Headlines you need to know this week

December 11, 2018

More ESG-focused indexes to launch in 2019

Some well-referenced benchmarks, including Russell 1000, Russell 2000, and Russell 3000 indexes, will have new “sustainable versions” beginning in 2019. The indexes will be produced by FTSE Russell and Sustainalytics, a research firm focused on sustainable investing. The indexes will include risk ratings calculated by Sustainalytics, based on a company’s focus on environmental, social, and governance issues.

Mobile apps likely to transform advice business

Mobile technology will be the top game changer in the financial advice industry according to a recent Financial Planning survey. A full 40% of the 307 advisors surveyed noted that mobile apps were most likely to transform wealth management. Another 39% of respondents cited behavioral finance software as a disrupter. Respondents were less optimistic about robo advice, with only 27.5% of advisors citing it as transformative, compared with 37% in last year’s survey.

Investors who work with advisors are more confident

A recent survey found that 87% of investors with a financial plan had a high level of confidence about their finances and 75% reported a positive outlook for their financial future. Respondents noted they felt confident by planning early, taking a long-term view on investing, and meeting often with a financial advisor. Still, the survey noted that only 55% had a formal financial plan.
December 4, 2018

Proposed rule would make it easy to transfer small 401(k) accounts

The Labor Department recently proposed a rule to allow for the automatic transfer of small 401(k) accounts to a new plan when employees leave their jobs. The rule would allow employers to move accounts that total less than $5,000 to an individual retirement account. A clearinghouse would then automatically transfer the funds to the 401(k) plan of the new employer. Each year, many employees cash out their 401(k) when they leave a job, undermining their retirement savings.

New fiduciary rule proposal may emerge in 2019

The Department of Labor is expected to introduce a new version of its fiduciary rule in 2019, providing guidance to financial advisors who offer retirement advice. In addition, several state-based fiduciary rules have emerged. According to Nasdaq, a fiduciary rule proposal in New Jersey is being challenged.

Retirement assets may be vulnerable to creditors when investors divorce

A recent court ruling found that IRA assets transferred due to divorce were considered part of the property settlement and not as retirement assets. This change in designation makes these assets vulnerable to creditors in the case of bankruptcy. Investors may want to consider additional asset protection strategies for managing these funds in the case of divorce.
November 27, 2018

Advisors should consider GenX when connecting with potential clients

Advisors may want to focus their prospecting efforts toward Generation X, according to research from Cerulli. The industry tracker projected that about $68 trillion in wealth will be transferred to heirs over the next 25 years. Baby Boomers represent about 70% of those gifting the assets, and nearly 60% of the transfer will go to Generation X households. Generation X is defined as households between the ages of 37 and 52.

Retirement dreams may motivate people to save

Envisioning what retirement could look like may be the best motivation for an individual’s commitment to saving, according to a new report. Individuals who could articulate their vision for retirement saved 31% more than those who could not. In fact, women and Millennials saved 40% to 50% more than the average savings rate. In addition, more Baby Boomers were optimistic about their financial future than Millennials or GenXers.

Caregivers may need guidance meeting the savings challenge

Caregiving can represent big challenges to saving for retirement, particularly for women. More often, women take on the caregiving role for elderly family members or adult children. It is estimated that about 40 million Americans provide unpaid caregiving to others. Several surveys found that many caregivers find it difficult to save for retirement, as their responsibilities could mean lack of promotion, reduced hours, or leaving their jobs. Working fewer hours or periods of unemployment can mean less retirement income.
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