Data & Research October 20, 2015

Wealth Advisory Clients Want Wider Focus

Spectrem study examines the role and scope of the relationship between wealthy investors and their financial advisers, finding most well-off clients want deeply considerate and personal service.
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New Spectrem Group research finds wealthy investors are seeking engagement with their professional financial advisers on “other aspects of their lives that do not necessarily involve the bottom line.”

As explained by George Walper Jr., president of Spectrem Group, financial providers and advisers have always been expected to play a traditional role in helping investors achieve attractive returns on their investments, “but increasingly there is more to the relationship than that.”

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“Today’s investors have long-term financial concerns that go far beyond the daily performance of the markets,” Walper says. “In addition to financial advice, investors are also looking to advisers for assistance with matters related to the broader life issues of retirement, insurance and health care.”

Key findings from the study show millionaires (those with a net worth between $1 million and $5 million not including primary residence) and mass affluent investors (with a net worth between $100,000 and $1 million) are “very likely to be seeking advice on establishing an estate plan, long-term care matters and retirement income.”

Somewhat surprising, Spectrem finds, is that ultra-high net worth investors—those with more than $5 million in investable assets—are actually most interested among the wealth groups surveyed in finding assistance with long-term care strategies. Unlike lower income groups, affluent population segments are likely to be able to afford long-term care premiums and other expenses associated with hedging longevity risk. This has the effect of making wealthy investors likelier to proactively plan for things like long-term care, despite being better able to absorb unanticipated financial burdens such as a chronic illness or disability. 

Additional research and information are at Spectrem’s Millionaire Corner blog.

Data & Research October 20, 2015

PNC Survey: To Save for Retirement, the Affluent Check Their Rolodex

Most well-off Americans have found a steadier option than Social Security or pension: help from their networking circles.
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If networking is useful for finding a job, how about for achieving retirement readiness? To offset the loss of the pension and uncertainty over Social Security, Americans are looking to other means to ensure they save enough for retirement. Those other means may be people.

“Americans are taking retirement into their own hands and surrounding themselves with a network of people to help them plan,” says Celandra Deane-Bess, chair of the national practice group for retirement at PNC.” According to the bank’s study Perspectives on Retirement 2015, 93% of “successful savers” have formed a network of advisers, ranging from personal to professional, who help them make financial decisions for retirement—and be more confident those decisions are good.

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 This confidence is far from just friendly optimism. A cool 45% of those with “a very effective network” have saved, on average, hundreds of thousands more, the survey says. PNC defines “successful savers” as Americans ages 35 through 44 with at least $50,000 of investable assets and ages 45 through 75 with at least $100,000 of investable assets. The average retirement savings for both age groups is $800,000 vs. $510,000, based on whether the saver had or didn’t have such a network, the study says.

On the whole, savers enlist various types of advisers, including family, friends, employers, accountants and, of course, financial advisers. Of their top two recruits, their spouse/partner, selected by 32%, is mainly an encourager. Their financial adviser (41%) aids with “most important” activities such as creating a plan, providing specific expertise and suggesting investments.

 NEXT: What to keep in mind when forming a network

 

What’s important when creating a retirement advisory network is to be deliberate, Deane-Bess says. She recommends that the saver choose people he knows he can trust. Just because someone is a friend or a highly paid professional doesn’t necessarily make him a good prospect for a particular saver’s network. Also, the saver should capitalize on any available tools and resources, such as online retirement calculators—as these are part of his network, too, PNC says.

Beyond this, he should “plan for all circumstances” by thinking through different scenarios, and, ultimately, “take responsibility,” Deane-Bess says.

In other words, to get the most from a network, the saver must work the network.

Because a major reason to have the network in the first place is to get help with the financial decisions, 95% of the savers seek information to that end. The top three needs they expressed were: help with choosing investment vehicles (72%), organizing an investment portfolio (68%) and rebalancing a portfolio (67%).

The support makes a significant difference in savers’ confidence they will indeed save enough—90% vs. 70%. Age apparently does, too. Eighty-three percent of Baby Boomers surveyed are more confident they know how much they need to save ($1.16 million) than the 74% of Generation Xers who believe $1.48 million is the number. The most confident are those who have at least $500,000 in investable assets, and are served by both a financial adviser and a strong retirement advisory network.

Pensions—here including defined contribution (DC) plans—and Social Security were still in the equation—when confident savers projected how much they expect to store up for retirement, 48% calculated the numbers based on those benefits. Yet, a combined 59% arrived at their amount based on their adviser’s help (33%) or an online retirement calculator (26%).

The Perspectives of Retirement Survey was conducted online, July 17 through 26, among 1,025 American adults representing a cross section of successful savers aged 35 through 75. About 20% of those surveyed were retired.

More information about the survey may be found here.

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