Data and Research August 17, 2015

A Written Plan Sparks Positive Feelings

Even the affluent have concerns when planning for retirement, a LIMRA study finds.
Reported by

Just because affluent Americans approach retirement planning with far more assets than average savers doesn’t mean they are not anxious. In a study, the LIMRA Secure Retirement Institute found nearly 70% of affluent consumers said maintaining their lifestyle in retirement was a top financial goal.

More than 80% of the affluent are confident they will be able to live their desired lifestyle in retirement, but despite substantial assets, only 4 in 10 are “strongly confident.” The reasons range from market volatility and rising inflation to living longer in retirement and unexpected events.

Get more!  Sign up for PLANSPONSOR newsletters.

The study found those who work with an adviser to develop a formal written plan to manage their assets experience increased confidence. About half of those with written plans (54%) said they were “very confident” about living their desired lifestyle in retirement.

In fact, that written plan seems to kick off a cycle of positive feelings and behavior, a kind of trust flowchart. The confidence sparks adviser satisfaction with the adviser, which fuels trust in the adviser, leading to more business. Only half of affluent consumers, however, have a formal written plan.

The study pointed out that once a written plan is in place, both adviser and client can pursue realistic planning and improve preparation for retirement. With a plan, 30% of affluent households feel “extremely well prepared” for retirement compared with only 17% who do not have a plan.

As confidence and preparation rise, the actions that follow benefit both client and adviser. Forty percent of those with a plan give their advisers perfect scores on satisfaction measures versus 14% of those without a written plan. In turn, clients have more trust in the advice they receive and look to consolidate more of their assets with their adviser: 55% of clients consolidated three-quarters or more of their assets with their adviser.  

The LIMRA Secure Retirement Institute looked at American investors at three asset levels: $500,000 to $999,999; $1 million to $3.5 million; and $3.5 million-plus. More information is at LIMRA’s website.

Investing August 17, 2015

Investors Shun U.S. Equity Despite Its Return

International Equity funds led inflows again in July, according to Strategic Insight.
Reported by

Net inflows to stock and bond mutual funds and exchange-traded products totaled $12.9 billion in July, data from Strategic Insight, an Asset International company, shows.

Among actively managed funds, growth-oriented International Equity funds again led inflows to long-term products during the month, attracting $4.7 billion. Monthly outflows from U.S. Equity funds totaled $12.1 billion in July; active products continued to see outflows while indexed U.S. Equity exchange-traded funds (ETFs) attracted $14.6 billion of net new investment.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

Net intake to Bond funds totaled $900 million in July. Top inflow Taxable Bond strategies during the month included Government Short Maturity ($3.4 billion) and Global Bond ($2.3 billion). Corporate High Quality strategies led monthly net redemptions during the month with $2.8 billion of net outflows.

Strategic Insight says fund returns by asset class were led by U.S. Equity in July, registering an asset-weighted average one-month cumulative return of 1.3%. Taxable and Tax-Free Bond fund average returns were also positive at 0.3% and 0.6%, respectively. International Equity funds declined 0.4% during the month.

Net subscriptions to Money Market funds totaled $44.6 billion in July.

More information about Strategic Insight is at www.sionline.com.

«