Headlines you need to know this week

March 19, 2019

Investors grow more pessimistic about markets

In the recent AAII Investor Sentiment Survey, a bearish view (the expectation that stock prices will fall within the next six months) rose above average, marking a six-week high. Bullish sentiment — expectations that stock prices will rise in the near term — declined.

Are 401(k) plans slow to adopt sustainable investments?

Interest in ESG investing is rising, but recent studies note that retirement plans have been slow to adopt these strategies in their investment offerings. In a survey of 401(k) plan participants, 56% of respondents said they would prefer to invest in companies that are focused on ESG — environmental, social, and governance issues. For plan sponsors, confusion about regulations may be among several obstacles to adoption, the study noted.

Millennials saving more for retirement than other generations

Millennials have $1 trillion in debt, according to the Federal Reserve, but they may have more retirement savings than other generations. Millennials today have an average of $15,500 saved for retirement. Gen Xers had an average of $13,600 saved for retirement at that age. Also, Millennials have less credit card and mortgage debt than Gen X, but higher levels of student loan obligations.
March 12, 2019

Record number of ESG funds launched in 2018

The number of mutual funds focused on sustainable investing rose by 50% last year, according to a report. By the end of 2018, 351 sustainable funds had garnered a total of $161 billion in assets. Sustainable funds also attracted record net inflows of $5.5 billion, the report stated.

House to hold hearing on Best Interest rule

The House Financial Services Committee will hold a subcommittee hearing this week (March 14) on the Security and Exchange Commission’s Best Interest proposal, which details a fiduciary standard for brokers. Congress cannot participate directly in the rulemaking process, but could denounce it through a resolution. The SEC chairman has said the regulation is expected to be finalized sometime this summer, the report stated.

Many women avoid financial decision making

Married women across all generations continue to leave financial decision making to their spouses, according to a recent study of more than 3,600 high-net-worth women. The majority of respondents (76%) cited retirement planning as a top financial need. Still, only 23% of women surveyed take charge of long-term planning. The lack of participation can put women at a financial disadvantage, the report noted.
March 5, 2019

Investors do not want robos to replace advisors

In a survey of more than 2,000 adults, 88% of respondents said they would like technology to help — but not replace — financial advisors. Differing views about using robo-advice emerged. More than half (52%) of Millennials said they would trust a robo-advisor with managing money, compared with 24% of respondents age 45 and older.

SALT limitation impacts 11 million taxpayers

Approximately 11 million taxpayers were affected by the $10,000 cap on state and local tax deductions (SALT) under tax reform, according to data from the Treasury Inspector General for Tax Administration. The report estimated that these taxpayers have a total of $323 billion in state and local taxes that cannot be deducted.

Are investors financially fragile?

A study by the Society of Actuaries (SOA) noted differences in saving behavior among individuals depending on their level of “financial fragility.” The SOA defined fragility as individuals who are vulnerable to a financial crisis and who may have a negative outlook for their finances. Individuals with high levels of fragility tend to focus on the near term and consider daily expenses a priority. The least fragile individuals can maintain a long-term investment horizon and focus on saving for retirement. Considering these definitions may help advisors understand an individual’s needs.
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