Just the Facts
A Progression in Preferences
U.S. retail investors within five years of retiring seek out advisers with strong support offerings; they also favor brands familiar to them, says current research from Cerulli Associates. Until then, only about 27% of investors are adviser reliant. That percentage jumps to 46% when investors are five years away from retiring, then to 57% when they are one year away. At the same time, their preference for familiar brands is growing. At retirement, 45% of investors want an adviser connected with a national firm, vs. the baseline of 39%; only 20% have no preference about adviser type, a drop from the baseline 30%.
|
Years From Retiring |
Years Since Retiring | ||||
|
All Respondents |
>5 Years |
<5 Years |
<1 Year |
>1 Year | |
|
Adviser at a large national bank, broker/dealer, asset manager, etc. |
39% |
36% |
39% |
45% |
41% |
|
No preference |
28% |
26% |
30% |
20% |
29% |
|
Adviser owner/operator of local financial advisory firm |
18% |
16% |
18% |
21% |
20% |
|
Adviser at a local bank, broker/dealer, asset manager, etc. |
13% |
17% |
12% |
12% |
8% |
|
Adviser who is online only |
3% |
5% |
2% |
2% |
1% |
Source: The Cerulli Edge—U.S. Retail Investor Edition, 3Q 2023 Issue
States With the Worst Plan Access for Lower Earners
Nearly 41 million people—or one in three workers—earned less than $37,000 in 2021, according to new data. The Economic Innovation Group considers this demographic the low-income workforce.
Only 30% of these low-income workers had access to an employer-provided retirement plan, which means approximately 28 million workers did not.
Florida, California and Connecticut were the worst-performing states, where under 25% of the low-income workforce had access. This is particularly noteworthy in California, where 3.6 million lacked access to an employer-provided retirement plan—the most, by state, in the nation.
Account Balances Grow
Retirement balances increased for the third straight quarter due in part to improving market conditions. Average 401(k) balances were up 4% quarter-on-quarter, and the average 403(b) account balance increased 5%. Average retirement account balances for a sample group of participants quarter-over-quarter and year-over-year were:
The Longevity Literacy Gap
Experts recommend retirement plan advisers provide appropriate interpretation and practical implications of longevity terminology.
- 33% of people understand the practical implications of the term “life expectancy.”
- 25% of those think life expectancy is the age by which the vast majority of a group of people will die.
- 50% of those with strong longevity literacy, reported that they had determined how much they need to save for retirement, versus …
- 32% of those with weak longevity literacy.
Source: TIAA
A Year of Loans and Hardship Withdrawals
Loans
Hardship Distributions
The BeFi Advantage
*Median results for firms with $250mm or more in assets under management
Put It in Writing
Firms with referral plans achieved stronger results via those channels last year than did firms without them. Although referrals account for most new clients, less than half of firms have formally documented their plans.
Firms with an existing client referral plan:
- 1.6x more new clients generated from existing client referrals
- 1.6x more new client assets generated from existing client referrals
Firms with a business-partner referral plan
- 4.0x more new clients generated from business partner referrals
- 5.1x more new client assets generated from business partner referrals
Source: Charles Schwab, “Insights from the 2023 RIA Benchmarking Study”