Data & Research July 11, 2012

Women May Stop Working With Adviser If Spouse Dies

Some women say if their relationship with a spouse or partner terminated, they would also end their relationship with a financial adviser. 
Reported by

According to Prudential Financial’s survey, “Financial Experience & Behaviors Among Women,” almost a quarter of women say they would discontinue a relationship with their financial professional if their spouse passed away, suggesting room for improvement in the quality of the advisory relationship for women.  

One of the biggest misconceptions about investing is that it is difficult and complicated, which could explain why some women stop working with an adviser if a relationship with a partner ends. Some women may not feel like they know enough about investments to feel comfortable talking to an adviser, Deborah Owens, CEO of Owens Media Group, said during Prudential’s press event about the study.

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

Two-thirds of women do not work with a financial professional, according to the survey. Women who do not currently use an adviser but are likely to do so are younger, have higher incomes, are disproportionately African-American, and are more likely to own an IRA or contribute to an employer-sponsored defined contribution (DC) plan.

The survey indicates that women who work with a financial professional feel more confident about not outliving their savings in retirement and maintaining their standard of living than others. While women are relatively confident in their ability to achieve financial goals such as buying a house and reducing debt, the survey indicates that they are less confident about having enough money in retirement and protecting investments from volatility.

Baby Boomer women are nearly as likely as their younger counterparts to say they are far behind or have not started planning for retirement (41% vs. 48%), further demonstrating that most women lack confidence in their retirement security.

“The whole confidence gap is really what stood out [in the survey],” Owens said. “I really look at that confidence gap as a knowledge gap, too.”

Collaborating with an adviser can be essential in getting an education, added Joan Cleveland, senior vice president of business development, individual life insurance at Prudential. Educated women will also be willing to take more investment risks, improving their chances of having adequate retirement savings.

The smarter choice is always to work with an adviser on your retirement preparedness rather than seek advice online, or from friends and family, added Lynette Khalfani-Cox, “The Money Coach” personal finance expert.

“You’re not going to go to a mechanic when you have a heart problem,” she said.

Prudential's survey polled 1,410 American women and 604 American men ages 25 to 68.

Compliance July 11, 2012

Further Guidance Possible Regarding Brokerage Windows

An official from the Department of Labor (DOL) said further guidance may be issued regarding the treatment of brokerage windows in participant fee disclosures.
Reported by

In May, the DOL issued Field Assistance Bulletin 2012-03, which answers questions about the participant fee disclosure regulations that go into effect August 30 (see “DOL Issues Additional Guidance for Participant Fee Disclosures”). Since the Bulletin’s release, some in the retirement industry have expressed concern about the DOL’s answer to question 30, which relates to brokerage windows.

Kristen Zarenko, senior benefits counsel for the DOL’s Division of Regulations, said during American Society of Pension Professionals & Actuaries’ Northeast Area Benefits Conference that dialogue about the entire Bulletin is ongoing. To her knowledge, no final decisions about question 30 have been made, but she foresees the DOL will issue additional guidance.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

Question 30 asks whether the platform itself is considered a designated investment alternative (DIA) when a plan offers an investment platform with many registered mutual funds of multiple fund families to which participants and beneficiaries may direct the investment of assets held in or contributed to their individual accounts. It adds that although the plan fiduciary selected the platform provider, the fiduciary did not designate any of the funds on the platform as “designated investment alternatives” under the plan.

Industry professionals have been surprised by the DOL’s answer (see “DOL’s Answer in Fee Disclosure Guidance ‘Surprising’”). Several associations have asked for complete withdrawal of question 30, said Robert Kaplan, vice president, national training consultant for ING.

Although questions loom about the Bulletin, Zarenko said plan fiduciaries will hopefully find some relief from question 30 by the DOL’s answer to question 37. The DOL answered question 37 by saying that it will take into account whether covered service providers and plan administrators have acted in good faith based on a reasonable interpretation of the new regulations.

The Field Assistance Bulletin is available here. 

«