Data & Research August 4, 2016

Advisers Embrace Social Media, Taking Cue from Wealthiest Clients

A new Spectrem Group study highlights expanding use of social media and mobile technology among trendsetting wealthy investors. 
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Social media has become a “ubiquitous communications platform” that’s slowly but surely becoming a key element of the adviser-client relationship, according to Spectrem Group’s newest research study, “Using Social Media and Mobile Technology in Financial Decisions.”

The study examines the social media habits of affluent investors and “how those habits intersect with their need for regular access to information about their investments,” as well as their desire for greater engagement with advisers using online and digital platforms. Suffice it to say that modern investors, especially those with greater amounts of assets already saved, want as much social media and other instant-access communication pathways to reach advisers as they can get, Spectrem finds.

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In fact, half of Millennial and Gen X Mass Affluent investors with a net worth between $100,000 and $1 million want to be able to text their adviser and get a quick response. Despite potentially tricky compliance guidelines, many advisers have already implemented texting and social media chatting as a means of communication with their clients.

Looking at the mass affluent client segment, three-quarters already utilize a smartphone that allows Internet access and instant text/social media communication, and more than half worry about keeping their online information secure from potential hackers, especially when it comes to managing finances.

Interestingly, the desire to utilize more digital communication pathways does not necessarily mean wealthy investors don’t want to see their advisers’ face: “Almost 80% of Baby Boomers and more than 60% of World War II-era investors now own tablets, providing an opportunity for advisers to video-chat with clients.” At the same time, more than 40% of ultra-high net worth investors of all ages (with a net worth between $5 million and $25 million) indicate that video chatting is a service they would utilize, Spectrem finds.

Taking all this together, Spectrem predicts advisers who provide easy access online and who offer such items as video education on their websites, will have a strong competitive advantage.

“This study shows that leading advisers, within the confines of regulatory compliance, should embrace digital technology and social media as a means of amplifying their thought leadership and engagement with clients,” concludes Spectrem President George Walper Jr. “As Millennials and Gen X investors accumulate greater wealth, they will expect to be able to utilize their smartphones and tablets to access their account information 24/7, tap into educational articles, white papers, videos, and even connect with their advisers in real time using text or interactive platforms such as Skype. Those organizations that are prepared to meet these expectations will be most successful.”

Additional information and research can be found at www.Spectrem.com. 

The Markets August 4, 2016

Institutional Investors See Low Returns Again in Q2

“Weak international returns contributed to a median plan return that underperformed the 60/40 portfolio in the second quarter and for the year ending June 30, 2016," says Robert Waid with Wilshire Associates.
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Institutional assets tracked by the Wilshire Trust Universe Comparison Service (Wilshire TUCS) saw a median return of 1.89% for all plan types in the second quarter and a median one-year gain of 0.91%.

“Weak international returns contributed to a median plan return that underperformed the 60/40 portfolio in the second quarter and for the year ending June 30, 2016. The Wilshire 5000 Total Market Index returned 2.78% in the second quarter and 2.96% for the year. The MSCI EAFE for international developed market equities lost 1.46% in the second quarter and 10.16% for the year,” says Robert J. Waid, managing director, Wilshire Associates. “Bond returns were solid with the Wilshire Bond Index gaining 3.24% in the second quarter and 6.82% for the year.”

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Corporate funds experienced a 2.21% return for the second quarter and 1.64% for the year. Public funds returned 1.85% in Q2 and 1.07% for the year. Foundation and endowments saw a second quarter return of 1.83% and an annual loss of 0.26%, while Taft-Hartley pension plans returned 1.84% for the quarter and 1.04% for the year.

“Though all plan-type categories had positive quarterly median returns, most categories experienced only small positive median returns for the year,” Waid says. “This was the fourth quarter in a row where the 60/40 portfolio beat the median plan return.”

In the second quarter and for the year ending June 30, 2016, larger corporate funds outperformed smaller corporate funds, while smaller public funds and foundations and endowments outperformed their larger counterparts on both a quarterly and annual basis. Large foundations and endowments continue to have a significant exposure to alternatives with a median exposure of 40.20%, which significantly contributes to the performance difference, Wilshire says.

All plan types with assets greater than $1 billion had median returns of 2.02% in the second quarter and 1.51% for the year, compared to plans with assets less than $1 billion which had median returns of 1.85% in the second quarter and 0.73% for the year.

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