Data & Research July 31, 2020

Working Generations Are Uncertain about Social Security

However, Millennials and Gen Xers are open to working with financial advisers to learn more and maximize benefits.

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American workers aren’t necessarily as ready for retirement as the industry may think, studies find.

According to a Nationwide Retirement Institute report, when provided with the definition of what a full retirement age is, four in 10 workers who plan to claim Social Security say they are not expecting to do so before age 66 or 67. Millennials, the youngest age cohort in the study, said they plan on drawing Social Security benefits at an average age of 63, either so they can invest the income and earn higher returns than by delaying benefits (41%) or because they expect benefits to be reduced before their full retirement age (39%).

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Twenty-seven percent of Millennials are expecting to retire earlier than the full retirement age, while 18% do not believe Social Security will be around at their full retirement age. Sixteen percent of Millennials expect to need the money earlier; 15% do not think they would live long enough to delay benefits; 14% expect health problems before their full retirement age; and 4% anticipate a job loss.

The idea of a future without Social Security isn’t uncommon—even those currently in retirement are claiming smaller benefits than they expected. According to a study by the Michigan Retirement and Disability Research Center (MRDRC), most current retirees say the amount of Social Security retirement benefits they receive is lower than what they anticipated. The average expectation bias for monthly retirement benefits, or the difference between the forecasted future benefits and the subjective mean of the expected benefits, in the study sample was $307.

A 2019 Nationwide Retirement Institute survey found retirees expected to receive $1,805 a month in Social Security benefits, yet when their check stubs arrived, they collected an average of $1,408—a 28% difference.

The MRDRC study notes that failing to appropriately adjust for early or delayed claiming largely contributes to expectation biases on retirement benefits. In fact, the study finds 50% of survey respondents are significantly uncertain about the amount they’ll receive in Social Security benefits, and, in most cases, tend to overestimate these numbers.

Many Baby Boomers, the age group that has seen an uptick in retirement since the start of the COVID-19 pandemic, say they plan to use Social Security as their primary source of income. According to the 2020 Nationwide Retirement Institute study, one in five Boomers do not have sources of retirement income beyond Social Security, and four in 10 who do have other income options expect Social Security to be their primary source of retirement income.

Across all generations, workers understand they will need more income in retirement than what Social Security will offer, the survey finds. Generation X workers identify with this the most, as they tend to have the biggest gap between the amount of pre-retirement income expected versus what Social Security will replace, the study suggests.

This uncertainty surrounding Social Security is compelling participants to learn more about the program. Eight in 10 workers believe the Social Security system is in need of change, especially as younger workers are expected to take on its burden when they reach retirement. Additionally, more Millennials and Gen Xers are interested in learning more about Social Security with a financial adviser, while Boomers are more comfortable contacting the Social Security administration for questions.

It’s up to plan sponsors and financial professionals to provide education, whether that’s in the form of seminars, presentations or calculators. Additionally, offering savings tools—such as emergency savings accounts, student loan debt assistance programs and a 401(k)—can elevate a worker’s retirement income in the future.

Younger workers are more comfortable speaking to financial professionals than Gen Xers and Baby Boomers. Forty-one percent of Millennials say they currently work with an adviser on how to handle Social Security, while just 27% of Gen Xers and 30% of Boomers do. Among those who do not work with a financial adviser, 32% of Millennials say they are planning on asking one about Social Security, yet only 21% of Gen Xers and 6% of Boomers say the same. A majority of all age groups note they are likely to find an adviser who would help them maximize Social Security benefits, but Millennials and Gen Xers are more likely to than Boomers.
Deals & People July 31, 2020

Retirement Industry People Moves

Lockton brings in senior adviser; Qontigo selects multi-asset solutions head; Franklin Templeton appoints head of U.S. distribution; and more.

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Art by Subin Yang

Art by Subin Yang

Lockton Brings in Senior Adviser

Lockton has added Michael Monahan as a senior adviser in its Minneapolis office.

Monahan, a lawyer, brings a wide range of skills and professional experiences, ranging from traditional investment consulting to investment banking, risk management and strategic planning. He has more than 13 years of experience advising corporations.

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“At Lockton, we always work holistically with our clients,” says Joe Agnello, CEO of Lockton’s Founders series. “That’s why bringing talent like Michael onto the team is so important. We look for people who can think strategically about risk management, whether that be retirement, benefits, or property and casualty. Michael’s one of those rare people who can help employers connect the dots across all those disciplines and address the larger scale challenges.”

“Retirement consulting is no longer just about picking funds,” adds Pam Popp, president of Lockton’s retirement practice. “That’s still incredibly important, but it’s just one component of the much more complex issues our clients face. They want help with compliance, workforce optimization and strategic alignment between their benefits and their overall corporate risk control objectives. Michael’s experience as a lawyer, investment expert and strategic risk consultant gives him the ideal expertise to help clients solve a wide range of problems.”

Qontigo Selects Multi-Asset Solutions Head

Qontigo has appointed Ping Jiang as head of Multi-Asset Solutions for the Americas within the Customer Experience Group, leading the pre-sales and product specialist team dedicated to Qontigo’s risk solutions. Jiang was previously with New York Life Investments, where he served as head of Investment Consulting since 2017.

