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How Reliant Is Each U.S. State on Foreign Trade?

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Foreign trade, as a % of GDP for each state:
How Reliant Is Each U.S. State on Foreign Trade?

How Reliant Is Each U.S. State on Foreign Trade?

Whether it is lashing out on China for unfairly weakening its currency, or calling out “unfair” government subsidies on Canadian softwood lumber, it’s safe to say that re-opening discussions about foreign trade has become a key priority under President Trump.

Is this the right route to take, and does America really need to negotiate new trade deals?

There are arguments either way, but the the reality is that trade agreements like NAFTA are perceived to have a mixed track record of success. Under NAFTA, trade volume has exploded, prices have been lowered, and U.S. reliance on oil imported from the Middle East has decreased, but at the same time, it is clear that manufacturers, especially in the auto industry, have been setting up shop in Mexico. As a result, at least partially, manufacturing jobs hover near all-time lows.

Walking the Tightrope

The biggest challenge with acting on these re-negotiation ambitions is that it’s inherently risky, no matter how you slice it. Any big slip up or ill-advised trade war could have a drastic impact on the economy.

Today’s data visualization, which comes to us from HowMuch.net, highlights this risk in a relatable way by showing the reliance on foreign trade as a percentage of GDP for each state.

Here are the state economies most dependent on foreign trade:

RankStateForeign TradeTrade as % of State GDP, 2015
1Michigan$178 billion38.0%
2Louisiana$84 billion35.1%
3South Carolina$70 billion34.8%
4Tennessee$110 billion34.7%
5Kentucky$66 billion34.3%
6Washington$138 billion30.9%
7Texas$500 billion30.7%
8New Jersey$152 billion26.7%
9Georgia$127 billion25.5%
10Indiana$82.8 billion24.6%

The state that stands out the most? It’s Michigan, the country’s auto manufacturing hub.

In 2015, a total of $171.8 billion (38.0%) of economic activity in the state was linked to foreign trade. Whether that’s buying aluminum from Canada to build a lighter chassis for Ford F-150s, or it’s one of the 2.6 million vehicles that the United States exports to 200 countries every year – that’s a large chunk of economic activity to muck around with.

Right now, the global economy is built around trade. And regardless of whether re-negotiating trade agreements is the right or wrong thing to do for Trump, the potential risks of any missteps ought to be respected.

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Investor Education

The Top 5 Factors Shaping Client-Advisor Dynamics

Here are the most common drivers for hiring a financial advisor, along with the top reasons for firing one.

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This circle graphic shows the top reasons for firing a financial advisor.

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The following content is sponsored by Morningstar

The Top 5 Factors Shaping Client-Advisor Dynamics

What drives investors to hire a financial advisor?

From saving for a down payment to planning for retirement, clients turn to advisors to guide them through life’s complex financial decisions. However, many of the key reasons for hiring a financial advisor stem from emotional factors, and go beyond purely financial motivations.

We partnered with Morningstar to show the top reasons clients hire a financial advisor—along with the reasons for firing one—to provide insight on what’s driving investor behavior.

Top Reasons for Hiring a Financial Advisor

Here are the most common reasons for hiring an advisor, based on a survey of 312 respondents. 

Reason for Hiring% of Respondents
Citing This Reason
Type of Motivation
Specific goals or needs32%Financial-based reason
Discomfort handling finances32%Emotion-based reason
Behavioral coaching17%Emotion-based reason
Recommended by family
or friends
12%Emotion-based reason
Quality of relationship10%Emotion-based reason

Numbers may not total 100 due to rounding. Respondents could select more than one answer.

While financial factors played an important role in hiring decisions, emotional reasons made up the largest share of total responses. 

This illustrates that clients place a high degree of importance on reaching specific goals or needs, and how an advisor communicates with them. Furthermore, clients seek out advisors for behavioral coaching to help them make informed decisions while staying the course.

Key Takeaways

With this in mind, here are five ways advisors can provide value to their clients and grow their practice:

  • Address clients’ emotional needs early on
  • Demonstrate how you can offer support
  • Use ordinary language
  • Provide education to help clients stay on track
  • Acknowledge that these are issues we all face

By addressing emotional factors, advisors can more effectively help clients’ navigate intricate financial decisions and avoid common behavioral mistakes.

Top Reasons for Firing a Financial Advisor

On the flip side, here are the top reasons clients terminated their advisor, based on a separate survey of 184 respondents:

Reason for Firing% of Respondents
Citing This Reason
Type of Motivation
Quality of financial advice
and services
32%Emotion-based reason
Quality of relationship21%Emotion-based reason
Cost of services17%Financial-based reason
Return performance11%Financial-based reason
Comfort handling financial
issues on their own
10%Emotion-based reason

Numbers may not total 100 due to rounding. Respondents could select more than one answer.

While firing an advisor is rare, many of the primary drivers behind firing decisions are also emotionally-driven.

Often, advisors were fired due to the quality of the relationship. In many cases, this was due to an advisor not dedicating enough time to fully grasp their personal financial goals. Additionally, wealthier, and more financially literate clients are more likely to fire their advisors—highlighting the importance of understanding the client. 

Key Takeaways

Given these driving factors, here are five ways that advisors can build a lasting relationship through recognizing their clients’ emotional needs:

  • Understand your clients’ deeper goals
  • Reach out proactively
  • Act as a financial coach
  • Keep clients updated
  • Conduct goal-setting exercises on a regular basis

By communicating their value and setting expectations early, advisors can help prevent setbacks in their practice by adeptly recognizing the emotional motivators of their clients.

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