Archives for June, 2014

NYT article on shrinking financial workforce echoes ‘Advisor 2020’

June 25th, 2014, Comments Off on NYT article on shrinking financial workforce echoes ‘Advisor 2020’.

An article in today’s New York Times concludes that the pool of young people entering the field of financial advising is shrinki__Pictureng.

Of the 315,000 financial advisers working in the United States, only 5 percent are younger than 30, with the average age 50 or older. Companies are scrambling to attract and retain young workers, launching new initiatives such as training and recruitment programs and enhanced outreach to women and minorities. Racquel Oden of Merrill Lynch Wealth Management said this: “The urgency is really the fact that there are more clients retiring than there are advisers who can cover them.”

Oden’s remarks reflect a key finding in “Advisor 2020,” research sponsored by NAIFA and published by GAMA that says demand for insurance and financial advisors will severely outpace the average growth of the U.S. workforce by 2020. The number of candidates for these jobs will shrink as the number of college graduates and early career changers decline.

While newspaper articles help raise awareness of the immediacy of such industry issues, “Advisor 2020” offers a framework that today’s advisors can use to capitalize on the changing market forces and meet the expanding needs of consumers today and tomorrow. Says NAIFA President John Nichols: “Every advisor needs to read and use the content and tools provided in “Advisor 2020” so they can build their practice and plan for a successful future.”


401(k) Balances Nearly Double Since Recession

June 24th, 2014, Comments Off on 401(k) Balances Nearly Double Since Recession.

401(k) account balances have gone up 93 percent, nearly double since the economic downturn in 2009, according to the latest research from the Principal Financial Group. While much of the increase reflects a rebounding market, the study found a significant increase in participation and savings rates since the market collapse, with account balances rising 17 percent in 2013 alone, to an average of $54,000.

“The economic downturn may finally be in the rear view mirror, but the lessons learned from the crisis are hopefully influencing our savings habits as a nation moving forward,” said Jerry Patterson, senior vice president of Retirement and Investor Services for The Principal. “While we still have a lot of work to do to help Americans save at more adequate levels for retirement, these numbers are a positive sign that retirement savings are moving in the right direction.”
The study, conducted by The Principal Knowledge Center, analyzed retirement plan participants savings and deferral changes among those enrolled in an employer 401(k) plan from 2008 to 2013.

More savings, more engagement

The study found a significant increase in the number of employees acting to increase their contributions or deferrals into their employer’s plan. The number of participants choosing to increase their contribution rates has increased almost 70 percent since 2009. The average employee-contribution rate has increased by 14 percent during the same period.
“Employees are making great strides towards signing up to save more, but employees still succumb to inertia and often set and forget their savings,” noted Patterson. “That’s one of the reasons we’re working with employers to design plans that use the power of inertia to help individuals continue to save at more adequate levels.”
Patterson says changing plan design features to help make savings more automatic can capitalize on the upward trend and accelerate overall participation and savings rates. The company recommends several key automatic plan design features, including:

  • Automatic enrollment with at least 6 percent elective deferral.
  • Automatic escalation of at least 1 percent per year up to 10 percent.
  • Sweep all existing employees into the plan at least one time at the default deferral rate.
  • Stretch the match by using a formula that incents employees to defer at higher levels in order to get the full employer match.
  • Use an asset-allocation choice as the qualified default investment alternative.

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By Ayo Mseka


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