Employees of John Hancock Total Retirement Solutions clients
can now use the MyLifeNow mobile app to enroll in their company’s 401(k) plan.
With the addition of MyLifeNow mobile enrollment,
participants can also sign up for automatic salary deferral increases and adjust
their pre-tax, Roth or after-tax contributions. The app also presents account
balances, personal rates of return and current investment allocations.
“If we want to engage with participants, we need to meet
them where they are,” explains Patrick Murphy, president of John Hancock Retirement Plan
Services, “not ask them to come to us.” He
suggests mobile phones are rapidly becoming the primary vehicle for people to
manage their lives, “whether that is banking, communication, and yes—even
retirement planning. Ensuring our participants can actually interact with their
plan, not just get information, will be critical as we continue to move into a
more mobile world.”
The MyLifeNow mobile app was launched in 2013 to give
participants anywhere access to their 401(k) account balance, personal rate of
return, estimated annual retirement income, year-to-date contributions, and
investment allocations by asset class. Earlier this year, the company added other transactional capabilities, including reviewing and changing contribution
percentage rates.
A new TIAA-CREF survey finds more than half of investors
look to short-term performance factors when making investment decisions, while
nearly one-third mistakenly believe all investments carry the same overall level
of risk.
Accordingly, TIAA-CREF warns the focus on short-term financial performance and
misunderstandings about the nature of investment risk may have an impact on
American investors’ financial well-being, especially in the long-term effort to
plan for retirement.
Overall, 36% of investors look to one-year performance as
the “most important indicator of an investment’s return,” with an additional 16%
looking to quarterly performance as most important. TIAA-CREF finds nearly half
of investors have purchased a fund “based on its performance during the
previous year rather than looking at its performance over a longer-term
investment horizon such as five or 10 years.”
Roger Ferguson, president and chief executive officer of
TIAA-CREF, says it’s critically important for people to look at the big picture
when evaluating investment performance. “One year or one quarter is a short
period of time when you consider that many individuals are investing for 30
years or more,” he adds. “Fortunately, investors can avail themselves of a
range of resources, including professional financial advice, which can help
them make well-informed investment decisions and build portfolios designed to
meet their specific financial goals—whatever they may be.”
NEXT: Grappling with
diverse concerns
According to TIAA-CREF, investors should be less focused on recent bouts of market volatility and more focused on the
key concepts of diversification and asset allocation—building a more holistic
understanding of the important role that taking risk and accepting some periodic
short-term losses plays in generating a stable retirement outlook.
This state of affairs is still someway off, TIAA-CREF notes,
as among those surveyed, a strong majority (71%) believe they can completely eliminate
investment risk by having a diversified portfolio. “In fact, while a
diversified portfolio can help to manage investment risk, there is no way to
eliminate it altogether,” TIAA-CREF says. Nor would one want to, given the yin-yang relationship of risk and return.
“Similarly, although investors should maintain an
appropriate level of risk in their portfolios, many are unclear about how that
works,” the report explains. Currently 53% of U.S. investors think that higher
risk guarantees higher returns.
TIAA-CREF finds all investors would benefit from better
access to financial education about these topics, but Millennials could use the
most help. Among this age cohort, 40% of all respondents misunderstand the
nature of various asset classes, TIAA-CREF says, indicating that they believe
that all investments offer the same level of risk. At the same time, 64% of Millennials
think that higher risk guarantees higher returns, compared with 53% for the
general investing population.
NEXT: Focus remains
on outcomes
“Despite some
misconceptions about investment performance, American investors have a clear
picture of what they want from their portfolio,” TIAA-CREF explains. “Two-thirds
of investors believe it’s more important that their portfolio allows them to
achieve their life goals, such as funding a comfortable retirement or paying
for a college education, versus one-third who place more importance on a
portfolio that consistently meets specific investment criteria, such as a
certain percentage return.”
One specific piece of advice plan sponsors and advisers
might offer to the workplace retirement investors: the middle of a period of
market volatility is likely not the most effective time to rebalance the
portfolio. Instead, most advisers’ recommend investors “ride out market
fluctuations as part of a long-term investing strategy,” TIAA-CREF says. Another
appropriate approach might be to tie the rebalancing date to a regular time of
year, perhaps a birthday, cited by 21% of advisers. Other key times to
reconsider the level of risk taking may be after a life change, such as
marriage, the birth of a child or grandchild, or the death of a spouse (20% of
advisers).
Ferguson concludes that having a well-defined vision of
one’s financial goals is a good first step for investors. “Once you have set
your priorities, a financial adviser can help you find the approach that is
right for you,” he concludes.
More information about the 2015 TIAA-CREF Built to perform
study is here.