Data & Research October 16, 2009

Getting Financial Advice Drops in Importance

This year, fewer Americans ranked getting trusted financial advice of prime importance, according to a survey by Prudential Financial.

Reported by

The number of respondents indicating that getting trusted financial advice was of prime importance was down from 40% in 2008 to 29% this year, according the survey. Prudential said the lower numbers could be because Americans are more cautious about getting advice, or they just can’t afford investment advice.

The survey also found that immediate financial needs are taking precedence over retirement savings. Sixty-three percent of respondents in a recent Prudential Financial survey rated retirement savings as highly important, down from 76% two years ago. Meanwhile, 72% of respondents said having a retirement nest egg large enough to meet their retirement needs was highly important.

The number of people who said they did not know when they would retire headed up in the 2009 poll to 14%, an increase from 9% in 2008. The mean expected retirement age was 64.1 this year, a slight hike from 63.5 last year.

Not surprisingly, Prudential said those who say they were most affected by the economic downturn were the most unsure about when they would stop working.  

The three surveys used in the Prudential report were taken in April and May of 2009 and included 2,500 workplace benefits officials, benefits brokers, and employees. The surveys were conducted for Prudential by the Center for Strategy Research.

The study report is available here. 

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Data & Research October 16, 2009

UBS: Retirement Investors Could Be More into Risk

UBS Wealth Management Research – Americas has released a study suggesting retirement investors should segment their financial planning to match specific financial goals with the appropriate risk level.

Reported by

A UBS news release about its study, “Risk: How much is enough?,” said its segmented approach is designed to help investors building up their retirement nest egg end up with enough to last them during their retirement years. The company said the strategy “can empower investors who otherwise might avoid risk altogether” in their retirement investing.

According to the announcement, the strategy involves dividing up assets into three pieces:

  • The first piece includes funds required to fulfill the liquidity needs for an individual over some pre-defined time horizon. “The sole purpose of this bucket is to provide an investor with a level of security in any contingency,” UBS said.
  • The “core” piece contains the bulk of an individual’s assets and should reflect the investor’s risk preference and be positioned for the maximum return versus risk.
  • The “leverage” bucket contains a mix of riskier assets that should be used as a risk overlay and offers the investor the opportunity to dial up or dial down their risk tolerance.”The risk overlay strategy, provided in the third bucket, offers some probability that investors will be able to at least partially realize their wishes (such as travel or a second home), while at the same time helping to narrow the retirement gap,” UBS said.

Mike Ryan, head of Wealth Management Research – Americas, commented: “The benefits of a segmented approach are found not so much in characteristics of the portfolios, but the ability to construct a portfolio that addresses the investor’s loss aversion concerns, while at the same time allowing enough financial risk-taking to meet the investor’s goals.”

The report is available here.


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