Headlines you need to know this week

June 30, 2020

Regulators focus on use of ESG funds in retirement plans

The Department of Labor is proposing a new rule that would clarify the standards for the use of ESG (environmental, social, and governance) funds in retirement plans under ERISA (Employee Retirement Income Security Act). The proposal also includes some additions to the regulation. The DOL has established a 30-day comment period.

Staying at home helps savers

Staying at home due to the pandemic may help some adults save more. In a recent survey, 65% of Millennials said that staying at home helped them save more money. An increase in online shopping did not eclipse their savings. Nearly 70% of respondents said they were spending less money overall. Also, 20% of respondents said they plan to start investing.

Retirees may forget to save for taxes

Many investors are examining their retirement plans due to the pandemic. A recent survey found that 59% of respondents are more worried today about paying taxes in retirement than prior to the crisis. About 38% said the pandemic is forcing them to retire earlier or later than they had planned. Among respondents, 63% said it is important to develop a financial plan with a tax strategy.
June 23, 2020

Wealthiest cut spending most during pandemic

The wealthiest 25% of households cut their consumer spending more than any other income group during the peak of the pandemic, according to research from Harvard University. As a result, businesses that cater to wealthy customers saw a sharp decline in revenues. The study found that small businesses in wealthy regions of the country reported significant lay offs.

Views differ on who’s in charge of finances

Men and women in a recent survey had differing views on who was in charge of household finances. The survey found that 56% of women said they “shared responsibility” for spending and investing, and 31% said they were “primarily responsible.” Only 5% of married men said their spouse or partner was in charge of financial decisions and 40% said they shared responsibility.

Social Security may face insolvency sooner than expected

Social Security’s insolvency may be accelerated due to the COVID-19 pandemic, according to a recent report from The Wharton School of the University of Pennsylvania. The research found that the trust funds that provide benefits for retirees and individuals with disabilities could be depleted four years earlier than expected — in 2032. In addition, those turning 60 this year could see a further reduction in benefits. Social Security uses a formula that is based on the Average Wage Index for the year an individual turns 60. This year’s economic downturn could be a drag on that index.
June 16, 2020

Client retention during a crisis

Economic stress can drive investors to seek financial advice for the first time. Some clients may also be considering changing advisors. A recent article offered some ideas for client retention during the pandemic. Stepping up communications with clients is particularly important for retention. Also, advisors may consider sharing additional resources such as meeting opportunities and webinars.

Younger investors seek financial advice

An increasing number of younger investors are seeking financial advice due to the pandemic, according to a recent survey. The poll found that 19% of GenX respondents, 22% of Millennials, and 22% of GenZers noted that they did not work with an advisor prior to the pandemic. Among all respondents, 15% noted that they have developed a financial plan for the first time. Of those who already had a plan, 20% said they are reviewing the plan in light of the crisis.

Advisors serve as resources in many areas

Some advisors report that investors are seeking advice in many areas. With 40 million workers claiming unemployment, and millions of individuals dealing with their own health issues or health care for family members, advisors are being asked for guidance on a range of challenges. With rising unemployment and business closures, clients want help managing daily expenses. A renewed focus on health has led many clients to search for resources on how the pandemic may affect them.
June 9, 2020

More advisors plan to use ESG funds

A recent survey found that one-third of advisors plan to increase their use of ESG (environmental, social, and governance) funds in the coming year. The survey, conducted by the FPA, found that 38% of respondents said they were currently using or recommending ESG funds.

Advisors prepare for Regulation Best Interest

Advisors are preparing for the implementation of the Securities and Exchange Commission’s Regulation Best Interest. The law, which sets fiduciary rules for broker dealers and advisors, is scheduled to take effect June 30, 2020. The regulation establishes a new set of standards for advisors recommending investments to clients.

Investors grow more optimistic

More investors reported an optimistic view — anticipating that stock prices will rise over the next six months — in the recent AAII Investor Sentiment Survey. A bearish view, that stock prices will likely fall, dropped 1.13 percentage points to a level not seen in three months.
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