to the annuity contract, such as lifetime income riders and death benefits. When evaluating a variable annuity for qualified monies, it is very important to understand how RMDs are treated and the effect they have on the policy.

For example, when MetLife sold annuities, it offered the Guaranteed Minimum Income Benefit Plus rider on its qualified contracts. This benefit treats RMDs as a percentage withdrawal against the guaranteed income base and not the total account value. This helps to maintain the investment’s ability to grow.

How Do You Calculate the RMD on an Annuity?

You generally don’t have to take RMDs from an annuity unless you are 73 years old or older and the annuity is held in a qualified retirement account, such as an IRA or a 401(k). If you are 73 or older and need to take an RMD, you must first consult the life expectancy tables published by the IRS each year. In order to calculate the necessary RMD, divide the value of the account (as of December 31 for the year in question) by the distribution period in the appropriate table.

What Is the Value of an Annuity?

When it comes to calculating RMDs for annuities, the value calculation depends on what type of annuity you have. For deferred annuities, the RMD is calculated based on the value of the annuity contract at the close of business at the end of the year. For annuitized contracts, the cash flow from the annuity is considered sufficient to meet the contract’s RMD requirements for that year.

When Is an Annuity Considered Annuitized?

An annuity is considered annuitized when the investment is converted into a steady stream of income payments. Once an annuity is annuitized, the value of the annuity is no longer included in future RMD calculations.

The Bottom Line

Required distributions should not stop investors from considering the valuable benefits offered by variable annuities. Investors and financial planners should work together to find a contract that works well with RMDs to maximize investment growth to last through retirement.

Reviewed by Charles Potters
Fact checked by Vikki Velasquez

After the 2020 election, President Joe Biden named members of his economic team, including the Federal Reserve Chair and the Secretary of the Treasury.

Key Takeaways

• Joe Biden was elected the 46th president of the United States on November 3, 2020.
• Incoming presidents name members of their prospective economic team.
• Biden selected Federal Reserve Chair Janet Yellen as Secretary of the Treasury.

Important

The Senate confirmation process ensures that individuals selected by the president for key positions are qualified for the job and hold the public trust.  

Secretary of the Treasury

The Biden administration nominated former Federal Reserve Chairwoman Janet Yellen as Secretary of the Treasury, a leading role in shaping economic policy. Yellen’s deputy at the Treasury Department was Adewale “Wally” Adeyemo, a veteran of the Obama administration and an expert on macroeconomic policy and consumer protection with national security experience.

Director of the Office of Management and Budget

The Office of Management and Budget (OMB) helps the president develop and administer the federal budget. Biden originally chose Neera Tanden, head of the think tank Center for American Progress. Biden’s nomination was subsequently withdrawn when Tanden failed to gain support. On November 24, 2021, Biden nominated Shalanda Young as director, who was confirmed on March 15, 2022.

Chair of the Council of Economic Advisers

Biden chose Cecilia Rouse, a Princeton University labor economist, to chair the Council of Economic Advisers, a role Yellen had occupied during Clinton’s administration. Rouse had previously been confirmed by the Senate as a member of the CEA in 2009. She was confirmed as chair on March 2, 2021.

Rouse was joined on the CEA by two campaign economic advisers, Jared Bernstein and Heather Boushey. Bernstein previously served as the chief economist to Biden in the first years of the Obama administration. Boushey was an economist focused on economic inequality and the CEO of the Washington Center for Equitable Growth. In 2023, Rouse stepped down from the role, and Biden nominated Bernstein as CEA chair.

Secretary of Commerce

Biden nominated Gina Raimondo as Secretary of Commerce. Raimondo was confirmed by the Senate on March 2, 2021. She previously served as the governor of Rhode Island.

Secretary of Labor

Biden tapped Marty Walsh, a former mayor of Boston, to serve as labor secretary. As the leader of the Department of Labor, Walsh oversaw issues related to federal labor standards, including wages, workplace safety, unemployment benefits, and workplace conditions. Walsh stepped down from the role in 2023. Julie Su, an attorney and former labor secretary of California, stepped in to serve as acting labor secretary.

Trade Representative

In December 2020, Biden chose Katherine Tai to serve as U.S. Trade Representative, advising and negotiating trade policy. Tai previously served as chief trade counsel and trade subcommittee staff director for the Ways and Means Committee of the House of Representatives. The Senate confirmed Tai in March 2021.

Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) is a unit within the Federal Reserve system. In January 2021, Biden announced Rohit Chopra as director. Chopra had served as a commissioner of the Federal Trade Commission and as a student loan ombudsman at the CFPB.

Federal Trade Commission

The Federal Trade Commission (FTC) oversees antitrust law and consumer protections. In March 2021, President Biden nominated Lina Khan as chair. Khan was confirmed and sworn into the role in June of that year. She was previously an associate professor at Columbia Law School.

Chair of the Federal Reserve

The Federal Reserve is an agency that operates independently of the federal government. Its governors are appointed by the president and confirmed by the Senate but its monetary decisions are not subject to approval. The chair and vice-chair of the Fed are nominated by the president and confirmed by the Senate.

Jerome Powell was first nominated to the role by former President Donald Trump in November 2017 and re-nominated for a second term by President Biden in November 2021. Powell worked as assistant secretary and undersecretary of the Treasury under former President George H.W. Bush.

What Agencies Help Monitor the U.S. Economy?

The Department of the Treasury and the Federal Reserve monitor the financial system and set monetary policy. The Department of Commerce creates conditions for economic growth and opportunity.

