Headlines you need to know this week
Women lack financial confidence about the futureA new study found that women tend to lag men in wealth accumulation and could fall short as much as $1 million in savings compared with men. Women may have less money to invest due to a wage gap and breaks from the workforce to take on caregiving responsibilities. Women may also be hesitant about investing, with only 52% reporting they are confident about managing investments, compared with 68% of men.
SEC releases “Best Interest” proposalThe Securities and Exchange Commission released its “Regulation Best Interest” proposal, which outlines a set of rules for the delivery of investment advice to retail investors. The proposal includes standards of conduct for broker-dealers and requirements for increased transparency with clients. A 90-day period has been launched for public comment.
Millennials more inclined to save their tax refundA recent Bank of America Merrill Lynch survey found that more Millennials may be planning to save their tax refund than older generations, including Generation X. They also may be planning to invest the funds. The poll found that 20% of Millennials plan to save compared with 18% of Generation X. Approximately 8% of millennials said they plan to invest their refund, compared to 7% of Generation X.
Can tech firms compete in robo advice space?While some large technology companies recently began exploring offering digital financial advice, financial industry tracker Cerulli noted that advisors should not be concerned about the competition. One of the biggest obstacles for large tech companies is the demand for human advice. Digital advice users still prefer to have frequent discussions with human advisors, Cerulli said in its report.
Social media may distract from savingWhile a recent study found that Millennials are saving more than previous generations, social media may be emerging as a distraction to saving. The study found that 41% of millennials set aside money each month for saving, which is about the same number of Boomers (42%), but more than Gen Xers (36%). At the same time, 57% of Millennials said they spent more money than planned to because of what they saw on social media feeds.
More retired Baby Boomers work in the gig economyMany Baby Boomers are starting second careers and working into retirement. A 2017 Prudential Financial survey found that 31% of people working in the gig economy are age 56 and older. Of those, 34% reported that they are retired. Longevity and the need to supplement retirement income are among the drivers of this trend.
Next generation investors want frequent communicationAn estimated $30 trillion in wealth is being passed down to the next generation over the next three decades. Yet 98% of heirs are likely to change advisors soon after receiving their inheritance, according to The Rudin Group. This next generation of investors is typically seeking more communications, high quality customer service, and responsiveness from their financial advisor.
Parents may need guidance before taking on college debtA record number of parents are entering their 60s with debt from their children’s college years, according to the Consumer Protection Bureau. Student loan debt held by people over the age of 60 totals $66.7 billion, and the average owed per individual is $23,500.
New hires may be looking for more than salaryWith a shortage of newly certified financial planners to fill job openings, some firms are offering a variety of perks to attract and keep qualified individuals. While salary is important, Millennials are also looking for more work-life balance and flexibility, Financial Planning magazine reports.
Gen Xers put off saving for retirementBurdened 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.
Retirement challenges not unique to the United StatesIndividuals 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.
Income uncertainty weighs on women’s risk toleranceWomen 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.
Millennials drive growth in sustainable investing: studyMillennials 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.
Financial literacy an issue for retirees, especially womenA 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.
Advisors organizing family meetings to talk wealth transferMany 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.
Robo-users prefer human advisors when creating a planDespite the rise in use of robo-advisors, many investors prefer to work with a human when crafting a financial plan, according to Investor’s Business Daily. Among investors using a robo-advisor surveyed by the Spectrem Group, only 13% cited the robo as their primary advisor, while 18% said they use a full-service broker as a primary advisor. A full 66% said human advisors did a better job creating financial plans and 50% said people were more capable of making changes to those plans.
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