Data & Research February 28, 2018

Tax Reform Prompts Affluent to Seek Out Financial Planners

Fifty-three percent say that working with an adviser could help them meet their goals.

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Sixty-three percent of affluent Americans, those with at least $250,000 in investable assets or more than $200,000 in household income, say the Tax Cuts and Jobs Act of 2017 will prompt them to adjust their financial plans, a survey by the American Institute of Certified Public Accountants (AICPA) found.

Fifty-three percent said that working with a financial planner with substantial tax expertise, such as a CPA, could help them meet their financial goals.

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“Effective financial planning takes an individual’s personal situation into account, as well as current laws and overall economic climate,” says Jeannette Koger, vice president of advisory services and credentialing at AICPA. “The newly enacted tax legislation is going to have an impact on the financial plans of tens of millions of Americans. With their foundational knowledge in tax, CPA financial planners are best positioned to understand the consequences of the new law and work with clients to ensure that their financial plans are tax efficient and designed to meet their long-term goals.”

Asked about their financial goals, the affluent Americans who were surveyed first said retirement savings, cited by 68%. That was followed by: not outliving their savings (46%), tax efficiency of savings and investment (43%), having a health care plan (39%), achieving their investment return goals (36%), having an estate plan (26%), retiring earlier (22%) and delaying taking Social Security in retirement (21%).

Eighty-one percent said they would be likely to achieve at least one of these financial goals with a tax-efficient financial plan. Twenty-five percent said a tax-efficient financial plan would likely enable them to leave a substantial inheritance for their children or grandchildren, and 18% said it would make them more likely to pay for their children’s college education. In addition, 44% said they would probably be able to travel more, and 12% said they could purchase a vacation home.

The Harris Poll conducted the online survey for AICPA among 507 adults late last September into early October.

Products February 28, 2018

Arnerich Massena Offers Best Practices for Plan Monitoring

The latest in a series of white papers discusses monitoring investment menu managers, plan providers and plan fees.

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The fourth in a five-part series, investment firm Arnerich Massena has published its white paper, “Retirement Plan Best Practices: Plan Monitoring.”

Previous papers in the series discussed plan governance, plan design, and investment menu construction. The series will close with a paper about covering participant education.

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The plan monitoring report offers best practices for:

  • Reviewing performance and other data of investment menu managers;
  • Managing plan providers and best practices for conducting a request for proposals (RFP) and negotiation process;
  • Benchmarking plan providers; and
  • Assessing, monitoring, and benchmarking plan fees.

The paper includes checklists throughout.

“Maintaining an employer-sponsored retirement plan is an ongoing process, requiring dedicated attention and oversight,” the paper states. “Monitoring your investment menu managers, your plan providers, and plan fees is an important part of your overall fiduciary responsibility.” The paper guides plan sponsors in developing monitoring processes based on best practices that will help them fulfill their fiduciary duty while best serving their plan participants.

“Fiduciary liability often comes down to process more than outcome,” notes Terri Schwartz, managing director of institutional services and business development. “Having a thoughtful process in place, then following and documenting the process is the best way plan sponsors can demonstrate prudence.”

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