Forty percent of advisers are fee based, according to
Advisor Brandscape, a Cogent Reports study released by Market Strategies
International. While consistency of fund performance and having a distinctive
investment philosophy are important to registered investment advisers, fees and
expenses are the No. 1 reason why they select an adviser from among those who
are fee-based.
“Firms overlook this group of advisers at their peril,” says Meredith Lloyd
Rice, a vice president at Market Strategies and author of the report. “We’ve
heard from many advisers who feel the DOL [Department of Labor] fiduciary rule
is pushing them toward a fee-based compensation structure. For mutual fund
managers seeking to secure and strengthen relationships with these high-end
producers, highlighting consistent, long-term investment performance and value
for the money is even more important to covey.”
Among fee-based advisers, the top 10 mutual funds that earn their trust the
most, in descending order, are: DFA, Vanguard, T. Rowe Price, DoubleLine, American
Funds, JP Morgan Funds, MFS Investment Mangaement, BlackRock, Legg Mason and Franklin
Templeton.
The Cogent report is based on an online survey of 1,460
advisers conducted between January and March of this year.
Millennials, more so than other generations, grasp the
importance of retirement savings, a survey by Natixis Global Asset Management
found.
Sixty-nine percent of Millennials, compared to 55% of Baby Boomers,
think workers should be required to save for retirement. Eighty-two percent of
Millennials, versus 77% of Generation X, think employers should be required to
offer retirement plans. Seventy-six percent of Millennials, compared to 66% of
Boomers, think companies should offer matching funds, and 84% of Millennials
want investment options that reflect their personal values.
Millennials began saving for retirement, on average, at age
23, while Gen Xers didn’t start until age 27 and Boomers at 31. While 81% of
Boomers are counting on Social Security, only 55% of Millennials think it will
still be in existence by the time they retire.
Sixty percent of the 951 workers that Natixis surveyed said they have figured
out how much they will need in retirement. Boomers think they will need an
average of $934,677 and are 34% on the way there ($317,790). Gen Xers say they
will need $810,387 and have 24% of their target saved ($194,492), and
Millennials have a target of $869,662 but have only 8% of this saved ($69,573).
Forty-one percent of workers save less than 5% of their
salaries, and 28% have taken out a withdrawal from their retirement savings.
Among Millennials, withdrawals jump to 43%.
“Younger workers in particular are grappling with a
different set of retirement challenges, compared to previous generations,” says
Ed Farrington, executive vice president for retirement strategies at Natixis. “Their
retirement savings strategies are encumbered by a number of factors such as
student loan debt, a lack of company pensions and a sense of doubt that Social
Security will be a source of income in retirement. Employers would do well to
focus on designing comprehensive plans that offer greater incentives and a
better range of investment choice that especially appeal to this large portion
of the workforce.”
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How many aren’t participating?
The survey found that 31% are not participating in their
employer’s retirement plan. The No. 1 reason they give as to why is that their
employer is not offering enough of a match, or no match at all (48%). Thirty-five
percent said it is due to rising health care costs, and 20% said it is because
they are saving for their child’s education. Thirty-three percent of
Millennials said student loan debt is an impediment.
Among the 69% who are participating in their retirement plan, 63% say it is
because of the company match, 56% cite the tax incentives, and 52% point to the
automatic deductions from their paycheck. Sixty-nine percent say they would
contribute more if their employer boosted their match.
Workers who have received financial advice have, on average,
10% more saved than those who did not. Seventeen percent said they would save
more if they had access to financial advice.
However, only 30% of the workers surveyed said their employer offers
financial advice.
Eighty-seven percent said they would save more if they were
permitted to participate in their company’s retirement plan from the first day
they started working there. Twenty-three percent said they would be
incentivized to save more if their plan automatically escalated their
contributions.
Forty-five percent said they did not know how much they will
need for retirement. Natixis says that financial education is obviously needed,
as only 55% correctly answered a question about compounding interest.
CoreData conducted the survey for Natixis in August and
September.