Headlines you need to know this week

August 14, 2018

More investors focus on ESG

A recent survey found that 43% of investors consider environmental, social, and governance (ESG) factors when making investment decisions. The focus on ESG is up from 37% in 2017. At the same time, 54% of those surveyed said they did not use ESG criteria, while 3% were unsure.

Many Millennials take retirement savings to buy a house

Many Millennials are using retirement savings to buy a house. A recent survey of some 600 individuals found that 19% of Millennials planning to buy a home expect to use money from retirement savings. Another 29% of those who already own a home report having borrowed or withdrawn from an individual retirement account or 401(k).

Thousands comment on SEC best interest proposal

Last week marked the final day for the public comment period on a new “best interest” regulation proposed by the Securities and Exchange Commission (SEC). The rule would require that financial advisors act in the best interest of their clients when making investment recommendations. Nearly 4,000 comments were submitted. Once the comments are reviewed, SEC staff will make a recommendation to the commissioners on next steps.
August 7, 2018

Investor optimism declines

Investor sentiment declined in a recent AAII Sentiment Survey. Optimism — investors’ belief that stock prices would rise over the next six months — hit a four-week low. The number of investors expecting that stock prices will fall in six months rose. The survey marked the first time in four weeks that pessimism rose above its historical average.

Less than one-quarter of Millennials invest in stocks

When considering long-term investments, only 23% of Millennials would put their savings into the stock market, a new Bankrate survey noted. Among age groups, 30% of Millennials prefer cash investments, while other generations — 33% of GenX and 38% of Boomers — would invest in the stock market.

Women are concerned about having enough savings to retire

Women are less confident than men about having enough money to sustain them through retirement, a recent study found. Nearly half (46%) of pre-retired women were uncertain how long their savings would last, compared with 33% of men. Only 14% of women said they were knowledgeable about managing their investments, compared with 33% of men.
July 31, 2018

Financial stress can be an obstacle to homebuying

Financial stress causes many couples to delay buying a home, according to a recent survey. Of the couples surveyed, 60% report that they discuss finances once a week. Among them, 97% of Millennials said they have a weekly conversation about finances with their partner. Still, 55% of respondents have never met together as a couple with a financial advisor. Only 30% meet with an advisor annually.

Retirees keep on giving

People continue their charitable giving habits even into retirement, according to a study by the Women’s Philanthropy Institute at Indiana University. The level of giving on average remains unchanged, the study found. The research also found that single women and married couples donate higher amounts compared with single men. Single women tend to spread out giving over several charities each year. Men typically gave larger amounts, but do so more sporadically.

How to recruit new advisors

More than one third (35%) of financial advisors are expected to retire in 10 years, according to new research. Only 25% of the advisor population is under the age of 40, the report found, and the number of new advisors entering the industry is shrinking. In a recent article, Wealthmanagement.com offered several ideas for recruiting and retaining talent.
July 2, 2018

More Millennials invest in the market

Among high-net-worth individuals, more wealthy Millennials invested in the stock market last year, according to a recent survey. Millennials reduced their cash allocations to 21% of their total portfolios from 47%, the poll found. Still, Millennials had the lowest stock allocations of any group, and 17% invested in alternative strategies. A full 80% of Millennials said they expect companies to focus on how their businesses impact the environment and society.

Investors: We need to talk about health care

A new survey stated that investors approaching retirement are “terrified” about the cost of health care but are not talking about it with their advisors. Nearly 75% of affluent investors — adults with $150,000 or more in income — reported that managing the rising cost of health care was their biggest fear about retirement. But less than half (48%) currently working with a financial advisor are discussing it.
June 26, 2018

Many individuals are not planning for longevity risk

Many financial advisors report that their clients are not planning for longevity risk, a recent survey found. Nearly 60% of advisors said that less than 25% of their high-net-worth clients have a plan for long-term care. Advisors may want to talk to clients about options and costs. A home health aide can cost $50,000 per year and the annual cost of assisted living facility can be $100,000, according to a Genworth study.

To improve financial literacy, educate children when they are young

According to the Federal Reserve, some 44 million individuals collectively have $1.5 trillion in college debt. Parents can play a role in helping children become financially knowledgeable as young adults. Many advisors encourage parents to start teaching their children at young ages about the value of saving.

Advice industry has a talent shortage

An increasing number of advisors are approaching retirement, but there is a shortage of advisors to replace them. According to a study by Ernst & Young (EY), for every graduate of a financial planning program who enters the industry, two advisors become eligible for Social Security. The study recommends more mentoring programs. Another report found many firms are focused on workplace improvements, such as additional benefits, to attract new advisors.
June 19, 2018

Nobel laureate: Human advisors are important

Despite the rise of robo-advice, human financial advisors are important to the industry, noted Nobel Prize-winning economist Daniel Kahneman at a recent conference. Communicating with a human advisor helps clients define their needs and concerns. Advisors can also help ease a client’s fears about finances. Robo advice, which has grown to more than $200 billion in assets under management, has been a disruptor in the industry, he noted.

Relationship-building is key to engage the next generation

An estimated $30 trillion in wealth is expected to transfer to heirs in the next several decades. However, only about one-third of advisors have an asset-transfer plan in place, according to a recent study. About 90% of advisors say their relationship with clients is critical to their business. At the same time, the majority of advisors note they only meet once a year or less with their clients’ heirs.
June 12, 2018

Regulators allow paperless financial reporting

The Securities and Exchange Commission recently voted to allow investment firms to post digital fund reports online instead of mailing paper copies to investors. Under the new e-delivery rule, which takes effect January 1, 2021, paper reports must be provided to any investors who request them.

Mobile wealth management sees fast growth

Mobility in financial services has grown significantly. A recent study found that mobile wealth management products grew 300% in the past year, largely driven by the banking sector. Mobile devices now make up the majority of web traffic visits, according to digital marketing research. At the same time, many banks and financial firms are seeking strategies to blend digital and human communications due to the importance of relationships in wealth management.

Workers may tap retirement savings for other expenses

A recent report found that 54% of workers stressed about finances and 64% with student loan debt believe they would likely use retirement savings to cover expenses other than retirement. More than half (54%) noted they would be open to help, and would like to have someone validate their financial decisions. The top concern for Millennials and Gen X workers is not having enough emergency savings. Among Boomers, nearly half (46%) said the top concern was not being able to retire when they want.
June 5, 2018

Advisors say clients are more optimistic about retirement

Nearly half (46%) of advisors report that clients who are working are optimistic about saving enough for retirement, up from 10.6% in 2015, according to Financial Advisor’s Retirement Planning Survey. Only 12% found that clients were less optimistic. Health-care costs in retirement are a concern. A full 63% of advisors said they provide some advice on health-care planning, while 20% noted they provide extensive planning.
May 30, 2018

Investors seek tax expertise

Financial advisors may want to highlight tax expertise when seeking new clients. According to a new report, 66% of affluent consumers cite tax knowledge as a priority when seeking a financial professional, and 47% of the respondents said they associate a CPA designation with financial advice.
December 5, 2017

Gen Xers put off saving for retirement

Burdened 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.
October 17, 2017

Retirement challenges not unique to the United States

Individuals 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.
September 26, 2017

Income uncertainty weighs on women’s risk tolerance

Women 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.
August 22, 2017

Millennials drive growth in sustainable investing: study

Millennials 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.
August 1, 2017

Financial literacy an issue for retirees, especially women

A 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.
May 23, 2017

Advisors organizing family meetings to talk wealth transfer

Many 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.
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