IMHO November 16, 2007

IMHO: Thank Full

Thanksgiving has been called a “uniquely American″ holiday, and while that is perhaps something of an overstatement, it is unquestionably a special holiday, and one on which it seems a reflection on all we have to be thankful for is fitting.
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Here’s my list for 2007:
First, I’m thankful for the voluntary nature of the defined contribution solutions in the Pension Protection Act—that plan sponsors were given guidelines and protections for adhering to specific safe harbor approaches, but were not forced to adopt those or prohibited from pursuing their own approaches to things like automatic enrollment (albeit without the regulatory protections). I’m thankful for the Department of Labor’s ongoing willingness—and enthusiasm—for soliciting and incorporating feedback on their regulations from those of us who have to work with them every day.
I’m thankful that, despite the mass coverage of defined benefit plan freezes—and the new restrictions imposed on these programs by the PPA and the accounting profession—so many employers remain committed to the concept. I’m thankful—as are, no doubt, the workers that count on those programs—that so many employers have been willing (and, I suppose in some cases, forced) to make the contributions to at least narrow, if not eliminate, their funding gaps.
I’m thankful for an extra year to gear up for 409A, the thoughtful and deliberative approach by the Department of Labor on the final qualified default investment alternatives (QDIA), and the availability (if somewhat later than one might have hoped) of a sample notice for automatic enrollment plans. I’m glad that 403(b) plan participants can look forward to some of the structural efficiencies and fiduciary oversight that have long been part of the 401(k) market—and thankful that plan sponsors were given some extra time to prepare for that fairly significant change.
I’m thankful that so many entities are concerned about how much we are paying for our 401(k)s—and only a little bit worried that so much of that well-placed concern will serve to make things worse.
Much as there is to be thankful for, there are some things still to look forward to. For instance, I’ll be thankful when:
  • Those in Washington appear to worry as much about encouraging employers to set up workplace retirement plans as they do about scrutinizing and punishing those who have;
  • Plan sponsors simply decide to eliminate company stock as a participant investment option—if only to deny the plaintiffs’ bar so many easy targets.
Still, all in all, I’m thankful to be able to play a small part in helping provide for the retirement security of others—and grateful that so many gifted professionals have committed themselves to being part of the solution to these issues.
Most of all, I’m thankful for the unconditional love and patience of my family, the camaraderie of dear friends and colleagues over the years, the opportunity to write and share these thoughts—and for the ongoing support and appreciation of readers like you.
Data & Research November 16, 2007

Money Not Openly Discussed In Families

Baby Boomers appear to be talking more with their adult children about family finances than with their parents, a new study says.
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A news release about the Ameriprise Financial Money Across Generations study said the research found that adult children of the boomers are more likely than their parents or grandparents to say their family regularly talks dollars and cents.

Some 46% of adult children of boomers say their family regularly has such conversations; where 39% of boomers and only 26% of boomers’ parents describe such financial discussions. However, 71% of boomers have discussed their parents’ current financial situation, compared to 54% of adult children of boomers.

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More than half (54%) of adult children of boomers say that their parents had conveyed to them the idea that “money is something that should be discussed openly.’ The problem, according to Ameriprise: each older generation had expressed that idea less and less often. Some 48% of the boomers grew up in a household that believed that money should be talked about openly, and even fewer, 44%, of the parents of boomers had that attitude in their home. And, as 61% of the parents of boomers, 56% of boomers, and 59% of the adult children of boomers agreeing that they do not wish there had been more talk about money while growing up, there might not be a significant change in this disconnect in the future.

The study also found there are some varying differences about financial planning across generations as well:

  • 81% of boomers have discussed with their parents whether the parents have made a will, compared to 57% of the adult children of boomers who report having that discussion with their parents.
  • 72% of boomers have discussed with their parents the parents’ wishes for their home or belongings, compared to 55% of the adult children of boomers.
  • 71% of boomers have discussed with their own parents how they would like things handled if they had a catastrophic illness, compared to 50% of adult children of boomers.
  • 71% of boomers have discussed with their parents the parents’ wishes for their financial accounts, while 40% adult children of boomers have done so.
  • 66% of boomers have discussed their own parents’ medical expenses, compared to 41% of adult children of boomers.

Working with GfK Roper Public Affairs, Ameriprise Financial launched the national study in April and May 2007. Telephone interviews were conducted among 1,001 affluent baby boomers (those with $100,000 or more in investable assets); 300 parents of baby boomers; and 301 children of baby boomers at least 18 years old. Copies of the study report are available at http://www.ameriprise.com/presscenter.

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