What Is the Council of Economic Advisors?

The Council of Economic Advisers (CEA) is an agency within the executive office that provides the president with “objective economic advice on the formulation of both domestic and international policy.”

What Is the National Economic Council?

The National Economic Council (NEC) includes numerous department and agency heads within the administration. It’s tasked with advising the president on domestic and international economic policy. President Biden appointed Lael Brainard NEC’s director in February 2023.

The Bottom Line

Incoming presidents announce members of his economic team soon after winning the presidential election. The Senate must approve nominees before they join the administration.

Meme coins have evolved from internet jokes into multi-billion dollar assets, attracting everyone from casual investors to major financial institutions and the sitting U.S. President. Once playful parodies, the explosion of tokens tied to celebrities, politicians, and viral trends has turned them into “highly volatile and speculative assets,” Anwar Sheluchin, a doctoral candidate at McMaster University researching financial governance and digital currencies, told Investopedia.

Sheluchin suggested many traders haven’t caught up to significant shifts within the industry over the last decade or so. “Meme coins are still inspired by internet culture and trends and supported by online communities [and] hype cycles,” she said. But “the hype around them seems to operate in shorter time frames than before.” She noted many coins, like the one from the so-called “Hawk Tuah girl” and based on her 2024 viral fame, “had prices rise and plummet within hours”—not days and weeks.

Below, we take you quickly through some dangers with these assets.

Key Takeaways

• Meme coins are highly speculative and driven by social media hype rather than intrinsic value.
• Their extreme volatility could mean heavy losses for anyone trading them.
• Pump-and-dump schemes and market manipulation are common in this sector.

What Are Meme Coins?

Meme coins are a cryptocurrency that thrives on social media hype, internet culture, and community engagement—there’s simply no intrinsic value or use for them beyond that. Hence, they’re far more like casino chips than regulated investments.

Initially created as supposed jokes or parodies, they have gained traction because of speculative interest, with Dogecoin (DOGE) leading the way. While some, like Shiba Inu (SHIB) and Floki Inu (FLOKI), have gained strong followings, the vast majority haven’t.

Days before his inauguration in January 2025, President Donald Trump issued a $TRUMP token, marketing it as an “expression of support” for his views. The token’s price surged more than 200% before crashing to below its offering price in a matter of days. This rollercoaster pattern is the rule, not the exception, for meme coins.

Meme Coins and Crime

Authorities have long highlighted the major criminal risks associated with meme coins. For example, in October 2024, U.S. authorities charged 18 individuals and major crypto firms with various frauds against everyday investors. These schemes depended on central players in the sector—so-called “market makers”—who artificially inflated trading volumes and prices through wash trades to create fake transactions and suggest more buyer interest for unsuspecting investors.

Experts like Sheluchin say that market manipulation isn’t the only problem in the sector. It’s also rife with pump-and-dump schemes, in which prices are often artificially inflated before major sell-offs, leaving late investors at a loss.

The 2024 charges “are a stark reminder of how vigilant online investors must be and that doing your homework before diving into the digital frontier is critical,” said Acting U.S. Attorney Joshua Levy. “People considering making investments in the cryptocurrency industry should understand how these scams work so that they can protect themselves.”

Warning

One defendant in the October 2024 crypto fraud case unwittingly messaged undercover investigators that he and his cohort’s “objective on the secondary markets” (where everyday traders buy their meme coins) was to find “other buyers from the community, people you don’t know about or don’t care about” because “we have to make [the other buyers] lose money in order to make [a] profit.”

Other Significant Risks

As if all that weren’t enough, here are the other well-known hazards of putting your money into these coins:

• Extreme volatility: Meme coins experience unpredictable price swings, leading to potential gains or significant losses.
• Lack of fundamental value: Most meme coins lack real-world applications, strong development teams, or long-term viability.
• Regulatory uncertainty: Future legal crackdowns or reclassifications could impact their liquidity and market presence.
• Security risks: You must secure your coins from hackers and other criminal operators.
• Liquidity issues: Many meme coins have low trading volumes, making selling holdings at desired prices difficult.

The Bottom Line

Traders should approach meme coins with extreme caution, more akin to gambling and entertainment than an investment for your portfolio. “The speculative nature of meme coins, combined with their susceptibility to fraud (pump-and-dump schemes),” Sheluchin said, “poses significant risks to retail investors, especially those who are inexperienced.”

Reviewed by Robert C. Kelly
Fact checked by Diane Costagliola

A dominant global financial center has international connectedness, cultural and educational diversity, and expertise across the full range of financial products and services.

We walk you through the top three, New York, London, and Hong Kong, as ranked in the Global Financial Centres Index (GFCI). All were recognized for their robust financial institutions, trusted regulatory channels, skilled workforce, educational and research resources, and first-rate infrastructure.

The index, updated every six months by the Z/Yen Group, a London-based commercial think tank, draws on data from the United Nation’s ICT Development Index, the World Economic Forum’s Networked Readiness Index, and the World Bank’s ratings on government effectiveness, among other metrics and survey data.

Key Takeaways

• New York is on top with the two largest stock exchanges in the world: the New York Stock Exchange and the Nasdaq.
• London is second, bloodied but unbowed after the lingering effects of Brexit.
• Hong Kong regains its third position after beating out Singapore.
• A slight change in the weight given certain criteria or a minor point change would lead to many cities swapping places in the index. As with other such rankings, it’s best to take them as helpful in considering the world’s financial centers but not as set in stone.

