Headlines you need to know this week
Married women may not be saving enoughNew research found that married women may be at a higher level of risk to have insufficient retirement income than single women. Boston College’s National Retirement Risk Index noted 46% of married women are at risk compared with 39% of single women. The study noted that married women tend to save less for retirement.
Technology is essential for advisorsTechnology, used in combination with a human relationship, is essential for financial advisors, according to a recent report. A 2015 survey found that only 32% of investors working with a financial advisor placed a higher value on financial returns than a good personal relationship with their advisor.
Advisors anticipate business growthA recent survey of more than 900 advisors found that 94% expect to grow new assets over the next five years, even if the market experiences a downturn this year. To position for growth, more than 90% of advisors said they plan to invest in technology as well as increase sales and marketing activities. About two-thirds of respondents said they were concerned about a market decline.
A 401(k) is the most important savings vehicle for manyA recent survey found that most savers (58%) said their 401(k) plan is their only or largest source of retirement savings. The majority of participants were not that engaged with their plan beyond the initial enrollment and had made few changes to their savings behavior. Less than half had changed their deferral rate in the past two years. More than half (51%) said they contribute 10% or less of income.
Savers may not understand the value of HSAsMost advisors do not include health savings accounts (HSAs) as a long-term strategy in their clients’ accounts, according to a recent report. Among advisors surveyed, nearly 60% did not offer HSAs and only 26% discussed how these plans worked or their tax advantages. Still, HSAs continue to grow in popularity and total assets are projected to exceed $70 billion by 2020.
Graduates say they need more financial knowledgeAnother reason to reach out to the next generation: financial literacy. A recent study found that more than half of high school and college graduates gave themselves a grade of “C” or lower in financial literacy. Only one in 10 of respondents said they deserved an “A.” The survey, which fielded questions about financial behavior and finance knowledge, included adults ages 18 to 24.
Retirees need tax adviceA recent survey found that 70% of retirees are only “somewhat knowledgeable” or “not knowledgeable at all” about tax planning. Retirement can be a particularly challenging period as investors are faced with decisions about how much income to withdraw and from which accounts. The survey also found that retirees may need more clarity on the tax treatment of Social Security in retirement.
Advisors look to data to differentiate their servicesAs financial advisors face increased pressure to differentiate themselves, they may gain an edge by learning more about their clients. Some advisors are turning to data to help deepen their knowledge about clients. Implementing a tool or questionnaire that focuses on clients’ financial behavior patterns, goals, risk tolerance, and approaches to decision-making can be a place to start.
SEC approves Best Interest regulationThe Securities and Exchange Commission last week approved a series of rules including a Regulation Best Interest, which sets new conduct and disclosure standards for broker/dealers. The rule also requires that advisors share a Form CRS when starting a client relationship. The form is a summary of the relationship, including details about fees, costs, conflicts of interest, and code of conduct. The rules take effect 60 days after publication in the Federal Register. Firms will have until June 30, 2020, to comply.
Gig workers say they need financial adviceGig workers — individuals engaged in short-term contracts or freelance work — may face challenges to saving, but acknowledge they could use financial advice, a recent study found. About 31% of households work in the gig economy. Individuals between the ages of 21 and 39 had more investing experience than those in the non-gig economy but were more anxious about their financial future, according to the report. Still, 19% of younger workers said they had difficulty choosing investments and planning for retirement. The majority of respondents noted that they were likely to use many sources of advice, including financial professionals (81%) and online tools (80%).
Colleges launch financial planning studies as advisor shortage loomsAbout 40% of financial advisors plan to retire in the next 10 years, Cerulli reported. The CFP Board stated that there are more certified financial planners over the age of 70 than under 30. As a result, it may become more difficult to recruit as older advisors retire. In response to this trend, a growing number of colleges are offering programs to help students become financial planners.
Gender is a key issue for impact investorsMore investors are interested in making a difference with their investments, and so-called impact investing is growing. Gender-focused investing is a growing trend, according to a recent report. The analysis found increasing awareness that investing in women and minority-led businesses is key to building more fairness in the world. In addition, women make up larger percentages of impact investing asset management teams.
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