Headlines you need to know this week
Without a workplace plan, many workers do not save at allMany workers who do not have access to workplace retirement savings, are not planning or saving. Pew Research found that making an informal guess about how much to save for retirement is more common among those without a plan (43%) than those with a plan (31%). Only 25% of those without a plan report having any retirement savings in other accounts such as an individual retirement account.
Couples less likely to talk about money as they get olderAlthough it is an important topic but most couples avoid talking about savings and investments, a new study found. While 63% of couples in their 20s report they talk about finances all or most of the time, that focus diminishes as couples get older. Just more than half (56%) of couples in their 30s and 48% of couples age 40 and older report they talk about finances most of the time.
Women are more worried than men about Social SecurityA new study from LIMRA found that women pre-retirees are more worried about risk such as reductions in Social Security and Medicare benefits. Women expressed more concern about health-care costs, and believed they were more likley to need long-term care than men.
Attitudes about advice differ among generationsMost Millennials (87%) expect an advisor to protect their investments in the event of a market downturn, while 76% of Gen X investors want financial education, a recent study found. Gen X investors tend to be skeptical about investments while Millennials are interested in socially responsible investing, the survey found.
Market plunge causes many retirement savers to make changesMany 401(k) savers chose to make investment changes in response to last week’s equity market plunge. According to the Alight Solutions 401(k) Index, the stock market drop caused almost 12 times the “normal” level of trading activity on February 5, according to the report. Most of the reallocations were from equity to fixed income.
New fiduciary proposals expected in the fallNew proposals for fiduciary rules for the advice industry could be published for comments by the fall, according to recent reports. The Department of Labor (DOL) and the Securities and Exchange Commission are both working on fiduciary rules for the advisors who deliver retirement planning advice. The DOL’s rule, which was partially implemented in 2017, is facing a July 2019 deadline for portions of the original rule. The new proposals will likely require 60-day public comment periods.
Advisors can help boost investor confidenceAmong investors who work with a financial advisor, 75% reported a high level of confidence in their financial future because of the relationship, a recent survey found. The majority of those surveyed (87%) cited some trust in financial professionals, and 53% noted a “moderate or great deal” of trust.
Millions more boomers expected to migrate to mobileAbout 70% of baby boomers utilize mobile internet compared with 90% of Millennials, a recent study found. At the same time, the report estimated that 14 million boomers are expected to migrate to mobile technology within the next four years.
Optimism declines to normal levelInvestor optimism declined recently, falling back within its typical historical range for the first time since mid-December, according to the AAII Sentiment Survey. Bullish sentiment — stock prices will rise in the next six months — fell 8.7 percentage points. Bearish sentiment — stock prices will fall — rebounded by 2.6 percentage points. Still, pessimism remains below its historic average.
Gen Xers put off saving for retirementBurdened by debt, including credit card and student loan debt, many Gen Xers are putting off saving for retirement. In a recent survey, 50% of Gen Xers stated that they cannot save for retirement until they pay off their credit card debt. Gen Xers also have an average non-mortgage debt of $23,000. A full 63% polled believe “everything will just work out” when it is time to retire.
Retirement challenges not unique to the United StatesIndividuals planning for retirement in several countries share many of the same concerns as those in the United States, an international survey found. The study, which surveyed individuals in the United States, United Kingdom, and Australia, found that respondents were concerned about how much to save for retirement and assessing the impact of longevity risk and health-care costs.
Income uncertainty weighs on women’s risk toleranceWomen may be less risk tolerant than men but the catalyst is income uncertainty, according to a University of Missouri study. In analyzing more than 2,200 unmarried individuals in the Survey of Consumer Finances, researchers found that women are more likely to have uncertain incomes from one year to the next. Life events and caregiving affect income levels. The study also found that men and women receive different types of advice from advisors.
Millennials drive growth in sustainable investing: studyMillennials are driving growth in the $9 trillion sustainable investing market, a Morgan Stanley study found. Interest among millennials grew to 86% in 2017 from 84% in 2015. Millennials are twice as likely to invest in funds with social or environmental goals. Investment products focused on sustainable investing grew at a rate of more than 33% from 2014 to 2016.
Financial literacy an issue for retirees, especially womenA recent survey from the American College of Financial Services found that retirement-age women lagged men in their knowledge about securing income in retirement. Although neither group were high scorers, 18% of women passed the college’s retirement-income literacy quiz, compared with 35% of men. The study also noted that effective planning is linked to financial literacy.
Advisors organizing family meetings to talk wealth transferMany financial advisors are introducing new programs and ideas to talk to their clients, as well as their families, about wealth transfer, CNBC reports. With more than $30 trillion expected to move from boomers to the next generation in the coming decades, heirs will likely need guidance. Some are organizing meetings with multiple generations. Younger advisors are also playing a role in this business building effort.
Robo-users prefer human advisors when creating a planDespite the rise in use of robo-advisors, many investors prefer to work with a human when crafting a financial plan, according to Investor’s Business Daily. Among investors using a robo-advisor surveyed by the Spectrem Group, only 13% cited the robo as their primary advisor, while 18% said they use a full-service broker as a primary advisor. A full 66% said human advisors did a better job creating financial plans and 50% said people were more capable of making changes to those plans.
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