Diversions July 19, 2012

Cars of the Future: No Hands Required

 

Imagine reading up on the latest financial news while you drive to work, but unlike the markets, your car won’t crash.

 

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Once something in a Ray Bradbury story, autonomous cars (you don’t have to brake, accelerate or even steer) could become a reality. Some consumers are even willing to shell out the extra money for this feature, though interest did drop once the price was disclosed, according to a survey by J.D. Powers and Associates.

After learning the estimated market price would be $3,000, one-fifth of vehicle owners said they definitely or probably would purchase an autonomous driving feature in their next vehicle. Before the price was disclosed, interest for the technology was higher(37%).

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Jason Chepenik, a managing partner with Chepenik Financial Services in Winter Park, Florida, who drives often for business, liked the idea of autonomous driving. “I wish I had that,” Chepenik told PLANADVISER. Not having to keep his hands on the wheel, he said, would free him to use e-mail or his phone, but “mostly be safe.”

Men are most interested in paying a premium for a car with an autonomous driving feature, followed by drivers between the ages of 18 and 37, and urbanites, according to the survey.

The study also found a lot of interest (41%) in fully autonomous driving among vehicle owners who were attracted to automatic parallel parking.

The study found that vehicle owners are nearly as likely to select fully automated technologies as semi-automated ones, such as emergency stop assist ($800), traffic jam assist ($800) or speed limit assist ($800).

There’s just one thing a so-called autonomous car won’t be able to do: help you pay for gas.

 

 

Data & Research July 18, 2012

Financial Education Improves Retirement Savings Outcomes

Financial education improves plan participants’ knowledge and awareness about saving for retirement. 
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A financial management course changed the retirement savings behavior of Army members, Harvard University John F. Kennedy School of Government Professor Brigitte C. Madrian said during a State Street Global Advisors (SSgA) media event detailing SSgA’s Defined Contribution Investor Survey. (See “DC Participants Want to Save More, Need Education and Help.”)

Before the course, participants had an 11% participation rate in the Federal Thrift Savings Plans during year one and 17% in year two. After the course, participants had a 27% participation rate in year one and 47% in year two.

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Participants’ monthly contributions also increased following education. Before the course, participants set aside $15 in year one and $22 in year two. After the course, participants set aside $32 in year one and $56 in year two.

When teaching participants, Madrian said plan sponsors should use rule-of-thumb-based education. An example lesson could be on the appropriate amount of money to set aside for retirement. Using the rule-of-thumb approach, Madrian suggests that plan sponsors tell participants what percentage of their income they should save for retirement (she used 10% of income as an example).

Madrian said employers should offer classes during paid work hours to encourage employees to attend them.

 

(Cont...)

Kristi Mitchem, head of global defined contribution at SSgA, suggested that employers offer classes during convenient times such as breaks and lunch to increase attendance. Even offering promotional products with your company’s logo to participants can encourage employees to check out an event.

Participants’ preferences for financial education may vary, and could extend beyond traditional classroom settings. For example, Madrian said,“[S]ome people who are antisocial, they might prefer the Internet.”

Regardless of how employees gain financial knowledge, nobody is expecting participants to become the next George Soros or Warren Buffet. “We’re not all trained to be investment experts,” Mitchem acknowledged.

Madrian agreed, saying that participants can turn to those who specialize in investments, just as they turn to other professionals to solve problems in other aspects of their lives. “I don’t have to know how to fix a car. I take it into the auto body shop,” she said.

 

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