Data & Research October 9, 2013

Small Businesses See Growing Need for Advisers

More than nine in 10 small business leaders predict that their need for an outside financial adviser will increase or stay the same over the next several years, according to a recent LIMRA study.
Reported by

Dubbed “A Little Advice: How Small Businesses Use Advisors (2013),” the study found that businesses with 10 to 24 employees, companies that are in the middle of establishing operations, and organizations looking to expand are most likely to seek external aid while setting up and managing benefits plans.  

Another key finding in the study: Among the 98% of businesses in the U.S. that employ fewer than 100 people, only half have used an adviser, regardless of whether they offer some type of benefits plan.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

For those employers surveyed that have used an adviser, half also reported feeling satisfied with the services they received. Four in 10 small businesses reported themselves as “neutral” with regard to adviser satisfaction.

The top reason small-business employers gave for eliminating their adviser was cost.

The survey also included analysis of the types of services most often requested of advisers by small-business owners. More than eight in 10 advisers (84%) reported being engaged to review benefit plans to ensure competitive rates and services. A slightly lower percentage (78%) said they had been hired by a client to review renewal rate adjustments to ensure competitiveness and appropriateness.

A full list of the most popularly requested adviser services can be read here.

Data & Research October 9, 2013

Many Investors Have Fear of Financial Planning

They have yet to get around to it. Some say they just do not need to. A substantial number of investors have not developed a financial plan, Nationwide found in an investor sentiment survey.
Reported by

About a quarter of potential investors (26%) in Nationwide’s investor sentiment survey, Fear of Financial Planning, have no financial plan. Considering that October 7 through 11 is Financial Planning Week, Nationwide said it is even more alarming that, of those investors without a financial plan, 38% also have no intention of ever creating one.

Of the investors without a plan, 31% said they have not gotten around to crafting one yet, 20% said they do not need one, 16% said they do not know how to create one and 15% responded that they do not need a formal financial plan because “all the information I need is in my head.”

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

“An effective plan is much more than opening a savings account or investing in your employer’s 401(k). It’s a map to ensure that you get to your financial destination,” said Michael Spangler, president of Nationwide Funds. But people do not need to go it alone. They can benefit from an investment professional’s expertise, taking a macro-level view to help with financial goals.

According to the survey, of the 783 potential investors over the age of 18 who had at least $100,000 in investable assets—i.e., the survey’s participants—36% have never worked with a financial adviser, or they have in the past but currently do not. The top reasons respondents gave were that they thought they could do it themselves and felt they did not need professional help (40%), did not want to pay the fees associated with working with a financial adviser (20%), felt they do not have enough assets to work with a financial professional (11%) or were afraid to trust a stranger to handle their financial needs (6%).

Adviser Opportunity

Of those investors who do work with an adviser, 19% said they feel they need help to make better investment decisions or need more information and options about various investment opportunities. Slightly less (17%) said they turn to a financial adviser to get access to professional knowledge, expertise and investment success.

“These findings demonstrate several significant gaps that financial advisers can bridge to educate investors about the importance of a robust financial plan and various investment products that can help them meet their financial goals,” Spangler said. “By working with an adviser who can assess an investor’s goals, assets and risk tolerance, the path to achieving those objectives and preparing for a secure retirement becomes significantly smoother.”

“We live in an era when Americans are more responsible for their own financial security than ever before,” Spangler said. “However, for various reasons far too many haven’t taken the time to draft a detailed financial plan to help them achieve their goals over the short, medium and long terms.”

The survey was conducted online within the U.S. by Harris Interactive on behalf of Nationwide Financial, from March 26 through April 3.

More data from the Fear of Financial Planning survey and a link to download is on Nationwide’s site.

«