The Markets December 14, 2007

Retirement Savings Increase 4% in Q207

Americans' retirement savings grew in the second quarter of 2007 to $17.4 trillion, according to the latest Investment Company Institute (ICI) data.
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Retirement assets grew about 4% between March 31 and June 30, an ICI news release said. The combined retirement savings now accounts for nearly 40% of all U.S. household financial assets.

According to ICI, assets in lifecycle funds reached $152 billion during the quarter, 89% of which was held in retirement accounts. Meanwhile, lifestyle funds managed $221 billion as of June 30, up from $204 billion as of March 31, with nearly half of that total in retirement accounts.

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Americans held $4.4 trillion in all defined contribution plans, of which $3 trillion was held in 401(k) plans, ICI data showed. Those figures are up from $4.2 trillion and $2.8 trillion, respectively.

Mutual funds managed $2.3 trillion in assets in 401(k), 403(b), and other defined contribution plans at the end of the second quarter, up from $2.2 trillion at the end of the first quarter. Mutual funds manage 52% of DC plan assets.

IRAs held more than $4.6 trillion of assets as of June 30. Mutual funds managed 47% of IRA assets.

The report covers assets held in private-sector pension plans, both defined benefit and defined contribution; government pension plans; annuities; and individual retirement accounts (IRAs).

Complete data can be found at http://www.ici.org/pdf/retmrkt_update.pdf.

In Practice December 14, 2007

SEI Says Advisers Most Focused on Communication in ‘08

As the year comes to a close, advisers are planning ahead for 2008 and, according to a recent poll by the SEI Advisor Network, advisers’ New Years resolutions are focused on how client interaction will lead to a successful year.
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To help advisers strengthen their business in 2008, SEI has released what the firm believes are five business-building resolutions:

  1. “Get interactive.” According to SEI, 42% of SEI advisers say that increasing face-to-face interaction with clients is the most important priority for them and their businesses. However, SEI says that this is a very time consuming initiative. In addition to individualized meetings, SEI suggests that hosting group seminars for clients is a great way for advisers to conduct face-to-face interaction and maximize their time. Unfortunately, only a small sampling of advisers surveyed (roughly 10%) expressed interest in exploring educational initiatives for clients.
  2. “Travel through time.” Since 2007 saw many investors losing confidence in the markets, SEI suggests that advisers manage their expectations for the future and work on educating clients on what causes market volatility, as well as using innovative strategies designed to specifically manage volatility and downside risk.
  3. “Cover more ground.” Thirty-one percent of advisers polled plan to explore and/or add more wealth management services to increase client satisfaction and meet other needs in 2008. However, SEI cautions that adding the wrong type of services can further diminish profit margins. In order to achieve a balanced offering that fosters profitability, SEI recommends offloading non-client-facing functions like proposal generation and reporting to increase efficiency.
  4. “Get smarter.” Potentially as a result of market conditions during 2007, about half (52%) of advisers surveyed said that Boomer clients would scrutinize financial advice more than ever. Therefore, advisers need to have easy access to the answers clients seek – which includes being armed with knowledge, as well as tools, to differentiate advice, communicate effectively, and give clients the confidence their life goals will be met, SEI explains.
  5. “Remember – money isn’t everything.” When asked what they’d have done differently in 2007, 40% of advisers said they’d have focused on more frequent communication with clients. According to SEI, advisers should be proactively communicating with clients about a broad range of industry trends that affect their clients’ lives. Ideas SEI gives for proactive communication include: clip and send news articles, forward links to interesting studies, or give personal perspective on an emerging trend.

For more information about the SEI Advisor Network, visit www.seic.com/advisors.

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