1. New York

From its origins as the U.S.’s first federal capital to its present status as a financial linchpin, New York has been the home to the country’s major financial markets since the NYSE opened in 1792.

Today, Wall Street in Lower Manhattan is the world’s most important financial district, with the street a synonym for global finance. Midtown Manhattan, meanwhile, houses the headquarters of many of the most significant investment banks, hedge funds, and law firms.

Listed first in the Global Financial Centres Index, New York’s financial dominance is symbolized by Wall Street, the enduring global symbol for finance.

Home to the New York Stock Exchange (NYSE) and Nasdaq, the first and second largest stock exchanges by market capitalization, and headquarters for financial giants like JPMorgan Chase & Co. and Citigroup Inc., the city has an unrivaled concentration of financial power and influence.

It’s also the site of many of the most powerful investment banks, such as Goldman Sachs and Morgan Stanley, and the city’s a leading player in asset management, foreign exchange, financial technology, and private equity.

2. London

London ranks second in the Global Financial Centres Index and is home to the Bank of England, one of the world’s oldest and most prestigious central banks. The London Stock Exchange is among the world’s top five stock exchanges and the city has one of the world’s largest banking sectors. It is also the site of the London Bullion Market, the world’s largest for gold and silver bullion trading.

In the GFCI financial competitiveness categories, London ranked second in fintech, after New York.

Brexit is expected to continue to substantially impact the U.K. and London’s traditional places as one of the most important financial centers. The move out of the EU meant London firms lost so-called “passporting rights;” the ability to operate freely in the EU without needing separate licenses.

Some financial institutions have relocated all or parts of their operations from London to other EU financial centers like Frankfurt, Paris, and Dublin to keep their direct access to the EU market.

London’s financial sector has also traditionally benefited from its ability to attract talent from across Europe. Despite more bureaucratic hurdles and other changes post-Brexit, the lure of London and its cultural and global scene still makes the city a sure bet in continuing to recruit from among the brightest and best workers from the EU and beyond.

Note

The U.S. has the most financial centers in the index, with New York, San Francisco, Los Angeles, and Chicago in the top 10.

3. Hong Kong

Hong Kong ranks third in the Global Financial Centres Index, having taken over Singapore, making it the most important financial city in Asia, though it has long been one of the global centers of finance, and benefits through its close financial relationship with mainland China.

Hong Kong has an advantageous tax regime, is home to many global banks, and has its own freely traded currency. In the GFCI rankings, Hong Kong ranked in the top five for business environment, human capital, infrastructure, and reputation. It also ranks no. 1 in investment management.

While Hong Kong traditionally operated separately from China, there has been concern over China’s growing influence now that Hong Kong has been integrated into the mainland.

Particular areas of concern include legal and regulatory frameworks, especially in regard to political interference, reduced judicial independence, and capital controls. This has raised concern for some investors who have redirected capital elsewhere in Asia.

Why Does the U.S. Have So Many Cities Ranked Highly as Global Financial Centers?

The U.S. has four of the top 10 financial centers in the GFCI because of its large, diverse economy and the large role it plays in global financial markets. For example, the dollar is the world’s leading reserve currency.

The U.S. also has an advanced infrastructure, a robust legal and regulatory framework, and financial and technological companies among the world’s best in innovation. Cities like New York, Chicago, and San Francisco each have unique strengths: New York with its stock exchanges and banking institutions, Chicago with its futures and commodities markets, and San Francisco with its proximity to Silicon Valley and power in fintech.

What Cities Were Historically Important Financial Centers?

Historically, cities like Venice and Amsterdam were the preeminent financial centers. During the Renaissance, Venice was pivotal in the development of the European model of international finance and trade. Amsterdam, in the 17th century, was instrumental in laying the foundations for modern financial systems, including the establishment of the first stock exchange. Their decline was due to diverse factors like political shifts, military conflicts, and the rise of new economic and colonial powers, which shifted the focus to cities like London and New York.

What Are the World’s Major Tax Havens?

Major tax havens include Switzerland, the Cayman Islands, and Luxembourg. These locales offer low tax rates and privacy, attracting high-net-worth individuals and corporations looking to minimize tax liabilities. While they play a role in global finance by holding substantial amounts of foreign assets and capital, they also face criticism and scrutiny for encouraging tax avoidance and lacking transparency, often hiding assets for those involved in illicit trade, terrorism, and the sale of illegal narcotics.

The Bottom Line

The dominance of New York, London, and Hong Kong among the top global financial centers reflects their historical significance, strategic geographical positions, and adaptability to modern financial dynamics.

New York has its world-renowned stock exchanges and a concentration of major banking institutions. London is rich in financial history and remains a global trading nexus post-Brexit, and Hong Kong continues to propel Asian finance markets globally.

Fact checked by Stella Osoba

If you think flying out of major hubs like JFK (New York) or LAX (Los Angeles) is expensive, wait until you see the airports with America’s highest average fares.

Telluride Regional Airport in Colorado tops the list with an eye-popping average fare of $818 in 2024—more than double the national average of $366.

Key Takeaways

• Mountain destinations and remote locations dominate the list of most expensive airports.
• The highest fares are more than double the national average of $366.
• Location and limited competition are significant factors driving up prices.

