Products June 26, 2019

CEFEX Offers Due Diligence Reports on Advisers and Providers

For retirement plan sponsors, the CEFEX Independent Assessment Report offers a method to document the selection and monitoring of their service providers, thereby helping them fulfill their fiduciary obligations.

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CEFEX announced a new way for plan sponsors, investment committee members and individual investors to obtain due diligence reports on their advisers and service providers.

The new CEFEX Independent Assessment Report (IAR) contains a description of CEFEX’s rigorous annual assessment including the standard and assessment methodology applied, the date and the people involved.

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For plan sponsors, the IAR offers a method to document the selection and monitoring of their service providers, thereby helping them fulfill their fiduciary obligations. The IAR serves as a comprehensive expert analysis, which should be stored in their fiduciary file as a permanent record.

The IAR is a feature exclusively available to CEFEX certified advisers in the U.S. and internationally, third-party administrators (TPAs) and recordkeepers to help communicate the significance of the CEFEX assessment to clients. The new reports are available for renewal assessments conducted after May 1, 2019.

The CEFEX assessment is based on the standard described in the handbook: “Prudent Practices for Investment Advisors”, recently updated by Fi360 Inc. In the case of recordkeepers and TPAs, it is based on the “Standard for Retirement Plan Service Providers” published by CEFEX and the American Society for Pension Professionals and Actuaries (ASPPA).

According to the Department of Labor, retirement plan fiduciaries can limit their liability by implementing prudent practices including establishing a prudent process, maintaining records and documenting decisions. Plan sponsors have a duty to monitor retirement plan advisers, but may be forgetting to request or research certain information.

The IAR can be downloaded for a CEFEX certified firm from the CEFEX website.
Data and Research June 26, 2019

Study Finds Large Disparity in Women’s Retirement Readiness

Women have lower retirement savings and are saving less, and more women than men report planning to retire later because they'll need to, T. Rowe Price found.

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Baby Boomer women have a median 401(k) savings balance of $59,000, less than half the $138,000 median that men have saved, according to a T. Rowe Price survey. Even Millennial women have a median savings balance that is $30,000 lower than their male counterparts.

On average, women earn a median of $27,000 less than men, and they are deferring less of their income to 401(k)s. Sixty-six percent of the women contributing less than the recommended rate say they are saving as much as they can afford. Only 10% of women are saving additional money for retirement outside of their 401(k) plan, whereas 32% of men are doing so.

Women are more likely than men to say they will continue to work in retirement due to needing the money. Forty-six percent of women believe they will need to reduce their standard of living in retirement, whereas only 37% of men share this outlook.

Conversely, nearly half of men think they will continue to live as well or even better in retirement, whereas only 33% of women share this optimistic outlook.

Within the first five to 10 years of retirement, 33% of women are either widowed or divorced, compared to 17% of men. Looking out to 11 years, the number of single or divorced women increased to 45% , while the number of single or divorced men barely changed at 18%.

“The gender gap is contributing to a domino effect on women’s finances,” says Judith Ward, senior financial planner at T. Rowe Price. “Lower earnings can have an effect on their current financial decisions, which ultimately impact women’s financial future, including their retirement savings. As women, it’s critical for us to be proactive when it comes to our money and to seek the guidance and education that is necessary to put us on a path toward a successful financial future.”

Both men and women cited ease of use as their most favored attribute for financial advice. However, women place more importance on advice that fits into their work or personal schedule, as opposed to men who place more importance on advice that alerts them to critical developments in their accounts.

T. Rowe Price’s findings are based on a survey of 3,005 adults conducted by NMG Consulting. The full findings can be seen here.

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