Data & Research December 14, 2010

Investors Say Advisers Help Them Save More

People who spend time with a financial professional report saving two to three times more than their peers who do not, according to a study from the ING Retirement Research Institute.
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The research found that investors who work with an adviser feel more knowledgeable about investments and more confident in their ability to enjoy retirement, and they sasaving more.

ING Retirement Research Institute analyzed data from more than 14,000 users who used INGCompareMe.com – a Web site in which users can enter their personal information to see where they stand in relation to others on saving, spending, investing, debt, and personal finance matters. One question asks how much time they spend with a financial adviser; possible response choices ranged from no time to a lot of time.   

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According to the data, those who spent “some time” with an adviser (31%) reported saving, on average, more than twice as much for retirement as those who spent “no time.”  The number jumped even higher–more than three times as much–for those who spent “a lot of time” getting such help.

Spending time with a financial professional impacted how an individual invested with respect to their asset allocation. According to the data, a majority (60%) of those who spent some time or a lot of time with an adviser considered themselves to be moderate investors. The number who characterized themselves as moderate dropped to less than half (48%) when they spent very little or no time, and thus tended to be more conservative.

Confidence about future financial success also varied greatly between those who spent “a lot of time” versus “no time” with a financial professional.  More than six-in-ten (62%) of those who spent a lot of time with one said they were highly confident about enjoying their retirement.  For those who spent no time, only about one-third (34%) reported the same level of confidence.

The Markets December 14, 2010

FRC Predicts DCIO Market Growth

The Financial Research Corporation (FRC) projects asset growth in the DC market will achieve close to a 12% compounded annual growth rate between 2010 and 2015.
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According to an FRC report, “Exploring New Retirement Strategies: Maximizing Resources When Targeting DCIO Opportunities,” asset managers have an enhanced likelihood of growing assets within the competitive and complex Defined Contribution Investment-Only (DCIO) market if they employ multi-pronged strategies. These strategies include employing informative value-added marketing tools, as well as offering appropriate and differentiated products and pricing to pursue profitable platform opportunities. In tandem with these efforts, DCIO managers need to differentiate their products and service capabilities.   

“Even among the largest firms, what’s clear is that to effectively grow assets, investment managers need a distribution strategy and a value proposition that distinguish their firms’ offering from competing investments,” said Bob Hedges, FRC’s Chairman, in a press release.   

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FRC’s study also examined the drivers of growth of the defined contribution marketplace, and noted especially the predictability of inflows through automatic enrollment, the addition of investments to fund menus to augment plan options, and a shifting regulatory environment as key factors on the upside.   

“What we are seeing is that lifecycle funds, ETFs and stable value funds will undoubtedly have an impact on the opportunities for fund managers in the retirement market going forward,” said Hedges. “Target date funds, in particular, present both opportunities as well as challenges for asset managers, given their prominence as a qualified default investment alternative, balanced by the proprietary structure of target date offerings.”   

Other key topics covered in the report include European opportunities for DCIO providers, potential impacts of regulatory changes, and DCIO market data. 

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