Products August 6, 2014

Quiz Helps Plan Sponsors Understand Fiduciary Role

The Guardian Insurance & Annuity Company, Inc. (GIAC) released a new tool to help financial professionals mitigate fiduciary risk for their plan sponsor clients.
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GIAC, a subsidiary of The Guardian Life Insurance Company of America, launched its Fiduciary Awareness Quiz to help plan sponsors better understand their fiduciary obligations and responsibilities. The quiz consists of 15 yes-or-no questions designed to assess a 401(k) plan sponsor’s knowledge of qualified plan fiduciary best practices, as well as which of these practices is currently being applied to the administration of the 401(k) plan. Plan sponsors can benchmark their scores to determine where their fiduciary knowledge ranks against their peers.

“Business owners wear multiple hats and may be unsure about all of their responsibilities and obligations as a plan fiduciary under the Employee Retirement Income Security Act (ERISA). It’s important that plan sponsors appropriately mitigate their fiduciary risk, no matter how big or small the plan is,” says Matthew Bryan, director of retirement marketing for Guardian Retirement Solutions, based in New York.

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The quiz tool also provides a customized report with educational information to help plan sponsors better understand their fiduciary responsibility. Financial professionals can use the tool and reports to gauge the fiduciary awareness of their plan sponsor clients and help fill in knowledge gaps. The tool also suggests solutions to help mitigate fiduciary risk.

The quiz easily calculates how well plan sponsors know their fiduciary guidelines and procedures, identifying areas that demand greater attention, says Bryan. As a result, small business owners acting as plan sponsors gain a better understanding of their role as a fiduciary and can work with their financial professionals and support partners to ensure that the best retirement outcome is achieved for plan participants.

The Fiduciary Awareness Quiz was developed from Guardian’s “Small Plan 401(k) RetireWell Study: What’s Working and Not Working for Small Businesses,” which surveyed more than 450 plan sponsors responsible for managing their businesses’ retirement plans. The study revealed that one-third of respondents did not even realize that they were a plan fiduciary and one-quarter did not have an investment policy statement in place.

More information about Guardian can be found athttp://401k.GuardianLife.com.

Data & Research August 5, 2014

A Generational Disconnect on a Sticky Topic

Grandparents overwhelmingly feel their grandchildren will be unreceptive to any money or savings talk, a study finds, yet most grandchildren say they’re open to the conversation.
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One of the most important ways grandparents can help their grandchildren’s saving and spending habits has nothing to do with writing a check.

Very few grandparents (just 8%) say they are likely to start a conversation with their grandchildren age 18 and younger about money and the importance of saving for college, says a TIAA-CREF study. However, most young adults (85%) say they are open to talking with their grandparents about these topics.

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What’s more, grandparents do not know the influence they can hold. Only three in 10 think they can influence their grandchildren’s money habits, the study finds. Yet 73% of young adults indicate their grandparents actually do influence their saving and spending habits, and 59% rate their grandparents as very good to excellent savers.

With nearly all young adults (97%) concerned about saving for their future, grandparents can make a difference by sharing how their financial decisions—for better or worse—have affected their lives. In fact, the study shows that the No. 1 topic grandchildren would like to talk about with their grandparents is their memories and past experiences. This can be a great opportunity for grandparents to discuss their financial choices within the context of their personal stories, TIAA-CREF explains.

“Young adults are surprisingly open to talking with their grandparents about money, regardless of the generation gap,” says Joseph Coughlin, director of the Massachusetts Institute of Technology AgeLab, which collaborated with TIAA-CREF on the study. “When it comes to saving for college, most young adults feel unprepared, and grandparents aren’t fully aware of how they can help. Conversations about money over time could help young adults more than their grandparents realize.”

Coughlin suggests starting these conversations early in childhood. “When you empower children to understand financial decisions, they develop a lifelong sense of confidence and trust in themselves, helping them become successful adults,” Coughlin says.

As the cost of a four-year degree skyrockets, young adults are very concerned about saving for higher education. About a third (30%) indicate they have nothing saved for college. Of those surveyed, only 29% report that their grandparents have helped or are helping with their educational expenses.

College Cost Questions

Grandparents are largely unaware of the rising costs of a four-year degree. Twenty percent think a four-year education costs between $30,000 and $50,000. Another 26% think it costs $50,000 to $75,000. This is far less than projections from the College Board's most recent “Trends in College Pricing” report, cited by TIAA-CREF, showing a moderately priced private four-year college education now averages around $164,000. An in-state public college education costs approximately $100,000 over four years, according to the College Board. 

While 66% of grandparents surveyed say they don’t feel responsible for helping finance their grandchildren’s higher education, 23% do help pay for college in some capacity. In a supplemental qualitative study, grandparents suggested that their willingness to help depends on the habits and maturity of their grandchildren.

Grandparents  indicated willingness to help their grandchildren financially, but they want some assurance that their grandchildren have “skin in the game,” according to Coughlin. “Grandparents need to know their grandchildren are serious about achieving future success through advanced education by using their own money to help pay for at least part of it,” he says.

Grandparents surveyed also are unaware of affordable ways they can impact their grandchildren’s financial future. Specifically, 67% of grandparents say they haven’t heard of 529 college savings plans.

“In addition to grandparents sharing their own financial experiences, 529 college savings plans are an easy and affordable way for grandparents to help their grandchildren save for college,” says Doug Chittenden, executive vice president of individual business at TIAA-CREF. “Grandparents may lack awareness of 529s because they didn’t have to think about starting a college fund with their own kids.”

On behalf of TIAA-CREF, KRC Research conducted four focus groups among grandparents with a grandchild between the ages of 17 and 24. To qualify for the groups, grandparents had to have a minimum annual income of $50,000 and minimum investible assets of $100,000 or more. Two groups were conducted in Grand Rapids, Michigan, on March 18, and two groups were conducted in San Diego, California, on March 20. Each group participated in a two-hour, open-ended discussion facilitated by a professional moderator. A total of 39 people (20 in Grand Rapids and 19 in San Diego) participated in the groups. The 21 women and 18 men ranged in age from 58 to 81, with a median age of 68.

The study, conducted in March and April, compiled data from the focus groups, one-on-one interviews and online surveys of grandparents age 50 and older and grandchildren age 18 to 24.

More information about the TIAA-CREF study is here.

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