Headlines you need to know this week
More planners choose digital businessA growing number of advisors are establishing a virtual business. In a recent report, advisors noted the benefits of having a completely digital business including flexibility when scheduling meetings. Also, clients are receptive to the idea. Many clients travel and are accustomed to using video communications for meetings. Advisors noted that website and blog content become more significant when working in a digital setting.
Choosing a niche businessSeeking a competitive advantage, many advisors are choosing a niche for their practice. A recent study found that advisors with a niche practice had 35% higher client growth and 25% growth in revenues. Advisors should consider their current client base in order to identify the demographic for a possible niche business. Next steps include customizing services and marketing to the target audience.
What advisors wish they knew earlierIn a recent interview, several advisors discussed what they wish they had known when they first started in the business. Comments included: A professional designation does not automatically attract business; clients can be financially literate but make poor money decisions; and understanding behavioral finance is important.
Women plan to work longer than menWomen continue to report that they will work well into retirement, according to a survey by the Federal Reserve Bank of New York. On average, women noted that they earned less money than men and are not able to save enough for retirement. The survey found that 54% of women expect to work beyond age 62, up from 49% last year. At the same time, only 52% of men plan to work past 62, reflecting a decline from 57% a year ago.
A growing number of older workers are joining the gig economyMillennials are the largest generation in the U.S. workforce. About one-third of this group are working as freelancers or independent contractors — in the so-called gig economy. In addition, more older workers are doing freelance work. According to a recent report, 56 million adults worked as freelancers in 2018 and 30% were over the age of 55. While many contractors earn higher income than their peers, they often lack access to workplace benefits such as retirement savings plans. This growing segment of the workforce has unique financial planning challenges, creating opportunity for advisors.
Robo-advice market grows less than projectedThe use of automated financial advice is growing, but not as fast as once predicted. Just a few years ago, industry trackers expected assets under management by robo-advisers would exceed $2.2 trillion by 2020. According to a recent report, assets managed by robos reached just about $440 billion in the first half of 2019.
Interest in sustainable investing is at an all-time high: PollMore than 80% of total investors surveyed and 90% of individuals in the Millennial age group are interested in sustainable investing, according to Morgan Stanley’s Institute for Sustainable Investing. However, only 52% of individual investors and 67% of Millennials have taken action and invested.
Financial wellness programs grow, but gender gap persistsThe number of companies offering financial wellness programs is rising. In a 2019 study, 53% of companies reported offering a financial wellness program, up from 24% in 2015. Still, not all employees cite “good” or “excellent” wellness. The study found that 65% of men, who had more saved for retirement than women, reported feeling financially well, compared with 43% of women.
Parents seek guidance on financial literacyMost parents influence their children’s financial behavior, but many are not confident about their ability to educate about money, according to a recent survey. Most respondents with children noted they are unsure about certain financial topics. Just half (53%) said they feel confident about managing a 401(k). Seeking guidance from a financial expert may help them develop the confidence to share important financial lessons.
Seven states sue over new regulationSeveral states have filed a lawsuit to block the new Regulation Best Interest, adopted by the Securities and Exchange Commission, according to a report. Some states are considering their own fiduciary rules. The regulation establishes rules governing conduct and includes a new interpretation of the fiduciary standard in the advice industry.
Investors turning to financial therapySome investors are seeking help at the crossroads of financial advice and psychotherapy: financial therapy. According to a recent report, a financial therapist tries to help investors understand the emotional causes of their financial decision-making and learn to change self-defeating behavior. In a 2018 survey, the American Psychological Association found that money was the top stressor among adults and has been since the survey began in 2007.
Millennials struggle to save for home purchasesStruggling to save for a down payment on a house, Millennials are choosing different methods than older generations. A recent survey found that 13% of Millennials are withdrawing money from retirement savings for a down payment, compared with 8% of Generation X and 7% of Baby Boomers. Millennials are also more likely to save money by moving in with family (14%) or selling personal items (12%) than older generations. Financial advisors can provide alternative saving strategies.
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