Data & Research May 9, 2018

Most Workers Willing to Pay More for Better Retirement Benefits

But less than half are willing to do the same for better health care benefits, Willis Towers Watson learned in a survey. 

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Sixty-six percent of U.S. workers said they would be willing to pay higher costs for more generous retirement benefits, and 61% would pay more for a guaranteed retirement benefit, according to the 2017 Global Benefits Attitudes Survey by Willis Towers Watson.

However, only 38% are willing to pay more for an improved health care plan, and 49% are willing to pay more to have lower, predictable health care costs. Only 24% are willing to pay for tools and services to live a healthier lifestyle, and a mere 19% would do the same to help boost their finances.

“While employees continue to feel vulnerable about their long-term financial prospects and say they are willing to pay more for greater retirement security, health care benefits evoke a much different response,” says Steve Nyce, senior economist at Willis Towers Watson. “Employees, who continue to see their health care costs increase annually, are basically saying ‘enough is enough,’ as far fewer are willing to pay more for more generous health benefits and more predictable costs.”

On the whole, the survey found that workers are happy with their benefits, with 55% saying they believe their retirement plan meets their needs, and 66% saying their health care plan is accommodating. However, only 43% say their benefits package offers the choice and flexibility to meet their needs, and 27% say that educational programs, such as financial wellness, meet their needs.

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Fifty-eight percent would take time off for an equivalent change in pay. Fifty-five percent would accept a more generous health care plan in exchange for an equivalent change in pay, and 48% would welcome added financial protection benefits. Nearly 90% with benefits choices and access to decision support say their benefit programs is satisfying—twice as many who do not have access to choice.

“Employers need to recognize that employee appreciation of their total benefit package has a positive impact on worker productivity,” says Julie Stone, managing director, health and benefits, North America, at Willis Towers Watson. “Our research shows that just over half of employees whose benefit package meets their needs are highly engage in their job, compared to just 25%” who do not believe their benefits package meets their needs.

Willis Towers Watson’s survey was conducted among more than 30,000 private sector workers in 22 countries last July and August. In the U.S., 4,983 workers were surveyed.

In Practice May 9, 2018

RIAs Predict 41% of New Clients Will Be Gen X, Millennials by 2023

This will mean shifting their current focus from Baby Boomers, TD Ameritrade learned in a survey. 

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Forty-two percent of registered investment advisers (RIAs) say they are changing their marketing and networking to attract younger clients, according to TD Ameritrade Institutional’s 2018 RIA Sentiment Survey. They say that today, Baby Boomers comprise 46% of their client base, but five years from now, in 2023, they expect that to drop to 43%—and 41% of their new clients will be Gen X and Millennials. Additionally, seniors will fall from 23% to 14% of clients.

“In just five years, RIAs expect 41% of their clients to be Gen Xers or Millennials,” says Kate Healy, managing director, Generation Next, at TD Ameritrade Institutional. “This should be a wake-up call to those who think that Next Gen wealth is literally still a generation away. Change is coming, which means advisers need to rethink their approach to finding both talent and clients in order to continue on their growth trajectory.”

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To attract Next Gen clients, nearly 40% of RIAs are advising 401(k) plan participants. Forty-seven percent are re-evaluating how they charge for their services, whether that is a flat fee for financial planning and coaching (33%) or adjusting pricing and fees in some other way (14%). Additionally, more than 20% of RIAs are lowering asset minimums.

Thirty percent are hiring younger advisers, and 24% are hiring college interns. Twenty percent plan to hire and train mid-career changers, providing an opportunity for women re-entering the workforce, and professionals from other industries and the military.

Twenty-five percent said succession planning or hiring talent is the challenge that will have the greatest impact on their firm in 2018, and 22% said the shortage of younger advisers is a threat to their growth.

TD Ameritrade also learned that many RIAs are ignoring the tremendous opportunity of the Next Gen, with 44% not taking any steps to build a new talent pipeline. Twenty-three percent are not doing anything to attract younger clients.

“Advisers who are not planning now to ensure the longevity of their firms risk being left behind,” Healy says. “Firms that are actively taking steps now to manage for client needs down the road may be better prepared in terms of talent, technology and, of course, clients.”

MaritzCX conducted the telephone survey of 300 RIAs managing an average of $161 million in assets last November and December.

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