Affluent Investors Motivated to Save for “Freedom”

The study, “Acquiring Mid-Career Accumulators: Positioning Advice and Disclosing Fees with Upshifting and Downshifting Investors,” found that many investors are not planning to retire, but rather are preparing a back-up plan if they want to leave their job “if someone treats them unreasonably, or if they simply get sick of that job and want to do something else,” said Laura Varas, Hearts & Wallets principal. However, the study also reports that few providers have been able to change the dialogue from a singular focus on retirement to multi-dimensional freedom money.  

“It’s critical to address these issues prior to the 401(k) fee disclosure in 2012,” said Chris Brown, Hearts & Wallet principal. “Investors want to understand what they are getting and paying for, and this will improve trust overall.” 

Brown continued, “It may take some time, but seeing what they’re paying in their employer-sponsored retirement accounts will give investors the framework to start asking questions about price and value in their own retail relationships, questions that are already very much on their minds.”

The study involved a series of nationwide focus groups with investors with a minimum of $100,000 in assets who were actively thinking about advice service model pricing, broken down into ‘Upshifters,’ ‘Downshifters,’ and those ‘Engaged & Staying Put.’ 

The research addressed questions concerning investor attitudes on retirement and advice, as well as the continued industry trend of muddled value propositions around advice service models and pricing.  

“The major finding with the concept testing was that if your offering is positioned as a service, be a service. Service companies can describe the services they offer on key dimensions, teach the customer how to evaluate how well those services are delivered, and offer choices in pricing to go up or down depending on the customer’s chosen service level,” said Varas. “This principle of ‘being a service’ applies to product manufacturers,… as well as the more obvious case of brokerage firms, banks and others who offer investment services directly to investors.”