Deals & People November 2, 2012

CFP Board Chair to Step Down

Alan Goldfarb, chairman of the board for the Certified Financial Planner Board of Standards, resigned his post effective immediately.
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The Board of Directors of Certified Financial Planner Board of Standards Inc. announced the resignations of Goldfarb, CFP, from the board and two members of the Disciplinary and Ethics Commission (DEC).

The CFP Board became aware of broad allegations that members of the Board and other volunteers may have violated provisions of CFP Board’s Standards of Professional Conduct. The Board of Directors created a special committee made up of public Board members who have no ties to the financial services industry. The special committee of the Board retained outside counsel to investigate and report its findings directly to the committee.

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The committee found sufficient merit in the allegations against Goldfarb and the two DEC members to refer them for further proceedings under CFP Board’s Disciplinary Rules and Procedures. When presented with the committee’s findings, they decided to resign.

The board of directors was informed of the resignations during a special October 31 meeting and elected new board leadership. All proceedings under CFP Board’s Disciplinary Rules and Procedures are confidential. Any proceedings that result in a public sanction will be made public.

“I am certain that this was a misunderstanding, and I welcome the opportunity to engage in good faith the CFP Board’s enforcement process consistent with its Disciplinary Rules and Procedures,” said Goldfarb in an October 30 letter to the board of directors.

The 2012 Chair-elect Nancy Kistner, CFP, was chosen to fill the remainder of Goldfarb’s term. She will continue to chair the board of directors through December 31, 2013.

Data & Research November 2, 2012

Economic Woes Complicate Saving

Slow economic recovery and tax increases could create new problems for  Baby Boomers saving for retirement. 
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The impact of the recession and slow recovery has had negative effects on the ability of Boomers to save for their retirement. An Insured Retirement Institute (IRI) report, “Overcoming Barriers to Saving: How Boomers Can Get on the Path to Retirement Security”, says more than one-quarter 29% of Boomers have stopped contributing to a retirement plan and 25% have had difficulty paying the mortgage or rent in the past year.

In addition, 16% of Baby Boomers have prematurely withdrawn assets from a retirement plan.

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Concerning tax policy, IRI surveyed Boomers on three points: increase in federal income taxes, increase in Social Security taxes and increase in capital gains taxes. In all three instances, IRI found these modifications to the tax code would have a negative impact on retirement saving behaviors. Fifty-four percent of Baby Boomers stated they would be less likely to save if federal income taxes increased, and 39% stated they would be less likely to save if capital gains taxes increased. If tax deferral for growth within retirement plans is reduced or eliminated, one-quarter of Boomers would be less likely to save for retirement.

Other tax policy changes could include the reduction or elimination of the tax-deferred growth for retirement savings such as annuities. Nearly all retirement savings plans receive a tax deferral on growth, which is highly valued by savers. Previous IRI research, “Tax Policy and Middle Income Boomers: The Importance of Tax Deferral in Attaining Retirement Security,” analyzes of the importance of tax deferral for retirement savers. This report shows that tax deferral is deeply valued by Boomers, with 44% stating it is very important when selecting a retirement savings product. If tax deferral for growth within retirement plans is reduced or eliminated, one-quarter of Boomers would be less likely to save for retirement.

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The IRI found that having a plan for retirement increases retirement confidence levels; among Boomers who work with a financial adviser, 75% stated their adviser prepared a retirement plan. Nearly half (45%) of Boomers whose adviser prepared a retirement plan were extremely or very confident they will have enough money to live comfortably throughout retirement, compared with 32% of Boomers whose adviser did not. 

In uncertain and volatile times, investors are looking at annuities as products that will provide safety for their hard-earned savings. A study by IRI and Cogent Research found 63% of investors stated that increased volatility makes them more likely to consider an annuity. In addition, 74% of financial advisers noted the volatility in financial markets makes it easier for them to sell annuities.

Nearly three-quarters (73%) of annuity owners and 17% of non-annuity owners see annuities as a critical part of their overall retirement strategy, the IRI/Cogent Research study found.

IRI commissioned Woelfel Research Inc. to conduct a survey of Boomers approaching retirement or Boomers who have recently retired, by means of telephone interviews with Americans ages 50 to 66. Preliminary results are based on a sample of 503 individuals from February and March 2012. IRI partnered with Cogent Research to conduct a survey of investors and financial advisers through an online survey instrument. Preliminary results are based on a sample of 475 individual investors and 312 financial advisers. Individual investors are at least 25 years old and share responsibility for making household financial investment decisions. The individual investor survey was conducted between May 14 and May 31, 2012. The financial adviser survey was conducted between July 19 and August 13, 2012.

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