For High Airfares, Think Regional More Than Popularity

While you might expect major coastal cities to have the priciest flights, it’s smaller regional airports serving remote or tourist destinations that command the highest fares. And there are some surprises: among mountain destinations and remote outposts, Southeastern airports like Dothan, Alabama ($799) and Albany, Georgia ($741) rank among the nation’s most expensive—despite being in areas typically known for lower costs of living.

The trend is clear when looking at the top 10 most expensive airports: they’re either gateways to popular ski destinations or critical air links for remote communities. Pocatello Regional Airport in Idaho ranks fourth with average fares of $795, while Gunnison-Crested Butte Regional Airport in Colorado rounds out the top five at $769.

What’s driving these prices? Limited competition is crucial. Many of these airports are served by just one or two carriers, giving airlines significant pricing power. In addition, fewer passengers mean airlines can’t benefit from economies of scale, leading to higher per-passenger costs passed on to travelers. This can also be seen when looking more broadly at all U.S. destinations, including those not in the contiguous U.S., where Alaskan destinations dominate the top-10 list of highest average airfares.

Below, you can view the list of average one-way domestic airfares within the contiguous U.S., sorted from most to least expensive.

Looking for a Lower Fare? Check Nearby Metro Areas

This pricing dynamic creates stark contrasts. While passengers departing from Telluride pay an average of over $800, those flying from nearby larger airports like Denver International can find fares closer to or even lower than the national average—DEN costs an average of $337. This can mean savings of hundreds of dollars for travelers willing to drive a bit further to reach a larger airport.

It’s also helpful to know where fares are heading upward. Below is a table of travel legs between paired cities that increased the most from 2023 to 2024:

Hidden Costs That Add Up

If you’re looking at local airports and not understanding why there are such differences in the average average airfare, it’s not just baggage fees and seat ticket costs that add up. Airports have “landing fees” that can vary significantly. For example, La Guardia Airport (LGA) in New York costs airlines $17.72 per thousand pounds of maximum gross landed weight (MGLW). That’s not a helpful number, so let’s break it down.

Checking U.S. Department of Transportation figures, the Boeing 737 is the most-used plane at LGA. Assuming a national average of 85% load (percentage of those on board), with the 737’s weight, we get almost $3,100 per flight for about 144 passengers, or $21.50 per passenger ticket.

Meanwhile, doing a similar calculation for JFK, 10 miles away at the other end of New York’s I-678 expressway, we get $6.76 per thousand pounds of MGLW, or about $8.18 per passenger—60% lower.

The Bottom Line

Knowing these price differences can help budget-conscious travelers find significant cost savings. If your destination is near one of these high-fare airports, consider flying into a larger hub and making the final leg of your journey by rental car or alternate transportation. The extra travel time might be worth the hundreds of dollars you could save on airfare.

Fact checked by Katie Reilly

Generation Z is rewriting the rules of investing. Out are the days of waiting until your 30s to start investing or relying solely on traditional stocks and bonds. In are teenagers wielding investing apps, cryptocurrency traders barely out of high school, and social media-savvy Gen Zers who began building their portfolios at an average age of 19.

Born from 1997 to 2012, Gen Z entered the financial world earlier than their predecessors. They are 45% more likely to start investing by age 21 than millennials were. But it’s not just their early start that is shaking things up. Below are four unexpected ways Gen Z is transforming investing.

Key Takeaways

• Gen Z is starting to invest at a young age, with an average starting age of 19. 
• Cryptocurrency has become a cornerstone of Gen Z’s investment portfolios, with 55% of U.S. Gen Z investors holding crypto assets.
• Gen Z’s investment strategies are heavily shaped by technology, with many using mobile apps and robo-advisors to manage their portfolios.

Investing at a Young Age

More than half (56%) of U.S. Gen Zers, aged 18 to 25, own at least some investments, according to a 2022 survey conducted by the FINRA Investor Education Foundation and CFA Institute. And they’re getting an earlier start with investing compared to previous generations. Gen Z started investing at age 19 on average, compared to age 25 for millennials, age 32 for Gen X, and age 35 for baby boomers, according to a 2024 survey by Charles Schwab.

This early start could have a substantial impact on long-term wealth accumulation. For example, an investor who begins setting aside $5,000 annually at age 19 could accumulate over $1.5 million by age 65, assuming a 7% average annual return. This is about $500,000 more than someone starting at age 25 despite only contributing $30,000 more overall.

Getting Financial Advice from Social Media

Gen Z investors primarily turn to social media and internet searches to learn about investing and finances. They rely more on social media and family as sources of information than millennial and Gen X investors do. They are also more likely than millennials and Gen X to get information from influencers and financial apps.

On the other hand, millennials and Gen X investors rely more on internet searches, financial companies, and financial professionals for information than Gen Z investors do.

Starting with Crypto

The rise of cryptocurrency may have motivated many U.S. Gen Z investors to begin investing, with 44% saying they started by investing in crypto and 32% saying they started by investing in individual stocks, according to the FINRA Investor Education Foundation survey.

Crypto remains the most popular asset class among U.S. Gen Z investors, with 55% owning some form of crypto, followed by 41% who own individual stocks, and 35% who invest in mutual funds. Crypto is also the most popular investment among millennials, while Gen X favors mutual funds and individual stocks.

Gen Z investors reported a median of $1,000 invested in cryptocurrency, accounting for a fourth of their median overall investment of $4,000.

Experts have long cautioned that cryptocurrency is a highly speculative, relatively new technology that is subject to significant volatility. It’s important to understand the risks before investing.

