Data & Research December 12, 2023

Saver Receptivity to Financial Advice Reaches 10-Year High

Hearts & Wallets research also finds more Americans are looking to do both investing and banking with one provider.

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Americans are more accepting of their responsibility to save for retirement and receptivity to financial advice is at a record high, according to new Hearts & Wallets research summarized in “Attitudes & Sentiment 2023: Driving Corporate Strategy in Response to Changing Consumer Needs.”

According to the study, the prevailing consensus nationwide is that employers are not “responsible for providing for my retirement.” Agreement with the statement “my employer is responsible for providing for my retirement” has risen only five percentage points since 2011, to 18% in 2023 from 13% in 2011 One-quarter of households reported feeling comfortable leaving funds in plans sponsored by former employers.

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The demand for financial advice, meanwhile, has reached its high-water mark since 2013, particularly among millionaire households, Hearts & Wallets found. Among all respondents, 32% saw value in paying for financial advice, well above the 18% reported in 2013, when research on this surveying began.

How that advice will be delivered is still up for debate, according to the report. Consumer opinions remain divided on whether automated or human advisers provide superior advice.

“Despite progress in perceptions about advisers, the financial advice profession faces headwinds in articulating value proposition and justifying price,” the report noted. “Consumers are undecided how recommendations from robo-advisers and online tools compare to those of human portfolio managers and advisers.”

1 Firm, Please

Savers are also trying to look to only one source for financial needs.

The desire to both bank and invest with the same firm has seen significant growth, especially among households with less than $100,000 in investable assets. This attitude has experienced substantial year-over-year increases, with 35% of households nationally expressing a preference for integrated banking and investing, up from 23% in 2010, with research on this point dating back to that time.

The report suggested that companies should enhance both banking and investing capabilities and strengthen the connection between the two. Firms with genuine banking capabilities may have an advantage over those relying on third-party private labels, according to the researchers.

Manager Matters

Investors are also becoming savvier about who is managing their money.

Interest in the asset managers behind funds has grown, with 36% of households now agreeing it “is important to me which investment companies manage my mutual funds regardless of whether I or a financial professional has chosen the funds.” Those who agreed with the statement has grown steadily to 36% in 2023 from 26% in 2011.

The report recommended that investment firms strengthen partnerships between asset managers and distributors, as consumers express a desire to be informed about the asset manager behind their funds in both intermediary-sold and direct channels.

The findings in the “Attitudes & Sentiment 2023” report were derived from the Hearts & Wallets Investor Quantitative Database, analyzing consumer attitudes, sentiment, concerns and goals related to saving and investing. The survey, conducted from September 11 through October 6, involved 5,846 participants.

Products December 11, 2023

Delaware Expands Auto-IRA Program, Joins Colorado Consortium

Administered by Vestwell, the program will expand retirement savings access to Delaware’s private sector workers and is fee-free for employers.

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Delaware announced Monday that it is partnering with Colorado’s interstate consortium of state-run retirement savings programs to launch Delaware EARNs with the goal of expanding retirement savings among private sector workers.

The state auto-IRA will be available to Delaware private sector employees who don’t have access to a retirement plan on a voluntary basis, and is fee-free for employers.

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Vestwell, in partnership with BNY Mellon, will serve as the program administrator, providing recordkeeping, custodial and administrative services to employers and employees in the program, the recordkeeper announced Monday.

The news comes on the heels of New Jersey’s September selection of Vestwell as program administrator for its Secure Choice Savings Program. The Delaware program marks Vestwell’s eighth state auto-IRA program.

The Delaware EARNS—or Expanding Access for Retirement and Necessary Savings—program was first enacted in September 2022, making it the 16th state in the U.S. to create a state-run retirement program for private sector employees; the total rose to 19 this year. The partnership with the Colorado consortium aims to accelerate the launch of the EARNS program.

According to the Georgetown University Center for Retirement Initiatives, nearly 40% of private sector employees in Delaware do not have access to retirement savings through their workplace. The EARNS program aims to serve small businesses, as well as middle- and low-income private sector employees, who lack access to retirement savings.

Delaware joins Colorado’s consortium, called the Partnership for a Dignified Retirement, along with Maine, which entered into the partnership in August.

“We are grateful to the EARNS Program Board for supporting our entry into this innovative consortium with Colorado and Maine,” said Delaware State Treasurer Colleen C. Davis in a statement. “Doing so will ensure that Delawareans have the highest quality choice when it comes to retirement savings. Nearly 150,000 Delaware workers currently have no way of saving for retirement through their workplace. Today, we took a major step toward closing that gap.”

EARNS Board Chair Fayetta Blake said in a statement that Delaware will save on start-up time and costs by joining the partnership, and Delaware participants will benefit from “economies of scale” that will help them grow their savings over time. Partnership programs are tied to the employee, instead of the employer, making the account portable if employees leave and change jobs.

As of June 30, 19 states have enacted one of a variety of state-facilitated retirement savings programs for private sector workers and there is now more than $1 billion in assets in these programs. New auto-IRA programs were enacted just this year in Minnesota and Nevada, while Missouri started a multiple employer plan. Additionally, Vermont switched its format to auto-IRA from MEP.

 

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