Client Service January 25, 2018

Americans’ Financial Satisfaction Hits Record High

Strong stock market gains and a decrease in unemployment boost AICPA’s Personal Financial Satisfaction Index to a record high in the 24 years the trade group has been conducting this survey.

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Although inflation has been rising, stock market gains and a decrease in unemployment have boosted the American Institute of Certified Public Accountants (AICPA) Personal Financial Satisfaction Index (PFSi) to the highest level it has ever reached in the 24 years AICPA has been conducting this survey.

In fact, the index has been rising steadily over the past seven quarters. AICPA suggests that the data could even be stronger next quarter, as the potential impact of the Tax Cuts and Jobs Act was not reflected in the data for the fourth quarter of 2017.

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AICPA calculates the index as the Personal Financial Pleasure Index minus the Personal Financial Pain Index. When the readings are greater than zero, this indicates that Americans are feeling more financial pleasure than pain. For the fourth quarter of 2017, the index stood at 26.9, up 1.2 points from the third quarter.

The Personal Financial Pleasure Index, at 69.2, is up 1.3 points from the previous quarter. This is the fourth quarter in a row that this index has increased. The Personal Financial Pain Index, at 42.3, is 12.1 percent lower than the previous year but 0.2 percent higher than the preceding quarter.

“Americans should continue to assess their personal risk tolerance and work with their financial advisers to determine how best to approach investment decisions in 2018,” says David Cherill, a member of the AICPA Personal Financial Planning Executive Committee. “Many of my clients have more confidence than ever in the market, while others are scared to death and have already taken considerable gains off the table. The potential for volatility remains, but this market has thus far been immune to many of the factors that have resulted in large swings in the past.”

The PFS 750 Market Index, the biggest contributor to the Pleasure Index, rose 5.2% in the fourth quarter to a record high for the fourth successive quarter. AICPA notes that Nasdaq, the S&P 500 and Dow Jones all experienced record highs in December. “The current level of the PFS 750 Market Index is a robust 15.6% above the Q4 2016 reading as the steady expansion of the U.S. economy continued and corporate earnings improved,” AICPA says. “The strongest market performers in the final quarter of the year were the consumer discretionary sector, which gained just over 11%, followed closely by technology, which advanced almost 10%.”

Personal taxes were the leading overall contributor to financial pain for the seventh quarter in a row. The measurement of this index rose 1.5% from the fourth quarter of 2016 but a 0.9% decrease from the previous quarter.

Products January 25, 2018

Empower Retirement Reveals PlanVisualizer System

The interactive technology enables retirement advisers to demonstrate to plan sponsors how modifications in plan design can impact their employees’ retirement readiness, and the shifting cost of providing the plan for the employer. 

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Empower Retirement announced that it will launch PlanVisualizer, a new adviser-support solution billed as “a powerful interactive technology that enables retirement advisers and consultants to demonstrate to plan sponsors how some modifications in plan design can impact their employees’ retirement readiness, pinpoint progress, and forecast plan contribution expenses.”

According to the firm, the new offering will be made available available through Empower’s adviser website. In a phrase, the tool is aimed at helping plan sponsors consider how possible changes to their plan—such as employer match, automatic enrollment and rate of auto-escalation—can impact their employees’ retirement prospects.

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“The ultimate goal of every retirement plan is to replace income in retirement,” explains Empower President Edmund Murphy III. “PlanVisualizer is designed to help employers better see and understand how the design of their plan can help employees achieve that goal.”

PlanVisualizer aims to create a holistic view of a client’s retirement plan in its current state, along with the ability to model how changes to key design elements can potentially affect participant preparedness. Importantly, the tool also helps analyze how changes to the plan might impact matching costs for the employer.

As seen in a demonstration supplied by Empower, the PlanVisualizer technology utilizes a core set of anonymous data points supplied by the adviser or consultant (including employees’ ages, salaries, retirement plan balances and contribution rates) to provide plan sponsors with customized insight across demographic segments, including a directional sense of participants’ current trajectory to replace income in retirement.  PlanVisualizer then “makes use of Empower proprietary data which utilizes multiple individual and actuarial data points to show individuals a score of how they are faring toward income replacement in retirement.”  

Advisers and consultants can employ this technology to communicate the effect of retirement plan design changes in real time, Murphy notes.

PlanVisualizer will also be offered by Putnam Investments to assist advisers and consultants in serving their clients. In recent years, Putnam has been working on maximizing its FundVisualizer tool, a free investment analysis tool that enables advisers, brokers and other intermediaries to evaluate and compare more than 30,000 mutual funds, exchange-traded funds (ETFs) and indexes using more than 80 performance and risk metrics.

For more information, visit www.Empower-Retirement.com.

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