Data & Research May 6, 2014

Adviser Credentials Key to Success, IMCA Says

Investors expect financial advisers to earn and maintain professional credentials beyond the minimum licensing requirements, according to research from the Investment Management Consultants Association (IMCA).
Reported by

A recent study conducted by the IMCA and Advisor Impact, “Economics of Loyalty Research,” finds 62% of investors believe it is important or critical that their financial adviser maintain voluntary certifications, and 65% value certifications issued by an objective third party.

IMCA researchers say the analysis contained a few surprises. For example, younger and more inexperienced investors appear to be the most stringent in their credential expectations for advisers, with 84% citing the importance of voluntary certifications above minimum requirements.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

“This is the latest in a long line of consumer research to foretell rising client expectations, particularly among Millennials,” explains Sean Walters, chief executive officer of IMCA (see “A Designation with Fiduciary Muscle”).

Walters says the survey also provides valuable insights for advisers to consider in pursuing new credentials, including which knowledge competencies are most valuable for a practice. Fifty-nine percent of investors, for instance, believe the most valuable adviser competency is in investment management, followed by competency in holistic financial planning, sought by 22% of investors.

A strong majority of investors (81%) believe is important or critical that advisers maintain their credentials once earned.

The findings are based on a set of custom questions asked on behalf the IMCA as part of an Advisor Impact study, which polled 1,200 investors. IMCA is a nonprofit professional association and credentialing organization. More information is available here.

Data & Research May 5, 2014

Recession Decreased Expected Reliance on 401(k)s

Fewer Americans plan to rely on a 401(k) account as their main source of retirement income than planned to prior to the recession, according to a recent Gallup poll.
Reported by

The survey found 48% of nonretired (i.e., working) respondents in 2014 say 401(k) retirement plans will be their primary source of income during retirement, compared with 54% who said so in April 2008. In addition, since the recession began, more nonretirees expect Social Security to be a major source of retirement income than did so before 2008. From 2002 to 2007, between 25% and 29% of nonretirees expected it to be a major source of income, compared with 30% to 34% from 2008 to 2014.

An additional 51% of nonretired Americans expect to rely on Social Security as a minor source of income.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The decrease in value of their 401(k) investments during the recession seems to have created skepticism with nonretired Americans that such investments could be relied on as a source of retirement income, Gallup says. It may also reflect the higher volatility in the stock and housing markets, as fewer Americans feel comfortable trusting their retirement income to these sources and instead consider Social Security the safer option.

However, for retired Americans, in 2014, 22% rely on a 401(k) or similar savings account as a source of retirement income, compared with 23% in 2013 and 20% in 2008. Gallup noted the recession did not decrease retirees’ reliance on these accounts as much as it decreased nonretirees expectations for reliance on these accounts.

Between 2002 and 2014, Gallup found between 50% and 61% of retirees have considered Social Security a major source of income.

The results for the poll are based on telephone interviews conducted April 3 to 6, 2014, with a random sample of 1,026 adults (334 retirees and 692 nonretirees), age 18 and older, living in all 50 U.S. states and the District of Columbia.

«