Majority of Americans Are Concerned About Finances

More than one-quarter are extremely or very concerned, according to Fidelity.

Fidelity Investments has released the findings of its Market Sentiment Study and found that 60% of Americans are concerned about finances. Of this group, 38% are extremely or very concerned, and 22% are moderately concerned.

Sixty-two percent are concerned about job security, with 43% extremely or very concerned, and 19% moderately concerned.

Millennials and Generation Xers are the most concerned about their finances in the next six months, with 69% of Millennials saying this is a concern for them, and 68% of Gen Xers sharing that anxiety. By comparison, only 51% of Baby Boomers are concerned about their finances over the next six months.

Forty-three percent of Americans say their stress levels related to finances have worsened. Thirty-three percent say it is affecting their sleep, 24%, their exercise habits and 22%, their healthy eating habits.

Forty-nine percent say they don’t have the time to address their investments and retirement savings because of increased responsibilities at home and work.

Women tend to feel the impact more than men, with 37% of men and 48% of women saying their anxiety about their finances has gotten worse. Sleep habits have gotten worse for 28% of men but 37% of women. Healthy eating habits have gotten worse for 19% of men but 25% of women.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

As the pandemic continues to impact financial markets and everyday life, 49% of Americans say they are worried about paying down student debt. Forty-six percent are concerned about having enough saved to retire as planned, and 45% worry about paying down debt other than student loans.

Forty-three percent are worried about their ability to pay for their children’s college education, and the same percentage is also worried about finding money to save for other goals, while 40% are concerned about their ability to pay monthly bills.

In spite of all of these concerns, Americans are taking steps to better manage their money. Forty-eight percent are cutting back on discretionary spending. Forty-four percent  are working to increase their emergency savings, and 34% are rethinking how they manage their money.

Thirty-one percent are talking more about money and finances with family or friends, and 20% are reviewing their existing financial plan more regularly. Fifteen percent are investing new money in the stock market, and 11% are creating a new financial plan.

Overall, 51% say they have a plan in place to help them save and invest to reach their financial goals. Of those who say they have a financial plan, 50% have at least three months’ worth of emergency savings, while this is true for only 34% of those without a plan. Thirty-five percent of those with a plan are less stressed about paying monthly bills, compared to 45% of those without a plan.

Thirty-five percent of those with a plan say they are less likely to feel especially concerned about finances over the next six months, but this jumps to 42% of those without a plan.

Asked what would make them feel more confident in making financial decisions about the future, 34% said having a financial plan, and 31% said understanding how to better prioritize their savings. Twenty-six percent said access to a financial professional would help, and 28% cited free workshops and online educational content. Finally, 25% said they wanted checklists and other actionable resources to guide them through different life events and market situations.

Aegis Media Faces ‘Down Market’ Excessive Fee ERISA Challenge

The case is an example of class action fee litigation targeting a ‘large’ rather than a ‘jumbo’ plan, as the Aegis retirement plan under scrutiny holds less than $1 billion.

Plaintiffs have filed a proposed class action lawsuit against Aegis Media Americas, alleging that the firm has permitted excessive fees to be levied on participants within its defined contribution (DC) retirement plan.

Filed in the U.S. District Court for the Southern District of New York, the complaint alleges a familiar host of fiduciary breaches commonly included in Employee Retirement Income Security Act (ERISA) lawsuits. What distinguishes the suit is the relatively small size of the plan in comparison with the many others that have faced similar allegations. Such plans generally have well in excess of $1 billion in assets, while the Aegis plan in question held some $540 million at the end of 2018, according to case documents, though it has presumably grown since that date.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

“As a large plan, the plan had substantial bargaining power regarding the fees and expenses that were charged against participants’ investments,” the complaint states. “Defendants, however, did not try to reduce the plan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent.”

The plaintiffs cite ERISA Section 3(21)(A) while arguing that their plan’s fiduciaries “failed to objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost.” They cite the same section to support their allegations that plan fiduciaries maintained certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.

In their complaint, the plaintiffs acknowledge that “at some point during 2018, over four years into the class period, defendants made changes to certain plan investment options, some of which are the subject of this lawsuit.” However, the plaintiffs argue, the changes came too late to prove that a prudent fiduciary monitoring process was in place.

As is common in such ERISA lawsuits, the complaint seeks to establish that its allegations are timely even under the special statute of limitations that can be applied by courts contemplating such issues. This issue was recently visited by the Supreme Court in Intel v. Sulyma and has thus featured prominently in newly filed ERISA complaints.   

“Plaintiffs did not have knowledge of all material facts (including, among other things, the investment alternatives that are comparable to the investments offered within the plan, comparisons of the costs and investment performance of plan investments versus available alternatives within similarly sized plans, total cost comparisons to similarly sized plans, information regarding other available share classes, and information regarding the availability and pricing of separate accounts and collective trusts) necessary to understand that defendants breached their fiduciary duties and engaged in other unlawful conduct in violation of ERISA until shortly before this suit was filed,” the complaint states. “Further, plaintiffs did not have and do not have actual knowledge of the specifics of defendants’ decisionmaking process with respect to the plan, including defendants’ processes (and execution of such) for selecting, monitoring and removing plan investments, because this information is solely within the possession of defendants prior to discovery.”

Another Supreme Court ruling featuring prominently in the text of the complaint is Tibble v. Edison. That 2015 decision was taken to establish clearly that the “ongoing duty to monitor” investments is a fiduciary duty that is separate and distinct from the duty to exercise prudence in the initial choice of an investment. The big practical result was that plan sponsors can no longer rely on ERISA’s statute of limitations to protect themselves from accusations of potentially imprudent investment decisions made in the past when the investment options in question persist on the menu to this day.

“A prudent fiduciary conducting an impartial review of the plan’s investments would have identified the cheaper share classes available and transferred the plan’s investments … into the lower share classes at the earliest opportunity,” the complaint states. “There is no good-faith explanation for utilizing high-cost share classes when lower cost share classes are available for the exact same investment. The plan did not receive any additional services or benefits based on its use of more expensive share classes; the only consequence was higher costs for plan participants.”

Aegis has not yet responded to a request for comment. The full text of the complaint is available here.

«