Industry Trends and Research

Industry Trends and Research

Industry Trends and Research covers significant research and trends affecting the advisor-sold retirement market. Overarching issues and major research initiatives are reviewed, posted and discussed by thought-leading institutions and industry publications, including the conductor, Nevin Adams.

Withdrawal ‘Symptoms’

was asked recently about the so-called “4% rule.” That’s the rule of thumb that many financial advisors rely on as a formula for how much money can be withdrawn from retirement savings every year (generally adjusted for inflation) without running out of money. At the time, my comment was that the 4% guideline is just that — a guideline. What’s not as clear is whether adhering to that guideline produces an income stream in retirement that will be enough to live on.   Read More

DB to DC Shift Continues: LA Looking to Move New Workers to 401(k)s

In another sign of the shift from DB to DC plans, former Los Angeles Mayor Richard Riordan has filed a ballot initiative to overhaul the city’s employee pension system. Riordan’s plan would require future workers to enroll in 401(k)-style retirement accounts instead of government pension plans. The plan — which the City Council supports — would also raise the retirement age for city workers hired after July 1st of next year from 55 to 65, cap retirement benefits at 75 percent of what an employee makes, and require workers to pay more toward their retirement benefits.   Read More

The Good Old Days

There’s been a lot of talk lately about the need to fix the “broken” 401(k) plan. As often as not, this sentiment arises as part of a discussion where folks, including retirement plan advisors, wistfully talk about the “good old days” when everybody had a defined benefit pension, and people didn’t have to worry about saving for retirement. The only problem is: Those “good old days” never really existed, nor were they as good as we remember.   Read More

PSCA Annual Survey Shows DC Plans Improving, But We’re Not ‘There’ Yet

The Profit Sharing Council of America (PSCA) has released its 55th Annual Survey of Profit Sharing and 401k Plans. The results of the 2012 survey — which reports on the 2011 plan-year experience of 840 plans representing 10.3 million participants and $753 billion in assets — demonstrate continued confidence in the defined contribution system. The most significant finding of this year’s survey is that more companies and participants are putting money into their plans, and they are doing so at higher rates than in previous years.   Read More

Generation ‘Gaps’

If you think it’s complicated trying to determine an individual’s retirement funding needs, imagine trying to do so for all American workers. When EBRI modeled the retirement savings gap of Baby Boomers and Gen Xers earlier this year, we found that in terms of the gap between retirement savings and anticipated post-retirement expenses, American households are better off today than they were nine years ago—even after the financial and real estate market crises in 2008 and 2009.   Read More

Are More Americans Covered by Company Sponsored Retirement Plans Than We Think?

An Investment Company Institute study released last month, “Who Gets Retirement Plans and Why, 2011”, found that nearly three-quarters of those likely to save for retirement have access to a retirement plan through their employer or their spouse’s employer. Of that group, 93 percent participate. And according to the September edition of “Beyond the Numbers,” a U.S. Bureau of Labor Statistics monthly publication, access to retirement plans differs significantly by occupation, union status and wage level, among other characteristics. For example, the 78.7 million people without access to their own work-based retirement plan includes 61.1 million private-sector workers — but 12.7 million people in this uncovered group are self-employed and 153,000 say that they work without compensation of any type. Of the 52 million people who work for companies that don’t sponsor retirement plans, just 9.9 million, or 19 percent, don’t have access to a plan through their spouses’ employers, the ICI study found.   Read More

Women Eclipse Male Wealth Managers in AUM

Female wealth managers now manage an average of 5% more assets than their male counterparts, according to Fidelity’s 6th annual Broker and Advisor Sentiment survey. Behavioral finance research shows that women take less risk than men and are more realistic, while men tend to be more confident and optimistic. Women make up less than 10% of plan advisors, so advisor firms and broker dealers may be wise to recruit women to help plan sponsors and their participants with financial planning — not only to distinguish themselves but also to gather more assets.   Read More

Obama or Romney? Red or Blue? What’s the Likely Impact on Advisors?

As you may have heard, there’s an election coming up in about a month. In a video shot just before the first presidential debate, NAPA’s Executive Director and Washington insider Brian Graff explains his take on the presidential campaign as it enters the stretch run, the likely political balance in the House and Senate, and what it all may mean for plan advisors.   Read More

Proactive Advisors Can Leverage Plan Participant Concerns

Participants’ concern about their retirement is growing, according to the 4th Annual 2012 DC Participant Experience Study by KK & Company and Greenwald & Associates. To address that concern, participants prefer more proactive steps to increase their retirement readiness and provide them with more analysis. Almost half of participants feel they are behind schedule on saving for retirement, and three in five wish their employer did more to educate them about their retirement plan. Advisors that provide hands on education and advice are better positioned to address these concerns and win new business.   Read More

Advisors Need to Help Clients Focus on the Right Variables to Improve Outcomes

For decades, the defined contribution industry has focused on the performance of individual funds at the expense of other plan metrics. In a recent white paper, W. Van Harlow, Director of Research, Putnam Institute, analyzes a series of variables — fund selection, asset allocation, portfolio rebalancing, and increasing deferral rates — to determine which factors may have the greatest potential impact on an individual’s portfolio. Though it may seem intuitive that deferral and asset allocation have a greater affect than fund selection, the analysis may be helpful to show clients where to focus attention and resources.   Read More

Coming Pension War Makes Election Look Tame

Mitt Romney’s reference to the divide between the 47 percent of citizens who don’t pay income taxes and those who do may not be as important the pension divide, between those few who have a guaranteed cushion in the form of defined benefit pensions. How the candidates address this divide, cultural as well as political, is crucial, far beyond November.   Read More

Six Good Websites for Research

NAPA Net Conductor Nevin Adams highlights his favorite websites that advisors can use for research and statistics, including EBRI, The Bureau of Labor Statistics, IRS, DOL/EBSA, The Ballpark E$timate and American Savings Education Council. While it’s difficult for an advisor to be a thought leader, citing relevant and useful statistics to clients, as well as leveraging thought leaders like Nevin, have a better chance of retaining clients and winning new business.   Read More