Headlines you need to know this week
Investors may not pay back emergency withdrawalsA recent survey found that 70% of individuals who withdrew money from retirement accounts under the CARES Act do not plan, or are unable, to pay the money back. In addition, 18% of respondents said they plan to repay some of the money back to their accounts and 13% said they will pay it all back. Among those who took a loan or withdrawal, only 10% said they are now financially stable. More than half said they expect it will take two to five years to recover.
Student loan debt can be issue at any ageCollege debt impacts all generations, according to a recent report. Adults age 50 and older held 22% of the $1.6 trillion in student loan debt in 2020. Their debt has more than doubled from 10% in 2004. In March, the government extended a provision to suspend loan payments until September 2021. The report estimated that more than $300 million in debt is not eligible for the suspension and could exclude up to 3 million older debt holders.
Gender differences in consumer confidenceConsumer confidence is on the rise. A poll of consumer confidence last week reached its highest level since the pandemic began. During the past year, women’s confidence levels have lagged each week. In some weeks, men and women were separated by 10 percentage points, the report stated. The pandemic also had varying impacts, with 5.4 million women losing their jobs compared with 4.4 million men.
Millennials search online for financial expertsHaving a social media presence is becoming more important as the pandemic has changed how investors search for financial professionals. Among younger investors, the search for an advisor has moved online. A recent report found that 73% of investors under the age of 40 use Google to search and 52% use LinkedIn. In addition, the study found that 83% of Millennials want to work with a firm that helps them contribute to environmental or social issues. As the demand for advice increases due to the pandemic, advisors may want to update their social presence and value proposition.
Investors remain optimisticInvestors remain bullish on equity markets according to the recent AAII Investor Sentiment survey. The index showed little movement from the previous two weeks. The number of investors citing an optimistic view — that the price of stocks would rise in the next six months — rose slightly to 59%. Individuals with a bearish sentiment — expecting stock prices to fall — dipped to 20.6%. And 28.5% of respondents were neutral.
Many individuals have a positive financial outlookNearly 70% of adults in a recent survey said they were optimistic about their current financial outlook. Nearly 30% were more optimistic today compared with periods following previous economic downturns. At the same time, 77% of respondents said the pandemic caused the worst economic downturn they had experienced. Saving has been a challenge, and 51% of respondents said they took some money from savings to cover expenses. Among savers, 46% said a rainy day fund was a top priority and 39% cited saving for retirement.
ESG certification launchedThe CFA Institute last week launched a certification program in ESG (environmental, social, and governance) investing. The certificate is designed for investment professionals who want to learn how to analyze ESG factors. The certificate will also help participants understand ESG issues in wealth management and financial advice. In a recent survey, 76% of institutional investors and 69% of retail investors cited an interest in ESG, the CFA noted.
More workers plan for early retirementYounger workers want to retire early. In a recent survey, 39% of adults said they anticipated retiring before age 65 — the largest number in any year of the survey since 2010. More individuals are saving in workplace retirement plans. The survey found that 62% of participants said that at least one person in their household is saving in an employer-sponsored plan, up from 53% in 2019.
Investors ready to focus on finances, engage advisorsA recent survey found that 53% of adults are ready to focus more on their finances in 2021. In addition, 44% of investors without an advisor said the impact of the pandemic helped them recognize the value of a financial advisor. More than one third (35%) said they experienced a decline in income last year. Of those, 37% said they do not work with an advisor and 32% said they have a financial advisor. In addition, 28% of those working with advisors said their income increased, compared with 15% who do not have an advisor.
Tax season moving slowlyTax season is moving slowly as taxpayers have filed fewer returns year to date, according to the Internal Revenue Service. As of March 5, taxpayers have filed 12.3 million fewer returns this year compared with 2020, representing an 18% decline. The filing window also saw its opening delayed two weeks until February 12. As a result, the IRS has sent out 32% fewer refunds. The average refund totals $2,990.
Virginia approves bill to create auto-IRAThe Virginia legislature recently passed a bill to create a state-run retirement savings program. The automatic enrollment, payroll deduction IRA program would be available for workers who do not have access to a retirement savings plan at work. Employees would have the ability to opt out. In recent weeks, the Oklahoma legislature also introduced a bill to create an auto-IRA program. Seven states have already adopted similar programs.
Investors want advisors to use latest technologyThe majority of investors in a recent survey said they want to work with advisors who use the latest technology. The survey also found that 83% of respondents said they preferred to work with a human advisor, even though communications are more often digital due to the pandemic. Of those working with an advisor, 90% said technology is important to track their financial health and performance, and to set and meet goals.
Read our views on preserving and enhancing wealth for the future with financial-planning experts Bill Cass and Chris Hennessey
Explore our thinking about today’s financial markets
Stay on top of trends in mobile technology, software, and social media