Looking Ahead

By 2050, today’s teenage crypto traders and app-based investors should be in their peak earning years, potentially creating an investment landscape where AI-powered social platforms replace traditional brokers and digital assets are as common as stocks and bonds.

Small-Scale, App-Based Investing

The majority (65%) of Gen Z investors use investing apps to manage their money and make trades. The FINRA Investor Education Foundation survey found that Gen Zers are much more likely to use investing apps compared to millennials or Gen X investors.

Gen Z investors often start with small amounts of money, leveraging micro-investing apps that offer fractional shares and lower costs.

A majority (67%) of U.S. Gen Z investors say that the ability to start investing with small amounts was a major factor in their decision to invest.

Gaining Wealth

Younger Americans have experienced significant wealth growth in recent years. From the end of 2019 to the end of 2023, inflation-adjusted wealth for households under 40 increased by 49%, according to a Center for American Progress analysis of Federal Reserve data.

Bottom Line

Beginning their investment journey at an average age of 19—a full 16 years earlier than Baby Boomers—Gen Zers are leveraging technology, embracing cryptocurrency, and reshaping traditional investment patterns. While social media and influencers may inform their investment decisions, this generation’s embrace of financial education, willingness to start small, and comfort with digital tools suggests they’re not just participating in the market—they’re actively redefining it.

AI is having a significant impact on the business world, affecting jobs, workers, firms, and industries

Fact checked by Vikki Velasquez
Reviewed by JeFreda R. Brown

Artificial intelligence (AI), or technology that is coded to simulate human intelligence, is having a huge impact on the business world. Now prevalent in many types of software and applications, AI is revolutionizing workflows, business practices, and entire industries by changing the way we work, access information, and analyze data.

Key Takeaways

• AI technology promises significant benefits for businesses, including improved customer engagement, data analysis, automation of processes, strategic recommendations, and enhanced decision making.
• AI can be applied in various business areas such as accounting and finance, customer service, recruitment, cybersecurity, sales and marketing, supply chain and logistics, information technology (IT) operations, and legal.
• However, implementing AI in business is not without challenges, which can include ethical and privacy concerns, skill gaps, and integration issues.
• The future of AI for business will necessitate ever more collaboration among governments, businesses, and individuals, as well as further integration of AI into software processes and workflows.

Benefits of Using AI in Business

Artificial intelligence can deliver significant benefits across different departments and business functions. Noémie Ellezam, chief digital strategy officer of Société Générale, the sixth-largest bank in Europe, describes AI as being “an accelerator” of their digital strategy, “with potential impact across all of [their] businesses and business areas.”

Here are some of the advantages that AI can offer businesses.

Improved Customer Engagement and Experience

Tools like chatbots, callbots, and AI-powered assistants are transforming customer service interactions, offering new and streamlined ways for businesses to interact with customers.

Data Analysis and Insights

AI can quickly process large volumes of current and historical data, drawing conclusions, capturing insights, and forecasting future trends or behaviors. These can help businesses facilitate better decision making about customers, offerings, and directions for future business growth.

Automation and Efficiency of Business Processes

AI enablement can improve the efficiency and processes of existing software tools, automating repetitive tasks such as entering data and taking meeting notes, and assisting with routine content generation and editing.

Personalized Recommendations and Targeting

AI can analyze consumer data (such as that captured in a business’s customer relationship management (CRM) system) to understand similarities in preferences and buying behavior across different segments of customers. This allows businesses to offer more personalized recommendations and targeted messaging to these specific audiences.

Applications of AI in Business

AI can be applied to many different business areas, offering increased productivity and efficiency and promising insights, scalability, and growth. Here are some of the business departments and applications in which AI is making a significant impact.

Accounting

Many accounting software tools now use AI to create cash flow projections or categorize transactions, with applications for tax, payroll, and financial forecasting. It can help reduce input errors, catch duplicate or suspicious transactions, and identify opportunities to save money.

Content Generation

Generative AI can assist in writing, researching, and editing as well as creating graphics, videos, and other media. It can be used for everything from marketing campaigns to business document templates like proposals and presentations. AI can also transcribe and translate language and generate code, providing businesses with quicker, easier, and more cost-effective access to these specialized skill sets.

Customer Service and Support

Chatbots and callbots can offer businesses a way to extend their current customer service capabilities and increase the volume of customer inquiries that their team is able to respond to, in addition to freeing up time for customer service agents to focus on more complex cases or interactions. Many AI-enabled call center and voice applications can also perform caller sentiment analysis and transcribe video and phone calls.

Cybersecurity

AI-powered cybersecurity tools can monitor systems activity and safeguard against cyberattacks, identifying risks and areas of vulnerability. It can also help security teams analyze risk and expedite their responses to threats.

Information Technology (IT) Operations

The use of AI in informational technology (IT) operations is so widespread that a special term for it was coined: AIOps. AI can be used to streamline data and maintain IT infrastructure, automating tasks like performance monitoring, workload scheduling, and data backups. It offers IT professionals better insights into the root causes of anomalies and errors, allowing them to resolve system issues more quickly and anticipate future ones.

Financial Analysis, Trading, and Fraud Detection

Financial departments and businesses can benefit from quick and powerful AI-driven data analysis and modeling, fraud detection algorithms, and automated compliance recording and auditing. Because of AI’s ability to analyze large, complex datasets, individual and institutional investors alike are taking advantage of AI tools in managing their portfolios. AI can also detect fraud by identifying unusual patterns and behaviors in transaction data.

