Data & Research March 29, 2016

Financial Elder Abuse on Advisers’ Radar

Protecting aging clients is advisers’ foremost ethical concern.
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Eighty percent of retirement income planning professionals are concerned about protecting their clients from financial elder abuse, according to a survey by The American College of Financial Services. In fact, of all of retirement advisers’ ethical concerns, this is the leading worry.

Although 64% believe the overall ethical climate of the industry is in good hands, the same percentage believes that retirement income professionals are not adequately trained. Sixty-eight percent do not think that advisers are keeping up with legal changes that impact their clients’ retirement income plans.

Eighty-eight percent think their clients may not completely understand their retirement income plans, and 85% think they do not understand other financial products and services.

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Nonetheless, only 6% think advisers lie outright to their clients, and only 27% think that they overcharge clients.

“Retirement income planning is extraordinarily challenging,” says Jamie Hopkins, retirement income program co-director at The American College. “Retirement income professionals are expected to manage a variety of client risks, legal changes and ethical issues when developing a comprehensive plan. The survey responses show that advisers are well aware of the challenges but worry that they industry as a whole lacks the proper training and education required to effectively serve aging clients.”

In fact, a 2015 survey of certified public accountants (CPAs) by the American Institute of CPAs found that 47% had witnessed an increase in elder fraud and financial abuse in the previous five years.

Data & Research March 29, 2016

Northwestern Mutual Debunks Millennials’ Money Misconceptions

Even if they are earning little, they need to start saving for retirement early on in life.
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For financial literacy month, Northwestern Mutual is debunking five myths Millennials may think about managing their money. “Financial literacy can be an intimidating topic for anyone, let alone for individuals who are just starting out in life, like Millennials,” says Emily Holbrook, young personal market director for Northwestern Mutual. “We feel it’s important for us to be a source of help and information for Millennials, and to break down some of the barriers and common misconceptions they may have about financial concepts.”

1.) Myth: I’m in debt from my student loans and can’t afford to save right now.

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Northwestern Mutual says that even Millennials can’t afford not to save. In fact, even if they have debt from college loans, they are likely to be earning more than someone who has not gone to college and, therefore, are in a better position to save. The firm also tells Millennials that if they don’t begin saving and face an emergency, they could get further in debt.

2.) Myth: I’m too young for life insurance.

Northwestern Mutual says adults are never too young to get life insurance, and, in fact, the younger you are, the lower the cost will be. Millennials also need to know that permanent life insurance can have a cash value and living benefits.

3.) I don’t make enough money to meet with a financial representative.

There is no minimum income requirement to meet with a financial representative, Northwestern Mutual says, and there is much to gain. They can help you understand how to make your money work for you, including how to save, spend, grow and protect your income.

4.) Myth: I don’t need to purchase additional disability insurance because my employer benefits cover my needs.

While most employers do offer basic insurance as part of their benefits package, most plans only partially cover the employee, leaving a vulnerable gap in the event of a disability, according to Northwestern Mutual. Most people can’t live off only 40% or 60% of their income, which is what could happen if there is an accident or unfortunate circumstance that prevents you from working.

5.) Myth: I can’t afford to invest in my retirement if I’m not earning enough money.

Even if it’s only 1% of your income to start with, it’s critical to start early to save for retirement, Northwestern Mutual says. Each year, try to increase your contributions to your retirement fund by 1% until you are maximizing your contributions, the firm recommends. By starting early, you can also take better advantage of compounding, which can really add up over the years.

Northwestern Mutual has created a financial guidance page on its website to help educate investors, be they Millennials or any other demographic group.

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