SURVEY SAYS: Taking a Guaranteed Return

Several investment managers are reporting that market return expectations going forward will be much lower than in the past—some as low as 3% to 4%.

By Rebecca Moore | June 26, 2017
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Last week, I asked NewsDash readers, “How likely would you be to pick a 2.5% guaranteed rate of return over the returns you would potentially receive in your plan over the years?”

Seventy percent of responding readers work in a plan sponsor role, 16.7% are advisers/consultants and 13.3% are TPAs/recordkeepers/investment managers.

Nearly half (48.4%) of respondents said they are not at all likely to switch to a 2.5% guaranteed rate of return for their retirement plan investments over the returns they would potentially receive in their plan over the years. One-quarter (25.8%) said they are somewhat unlikely, and 12.9% indicated they are somewhat likely. “Very likely” was chosen by 9.7% of responding readers, while 3.2% reported they didn’t know.

In verbatim comments, several respondents don’t give much weight to the investment manager estimates, and several say there is still a way to get much more than 2.5% by managing a portfolio correctly. Still there were some who like the idea of a guarantee, at least for part of their assets. Editor’s Choice goes to the reader who said: “I have wide ties, narrow ties, wild ties, dull ties and ties for any occasion. Several fashion managers are reporting an expectation, going forward, that one of them will be in style. In other news, scientists predict there will be four seasons within the foreseeable future. Sheesh!”

A big thank you to all who participated in the survey!