Human Resources

AI can assist human resources departments by automating and speeding up tasks that require collecting, analyzing, or processing information. This can include employee records data management and analysis, payroll, recruitment, benefits administration, employee onboarding, and more.

Legal

As a profession that deals with massive volumes of data, lawyers and legal departments can benefit from machine learning AI tools that analyze data, recognize patterns, and learn as they go. AI applications for law include document analysis and review, research, proofreading and error discovery, and risk assessment.

Sales and Marketing

Sales and marketing departments can use AI for a wide range of possibilities, including incorporating it into CRM, email marketing, social media, and advertising software. Generative AI can create all kinds of creative and useful content, such as scripts, social media posts, blog articles, design assets, and more.

Supply Chain and Logistics

AI can have a huge impact on operations, whether as a forecasting or inventory management tool or as a source of automation for manual tasks like picking and sorting in warehouses. It can prove useful in allocating resources or people, like drivers, scheduling processes, and solving or planning around operational disruptions.

Challenges and Ethical Considerations for Implementing AI in Business

In October 2023, former President Joe Biden released an “Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” citing AI’s “extraordinary potential for both promise and peril.” In it, he touched on how responsible AI use could help address urgent challenges and increase prosperity, productivity, and innovation—but noted that potential downsides include exacerbating social and societal harms such as discrimination, disinformation, and worker displacement.

Here’s a closer look at some of the important ethical and other considerations around implementing AI in business.

Ethical and Privacy Concerns

The introduction of AI to business applications raises urgent concerns around the ethics, privacy, and security of the technology. Governance of AI technology must consider how to develop and expand current legislation around privacy and data protection, including purpose specification, data collection and use limitations, accountability and security of data storage.

AI also requires human oversight to review and interpret the results it generates and monitor how it is generating them, lest it end up reproducing or worsening current and historical biases and patterns of discrimination. For example, researchers at Carnegie Mellon University revealed that Google’s online advertising algorithm reinforced gender bias around job roles by displaying high-paying positions to males more often than women.

Skill Gaps and Workforce Transformation

Although AI can bridge skill gaps, offering workers access to skill sets like coding, translating, and writing, it also creates skill gaps. As a rapidly advancing and developing technology, training and keeping up with knowledge about AI tools can be a challenge for workers and businesses alike. A 2023 survey of small business owners by Microsoft revealed that only 10% of small businesses with up to 24 employees “know how to use AI for their work-related tasks,” while 67% “say they know little to nothing about AI in general.”

There is much concern over worker displacement due to the use of AI technology. Massachusetts Institute of Technology (MIT) economists Daron Acemoglu, David Autor, and Simon Johnson have written about how digital technologies have exacerbated inequality over the past 40 years. However, they believe that the nature of AI’s relationship to inequality is still to be determined, and its impact will depend on how it is developed and applied—particularly, whether it is considered as a complement to human workers or a substitute for them.

For example, AI can be used to bolster skills and productivity as an on-the-job assistant or personalized tutor, and it could even help more people get hired by providing resume writing and editing assistance.

MIT professor John J. Horton recommends that business leaders consider the following before deciding whether to replace human labor with AI:

• How much time the task would take otherwise
• How much the employee who performs the task is paid
• Whether AI is capable of correctly performing the task
• How easy it is for a human to confirm whether the AI output is accurate

A 2024 International Monetary Fund (IMF) study found that almost 40% of global employment is exposed to AI, including high-skilled jobs. The study states that 60% of jobs in advanced economies may be impacted by AI, with half of those benefiting from increased productivity and half being affected in a way that could lower labor demand, leading to lower wages, reduced hiring, and, in extreme cases, job disappearance. In contrast, expected AI exposure was lower in emerging markets (40%) and low-income countries (26%), suggesting fewer immediate workforce disruptions but worsening inequality over time as the technology is adopted more widely.

Integration and Compatibility Issues

Companies that have successfully implemented AI solutions have viewed AI as part of a larger digital strategy, understanding where and how it can be instrumentalized to great advantage. This requires considering how it will integrate with current software and existing processes—especially how data is captured, processed, analyzed, and stored. Another important factor is the structure of a company’s technology stack—AI must be able to flexibly integrate with current and future systems to draw and feed data into different areas of the business.

Future AI Trends and Business Opportunities

As AI becomes ever more integrated into business technologies, it’s possible that the focus will shift away from specific AI-powered apps in favor of general AI assistance built into websites, software, and hardware. For example, Samsung’s Galaxy S24 Ultra has AI built into the phone in the form of a transcript assistant, “circle to search” feature, and real-time translation capabilities.

Adriana Hoyos, professor of economics at IE University, writes that as “technology’s influence endures, collaboration between governments, businesses, and individuals takes on unprecedented significance,” with “collaborating partnerships serv[ing] as incubators of innovation.” One example is Microsoft’s partnership with OpenAI, which aims to responsibly democratize AI and make it more accessible. However, she notes that governments “shoulder the responsibility of recalibrating regulations to harmonize with technological progress.” She predicts that future drivers of job growth will include big data analytics, climate change technology, encryption, and cybersecurity.

Many successful companies are approaching AI with a view to augment current efforts and work, rather than the intention to replace human workers with AI. This future is already expressing itself in the trend of AI-augmented software development, but AI researcher David De Cremer and chess grandmaster Garry Kasparov see a future in which humans work alongside AI in a complementary way, calling it the “new diversity.” This will necessitate leaders who are skilled in creating inclusive teams and bringing different parties together.

