Deals & People August 11, 2014

BNY Mellon Launches New Retirement Group

BNY Mellon named Michael Gordon to head the firm’s new Retirement and Strategic Solutions Group, which specializes in retirement and insurance solutions that can complement traditional strategies.
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The new business unit is dedicated to meeting current and anticipated investing and risk management needs for retirement plan and other institutional clients, according to BNY Mellon. Kim Mustin, BNY Mellon Investment Management’s head of North American distribution, says the firm is looking to add non-traditional investment solutions to complement its suite of more traditional retirement plan and insurance offerings.

Gordon has more than 15 years of experience within the retirement and insurance marketplace. He has worked in asset-liability management for both institutions and individuals, and has experience in distribution, marketing and investment technology solutions.

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Most recently, Gordon was managing director of non-traditional solutions and special situations for BNY Mellon Investment Management. In that role, he led and will continue to lead the home equity retirement solutions business. Gordon says the home equity unit is engaged in the purchase, securitization and service of reverse mortgages. The unit also provides advisory services to brokers, financial advisers and asset managers on how reverse mortgages can fit into retirement planning. 

Gordon will report to Mustin in his new role. Prior to joining BNY Mellon, Gordon was an executive at New York Life Insurance Company.

“The retirement industry is rapidly evolving from accumulation as clients’ primary objective,” Gordon says. “In less than three years, more than 50% of U.S. individual assets will be in retirement transition or retirement distribution. Complicating matters, an estimated $6 trillion dollar gap exists between what these retirees have accumulated and what they will need in transition and in terms of income they will need in retirement.”

Gordon adds that the new BNY Mellon business unit will focus on solving some of these questions. He says the wide-ranging nature of the retirement crisis will require new coordination both within firms and between providers.

“It is clear that to solve this challenge, we must explore various combinations of investment excellence, guarantees, insurance and banking concepts, incorporating non-traditional and illiquid assets into portfolio construction, as well as technology innovation,” Gordon continues. 

He says BNY Mellon is bringing “16 world-class investment managers” together to develop varied products and strategies, including liability driven investing; direct lending; collateralized loan obligations; and core fixed income. 

“Our combined capabilities, associated with asset management, banking and insurance, will reinforce our enhanced efforts in the retirement and insurance markets,” he says.

The new business unit is part of BNY Mellon Investment Management, which encompasses BNY Mellon’s affiliated investment management firms, wealth management services and global distribution companies. More information can be found at www.bnymellon.com.

Data & Research August 11, 2014

A Look at Adviser Opinions, Challenges

Only 18% of advisers surveyed target Gen Y clients, and 57% prefer new clients with assets of more than $250,000, according to The Principal Financial Well-Being Index: Advisors. 
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As Millennials become more established in their careers, they seem below the radar of most financial advisers, the study says. Instead, three out of five financial advisers surveyed are targeting Baby Boomers (64%), affluent/high-net-worth individuals (64%), or business owners (62%). Overall, just about a third of American workers (30%) work with a financial adviser. 

The findings illustrate an enormous opportunity for up-and-coming advisers to build relationships with underserved Millennials. Younger investors are in a growing phase of their careers and income potential, points out Tim Minard, senior vice president of distribution at The Principal.

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So what prevents Millennials and other workers from seeking the help of a financial adviser? Nearly a third of advisers surveyed (29%) report that potential investors say fees and costs are the biggest barrier, followed by fear (16%) and people thinking they can go it alone (10%).

But help from a financial adviser is definitely needed. Many advisers reported that clients tend to live beyond their means (22%), don’t save enough (15%) and do not start to save early enough in their careers (11%). The majority of advisers (52%) indicate that no more than one in four clients begins saving early enough in their career to actually achieve the recommended level of retirement savings.

“One of the biggest challenges advisers face is helping clients try to catch up when they didn’t start saving for retirement in the early years of their careers,” Minard adds. “Financial professionals are able to easily demonstrate to clients the power of early savings and the impact it has on their retirement nest egg.”

Financial advisers show continued confidence in their physical and fiscal health. More than three-quarters of advisers rated themselves as healthy or very healthy when it comes to their overall financial health (80%), physical health (77%) and the health of their business (83%, up from 78% last year).

Adviser Pain Points

However, advisers are still dealing with many fears about the economy. Respondents fear that market declines (57%) and a worsening economy (51%) will negatively impact their business in 2014. These advisers’ greatest pain point is dealing with compliance and regulatory issues (46%), followed by coping with misinformation (38%, up from 31% last year) and clients’ fears and emotions (38%). Additionally, many advisers surveyed reported that they are kept up at night worrying about not having enough time to get work done (28%), increased regulatory burdens (20%) and market performance (14%).

“As with employees, we are happy to see that financial advisers are equally focused on their financial and physical well-being,” Minard says. “While regulations, market performance and economic outlook continue to be concerns, financial advisers are making significant strides to handle these issues for their clients and their businesses.” 

Other findings include the following:  

 

  • Client Preparedness: While 61% of advisers surveyed feel clients are in good shape when it comes to planning for how they will turn their retirement savings into income in retirement, only one in five of these advisers (21%) rate their clients highly in being ready to deal financially with becoming disabled and unable to work for a living.
  • Social Media: Fifty percent of financial advisers surveyed are utilizing social media in some way. Many are using social media tools to communicate with existing clients (25%), deepen relationships with existing clients (25%) and to help find new clients (23%). Less experienced advisers (between two and ten years of experience) are more likely to use social media primarily to find new clients (46%) than their more seasoned counterparts (20%).
  • Biggest Competition: Advisers surveyed found that their biggest competition is not other advisers, but their customers’ fears which result in lack of financial action (34%). Nonetheless, these advisers say 37% of new clients, on average, do come to them due to dissatisfaction with their previous financial professional. Only 4% of advisers say they feel threatened by online investment advice providers.

 

“The Principal Financial Well-Being Index: Advisors” survey was conducted online in the U.S. by Harris Poll on behalf of the Principal Financial Group among 614 financial advisers. The study is used to identify and track changes in the financial adviser community. Participants were producing financial advisers with a minimum of two years of experience and a personal income of $75,000 or more. The survey can be accessed on The Principal’s website.

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