“Ping’s extensive client-facing experience in the risk-solutions space, coupled with his tenure as a senior risk officer within multiple asset management firms, makes him a perfect fit for Qontigo,” says Chris Canova, global head of the Customer Experience Group. “We take a collaborative approach to working with clients to help them solve the increasingly complex challenges they face, and to ensure that they get the most out of our innovative and sophisticated solutions. Ping is a welcome addition to our expanding team.”

Before joining New York Life Investments, Jiang served at AllianceBernstein starting in 2011 as a senior vice president in two key roles: deputy head of Investment Risk and director of Alternative Investment Risk. Prior to that, he was executive director, head of consultants—Americas at MSCI since 2010, and head of Risk Account Management, Implementation and Portfolio Analysis—Americas at RiskMetrics Group starting in 2003. Jiang began his career at Merrill Lynch.

Jiang is a graduate of Columbia University with a master’s degree in financial engineering.

Franklin Templeton Appoints Head of U.S. Distribution

Franklin Templeton has appointed Jeff Masom, CFA, as head of U.S. Distribution, overseeing U.S. retail and institutional distribution, including U.S. marketing and product strategy, reporting to the recently announced head of Global Distribution, Adam Spector. Masom will join the firm August 31 and be based in Baltimore.

“The acquisition of Legg Mason will establish Franklin Templeton as one of the world’s largest independent asset managers, both in the U.S. and globally,” says Jenny Johnson, president and CEO of Franklin Templeton. “Jeff Masom’s demonstrated leadership, and depth of experience in various aspects of U.S. distribution over the past decades, position him ideally to lead and grow our U.S. retail and institutional business, that will have a combined AUM [assets under management] of over $1 trillion, after deal close. His client-centric focus will help us continue to deliver the exemplary service our clients have come to expect from us.”

Masom most recently served as global head of Institutional Distribution with RBC Global Asset Management in Boston since 2018, following his prior role as senior managing director and head of U.S. Sales for Legg Mason. During his 20-year tenure with Legg Mason, he had direct oversight of all national account channels, including retail national accounts, defined contribution investment only (DCIO), sub-advisory, private bank, registered investment adviser (RIA), bank trust, family office and parts of the institutional marketplace.

“I am very excited to join Franklin Templeton at this critical juncture, to lead the U.S. business for the newly combined organization. I look forward to working with the talented U.S. distribution team coming together from across both Franklin Templeton and Legg Mason—where I have spent the majority of my career—to drive the business forward,” says Masom. “The combined footprint of the organization creates an expansive investment platform that is well balanced between institutional and retail client assets under management and a strong separately managed account business.” 

Masom is a CFA charterholder and holds a juris doctor from Delaware Law School and a degree in business administration and management from Elizabethtown College.

Northwest Plan Services Adds Client Services VP

Northwest Plan Services (NWPS) has hired Shanley Johndrow as vice president of Client Services for the Mill Creek, Washington, office.

Johndrow will be responsible for developing and leading a team of retirement plan professionals who work directly with plan sponsors, advisers and attorneys.

Johndrow joins NWPS with more than 30 years of retirement plan experience with Standard Retirement Services and predecessor companies. Most recently Johndrow served as an assistant  vice president, plan services, for The Standard.

“I am excited to welcome Shanley to the team,” says Tim Wulfekuhle, president and CEO of NWPS. “She adds leadership depth to our Mill Creek office and management team as a whole and brings a wealth of retirement plan, customer relations and management experience to her role at NWPS.”

Johndrow holds a bachelor’s degree in business administration from the University of Washington and is FINRA [Financial Industry Regulatory Authority] licensed.

Accounts and Sales Director Joins Capital Wealth Planning

Keith Wagner has joined Capital Wealth Planning LLC (CWP) as director of National Accounts and Institutional Sales after serving on the firm’s board for six months.

“Keith brings significant institutional investment management experience to the CWP team, along with a strong foundation and understanding of retail investing and behavioral finance. We’re honored to work beside him to deepen relationships with our clients,” says founder and chief investment officer (CIO) Kevin Simpson.

Wagner was most recently a managing director at Allianz Global Investors. He was also a managing director at Neuberger Berman and has held high-net-worth-focused retail and institutional roles with AMR Investments, PNC Securities and A.G. Edwards. 

“I’m excited to join Capital Wealth Planning,” Wagner says. “The firm’s impressive track record, proven strategy and quality professionals provide a fantastic opportunity to—together—enhance our collective value to clients and prospects.”

Prior to transitioning to the civilian workforce, Wagner was an active duty aviation officer in the U.S. Army and stationed in Savannah, Georgia. He led, trained and mentored enlisted and commissioned soldiers, was promoted to the rank of major, and served as pilot in command for domestic and international missions. He was awarded a Meritorious Service Medal and still holds a commercial pilot license with the Federal Aviation Authority.

Wagner has been on the board of 401(k) Toolbox/PMFM and was a steering committee member for the Southern Employee Benefit Conference for nine years. He graduated from the United States Military Academy in West Point, New York, with a bachelor’s degree in engineering management, and holds FINRA Series 3, 7, 9, 10, 24, 63 and 65 licenses.

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