Can You Use AI to Start a Business?

AI can be used to generate business ideas, write business plans, and guide entrepreneurs in the steps it takes to start a business. By making time-consuming tasks like coding a website, writing emails, and scheduling meetings more efficient, AI can save entrepreneurs valuable time and allow them to focus their efforts where they matter most.

Can AI Replace the Workforce In the Future?

Analysis of the impact of AI on the workforce holds mixed predictions for the future. A 2024 IMF study found that nearly 40% of global employment is exposed to AI; however, whether the technology complements or negatively impacts current jobs depends on the experience and current income of workers as well as the current level of economic development in the country of work.

How Is AI Used In Business Analysis?

AI business analytics tools can offer analysts and decision makers insights derived from large and complex datasets, as well as automation for repetitive tasks, such as standardizing data formatting or generating reports. Predictive analytics can identify future trends and patterns from current and historical data.

How Is AI Used In Healthcare?

There are many applications for AI in the field of healthcare, including analyzing large volumes of healthcare data like patient records, clinical studies, and genetic data. AI chatbots can assist in answering patient questions, while generative AI can be used to develop and test new pharmaceutical products. AI-powered robots could even be used to make surgery less invasive.

What Is the Impact of Using AI in Business?

AI is having a transformative impact on businesses, driving efficiency and productivity for workers and entrepreneurs alike. However, its potential to replace the jobs of human workers remains to be seen.

The Bottom Line

One useful way for businesses to think of AI’s future possibilities is in terms of capabilities, as opposed to technologies. AI can support businesses in three broad categories: automating processes, analyzing data to gain insight, and customer and employee engagement. Firms that apply AI strategically in these ways have much to gain in terms of productivity, efficiency, and potential cost savings and growth.

However, AI presents challenges alongside opportunities, including concerns about data privacy, security, ethical considerations, widening inequality, and potential job displacement. Researchers and analysts suggest that a collaborative approach among businesses, governments, and other stakeholders is the key to responsible AI adoption and innovation.

Several major credit card companies have cards that offer roadside assistance without an annual membership fee.

Capital One, Chase, Wells Fargo, and Bank of America are among the companies that offer credit cards with a roadside assistance benefit. For some consumers, one of these credit cards could provide enough value that it makes sense to skip paying for a roadside assistance membership.

Key Takeaways

• Roadside assistance comes in handy if run into issues like getting a flat tire, being locked out of your car, or needing a tow.
• You can pay for a roadside assistance membership through companies like AAA. Or you can explore roadside assistance benefits through your credit card issuer.
• Comparing the costs and benefits of a membership versus a credit card benefit can help you decide which route for roadside assistance works for you.

What Is Roadside Assistance, and What Does It Typically Cover?

Roadside assistance is a service that helps drivers when they run into car trouble on the road. You can get coverage for issues like:

• Towing
• Battery jump or replacement
• Emergency lock-out
• Fuel delivery
• Flat tire

Do Some Credit Cards Really Offer Free Roadside Assistance?

Roadside assistance is a benefit of several premium travel rewards credit cards, though there is usually a cap on each claim and on the number of claims a cardmember can make each year. Other less-premium cards that may or may not charge an annual fee may also offer some degree of roadside assistance as a pay-per-use service; you pay a fee only when you need roadside help or in the form of pre-negotiated discount rates for services like towing.

Capital One offers travel rewards cards and cash-back cards with roadside assistance via Visa and Mastercard.

Chase offers several credit cards with roadside assistance. Some cards, like the Chase Sapphire Reserve Card, have a lofty annual fee, while others, like the Chase Slate Edge, do not. Bank of America and Wells Fargo also offer a roadside assistance program for people with Visa credit cards.

The only way to determine if your credit card provides coverage for roadside assistance and how it works is to consult your cardmember agreement under its benefits section or visit the issuer’s website. You can also call the customer service number on the back of your credit card to inquire.

Is Paying for Roadside Assistance Really Worth It?

Over the course of a year, more than half of drivers ran into an issue that required roadside assistance, according to a survey from Agero. If you end up being one of those drivers, you can expect a tow to cost you an average of $109.

You can buy an roadside assistance membership. AAA, for example, offers plans ranging from $64.99 to $124.99 per year. Some car insurance policies include roadside assistance benefits, such as towing, as well.

As a credit card benefit, you will most likely only pay for roadside assistance if you use it unless you have a premium travel card that provides flat coverage amounts per incident.

If you are deciding between an annual membership and roadside assistance offered by your credit card, consider:

• The cost of a membership
• Membership benefits as described in your cardmember agreement
• Your credit card’s annual fee, if any
• Your card’s coverage or its pay-per-service options and charges for roadside assistance
• Any limits to payouts, frequency of claims, and the service area for roadside assistance via membership or your credit card

The Bottom Line

You could potentially save money by leveraging your credit card benefits and ditching the annual fee for a roadside assistance membership. Unless you carry one of the premium travel rewards credit cards you will likely pay for roadside assistance if you leverage your card benefits, but you only pay if you need it.

Do your research on roadside assistance memberships, card benefits, and fees to help you find the right coverage and cost for you.

However, they may just be adding another free option to those already available to taxpayers

Leading the Department of Government Efficiency (DOGE), now officially under the United States Digital Services, Elon Musk has promoted the creation of a mobile app for Americans to file their taxes for free. This would add to the options the Internal Revenue Service (IRS) already offers for free tax filing. 

