Products June 11, 2009

SSgA Introduces Financial Literacy Campaign

State Street Global Advisors (SSgA) launched a financial literacy campaign designed to help financial advisers become a resource and educator for parents seeking to raise financially responsible children.
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Developed by SSgA’s Intermediary Business Group, which provides products and services to financial advisers, broker/dealers, registered investment advisers (RIAs), and family offices, the program features thought leadership from SSgA and Jim Grubman, a psychologist and consultant to families of wealth, family businesses, and advisers, according to a news release.

Key components include:

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  • “The ABCs of 123s: Helping Clients Raise Financially Intelligent Children,” an on-demand Webcast designed to help advisers add more value to their client relationships by helping parents improve the financial literacy of their children;
  • “From Piggy Banks to Prosperity: How to Help Clients Raise Money-Smart Kids,” a white paper offering financial professionals actionable ideas and insights on successfully integrating financial literacy into their advisory practice;
  • “Raising Financially Independent Children: It’s As Easy as ABC, 123!,” a client-approved, ready-to-print educational guide that helps parents teach important money skills to children of all ages.

“The recent economic downturn has underscored the importance of teaching children prudent saving, spending, and credit skills,” said Gary MacDonald, managing director at State Street Global Advisors, the investment management arm of State Street Corporation, in the release. “In addition to helping their clients raise financially responsible children, the tools and resources developed to support this SPDR University program provide financial professionals with a great opportunity to differentiate their practice in an increasingly competitive marketplace.”

The tools are the latest offering from SPDR University, an online educational center launched by SSgA.


In Practice June 11, 2009

HNW Investors Seek Better College Savings Strategies

There’s plenty of opportunity for advisers to help high-net-worth (HNW) investors save for college funds, according to Phoenix.
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Not only has the market downturn made high-net-worth individuals (HNWIs) less confident in their ability to accumulate adequate retirement savings (see “HNWs Less Optimistic about Future“), but they are also less confident in the ability to which their 529 plans will fulfill their college savings objectives. An annual Phoenix survey of HNW investors found half of 529 plan holders (45%) said they are only “somewhat confident” or “not at all confident” their plans will meet their original objectives.

Of the 1,735 polled households, only 13% of respondents reported having one or more 529 plans. Phoenix said that’s not surprising as most in the HNW market do not have young children—however, even those with children younger than 18, less than one-third (31%) use 529s.

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Market Affect

As a result of the market pressure on their 529 plans, 57% of respondents with children under 18 are thinking about and/or actively seeking alternative strategies, according to the survey. The alternative strategies include: financial aid (29%), setting sights on a less expensive school (26%), seeking help from relatives (25%), or delaying college enrollment (21%). The vast majority of other 529 plan holders (83%) report not having made or even thought about these other college funding strategies.

Twenty-two percent of all high-net-worth 529 plan holders indicated that they have made changes to their plans within the past year. Changes were more common among those with children under 18 (37%), the survey found. Phoenix said additional exchanges will likely be fueled by the IRS’ decision to allow, for 2009 only, two investment portfolio changes per plan instead of one.

The most common change respondents have made or contemplate making is moving money to a more conservative asset allocation position (68% have moved), followed by moving money to a guaranteed investment (31% have moved), according to Phoenix. However, interestingly, more than one quarter (28%) making changes are moving to more aggressive asset allocation positions.

Phoenix noted there will likely be more adjustments in the future. Of those who haven’t yet made changes to 529 plans, 28% said they are thinking about making changes due to market volatility.

Similar to how providers are looking to add guarantees to target-date funds, providers are interested in providing guarantees to 529 plans, although no such product exists yet. Most survey respondents (80%) said they were at least somewhat interested in that sort of product.

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