Key Takeaways

• The DOGE is considering creating a new mobile app for Americans to file their federal taxes for free. 
• The IRS already offers to three ways to file taxes for free: paper forms, IRS Direct File and IRS Free File. 
• The DOGE discussions have negatively impacted the stocks of popular tax preparers H&R Block and Intuit, the parent company of TurboTax. 

What Musk’s DOGE Commission Is Considering

During a November DOGE meeting, The Washington Post reported that Elon Musk and Vivek Ramaswamy, who has since parted ways with the DOGE efforts, discussed the possibility of creating a mobile app so Americans could file their federal taxes for free. Musk posted on X in November about his desire to simplify the tax code, so this would be a step in that direction.

However, that’s easier said than done. The Internal Revenue Code (IRC) consists of more than 4 million words, so creating an app that not only encompasses the entire code but also calculates taxes based on the code is quite an undertaking.

What Are Taxpayers’ Options for Tax Preparation?

Currently, taxpayers have three primary ways of filing taxes: do-it-yourself (DIY), using tax software or hiring a CPA.

IRS DIY

Taxpayers can choose from three IRS options when doing their own taxes, all of which are free to use: 

• Print, fill out and mail in the tax forms
• Use IRS Direct File to file online
• Use IRS Free File to file online

While all of these methods are free to use, the Direct File and Free File programs have requirements, so not all taxpayers are eligible to use electronic filing. Also, they can be time-consuming, especially if you have many itemized deductions, complicated investment income, or own a business. When filing yourself, it’s possible you could miss deductions that could save you money, or you may make filing errors that could cost you later. 

Use Tax Software 

Taxpayers can use a variety of tax software programs to make tax preparation easier. These include TurboTax, TaxSlayer, H&R Block, and others. Some are free to use but have limitations, while others have paid tiers that offer additional features like live support. These can be pricey, depending on the amount of assistance you need. 

Hire a CPA

Hiring a CPA to prepare and file taxes is easily the most expensive option. However, if you have many itemized deductions, have complicated investment income or losses, are self-employed, or have additional forms such as schedules for student loan interest, hiring a CPA could save you money in the long run–and land you a bigger refund. 

How Are The Major Tax Preparation Services Reacting?

Following the report of the DOGE’s interest in a mobile app for free tax filing, Intuit and H&R Block suffered sharp drops in their stocks. Intuit stock dropped 5.1%, while H&R Block stock dropped 8.2%.

At H&R Block, George Agurkis, director of government relations, issued a statement saying the company looks forward to engaging with the incoming administration and DOGE regarding tax administration, according to Yahoo Tech. Intuit CEO Susan Goodarzi told The Verge the company doesn’t “lobby against free” and free tax filing is “not relevant to our business.”

The Bottom Line

DOGE leadership has discussed creating a new mobile app so Americans can file their taxes for free. However, there already are free tax filing options, both through the IRS and by using certain tax preparation software. You should review these options along with available paid options to see which filing method best suits their individual tax needs. Doing so could save money upfront or in the form of a larger refund–or both.  

Several brokers are under scrutiny for how they handle and make money on idle cash in customer accounts.

Brokers could be making significant returns on your idle cash in brokerage accounts and keeping the majority.

Brokers and banks are facing mounting scrutiny over their cash sweep programs. The U.S. Securities and Exchange Commission (SEC) is investigating them, and customers have filed class action lawsuits.

How are brokers making money on idle cash, and what can you do to earn better returns on your deposits?

Key Takeaways

• Brokerage firms often sweep uninvested cash in their customers’ brokerage accounts into bank accounts.
• The banks typically keep the majority of the returns on that cash.
• Some brokers could be making up to 10 times more than you receive on your idle cash.
• Investors can consider proactively investing their cash balances in high-yield savings accounts or CDs to net better returns.

What Do Brokerage Firms Pay on Average for Cash on Deposit?

Brokerage firms can transfer their customers’ uninvested cash from their brokerage accounts to higher-interest accounts. While it stands to reason customers would benefit from the higher interest, there is mounting concern that brokers keep most of the returns for themselves.

In 2025, the SEC fined Wells Fargo Advisors and Merrill Lynch $60 million for failing to consider their client’s best interests when choosing cash sweep program options.

According to a Bloomberg Law analysis, other brokerage firms are facing class action lawsuits alleging that customers were underpaid billions of dollars due to the low interest rates that banks and investment firms paid.

How Much Do Brokerages Earn on Those Deposits?

Cash sweep programs are lucrative for brokerage firms. They can move billions of dollars of customers’ money into sweep accounts and pay customers a fraction of the interest being earned.

Brokerage firms may seek to sweep cash into affiliated banks, often paying low interest rates. According to some reports, brokers could make 10 times more than their customers do on their cash.

What Can You Do to Earn Better Returns on Your Brokerage Deposits?

You do not have to accept the default cash management programs brokerage firms offer. You can consider placing that uninvested money in a high-yield savings account, offering interest rates close to 5%.

You can explore putting it in a CD if you do not need immediate access to that cash. As of January 2025, CD rates are as high as 5.50%.

The Bottom Line

Brokers commonly employ cash sweep programs, although this practice has attracted SEC scrutiny and class action lawsuits.

As an investor, you want the highest returns possible on your money. You can explore alternatives to the default sweep accounts that your broker uses. Take a look at the cash management options your broker offers. You can also explore options like moving that money to a high-yield savings account or a CD.