Data & Research February 13, 2012

Employee 401(k) Contributions Increased in 2011

The average employee 401(k) contribution rose slightly in 2011 to $5,750, up from $5,680 the year before, reported Fidelity Investments.
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At the end of the fourth quarter 2011, the average 401(k) balance was $69,100, up nearly 8% from the end of the third quarter.

According to the report, more participants benefited from employer contributions. Eighty-two percent of active participants received employer contributions—typically a company match or profit sharing—during 2011, up from 79% in 2010. Seventy-five percent of employers made contributions to eligible participants last year, averaging $3,270, up from $3,170 the year before.

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Target-date funds helped drive improved diversification and asset allocation. One in four participants invested 100% of their 401(k) assets in this option, with nearly half of participants age 35 or younger investing all their plan assets in the option.

Very few participants made exchanges last year. Only one in 10 participants made an exchange—the transfer of money from one investment option to another—during a year of significant market volatility, down from 15% in 2006. Much of the reduction in exchanges may be attributed to the increased use of target-date funds and an appreciation of a long-term, steady approach to retirement saving. Over the past few quarters, when investors made exchanges, more assets moved out of equities toward conservative holdings such as short-term, stable value and fixed-income options.

“It’s very encouraging that savings levels actually held up during the intense market volatility of last year and a sluggish economic environment,” said James M. MacDonald, president, Workplace Investing, Fidelity Investments. “Increases in savings levels, however small, can make a significant impact over time.”

In Practice February 13, 2012

Actions Speak Louder than Words: Mastering Body Language

February 13, 2012 – Potential clients must “buy” you before they buy any products or services from you.
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So noted Bill Acheson, faculty member of the Department of Communication at the University of Pittsburgh, when speaking to attendees of the National Tax Sheltered Accounts Association’s (NTSAA) 403(b) Advisor Summit.  Acheson shared tips on projecting the correct body language to win clients, as well as on interpreting the body language of clients and prospects.  

In a first meeting, body language is ten times more powerful than what you say, according to Acheson.  It is also more emotionally revealing and more emotionally accurate than what you say.  

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Acheson contended there are three things you must project to initiate and maintain a long-term professional relationship: trustworthiness, competence and likeability.  

Starting with the handshake, Acheson said a one-handed handshake using a vertical palm and firm grip indicates relationship equality.  “It is the only handshake you should use in a professional setting,” he said.  When shaking hands with a prospect, lead with your right hand, make eye contact and give a verbal greeting.  

An upturned or downward-facing palm and a limp-wristed handshake convey inequality in the relationship.  Acheson also said a two-handed handshake may be appropriate with senior citizens or a long-running relationship, but in a first meeting it shows a false attempt to accelerate rapport.  It says “I am not to be trusted.”

According to Acheson, if you touch your face while speaking, it conveys a lack of confidence.  Fingers over your mouth conveys dishonesty or deception.  

Acheson listed six behaviors advisers should adopt: 

  • Make eye contact 70% of the time; 
  • Smile; 
  • Nod your head at appropriate times – although Acheson said this means different things for men and women, and it would be a good idea for advisers to learn women’s perspectives; 
  • Body orientation toward prospect with only a slight forward lean; 
  • Have your hands in view at all times – this indicates you have nothing to hide; and 
  • Don’t cross your legs – Acheson said studies have shown that crossing one’s legs inhibits the ability to think clearly. 

 

Acheson said listening is better than talking.  The first thing to say to a prospect is, “Tell me about yourself,” then be silent.  If the prospect says something emotional, lean forward.  Acheson said that shows a commitment to listen and lessens the opportunity for distraction.

Acheson also gave attendees of the NTSAA 403(b) Advisor Summit insight on what a prospect/client’s body language conveys.  

When shaking hands, he suggested advisers pay attention to what the prospect’s left hand is doing.  If it is down by her side, she is neutral or unmotivated. If the left hand is in a fist or tense, it shows excitement for the meeting, high intent and positive attitude.  If the left hand moves up and toward you, this indicates the prospect already likes you.  

We’ve often been told that when someone sits or stands with their arms crossed, it means they have closed up and won’t trust you or let you in.  But, Acheson said we can read other things from crossed arms.  If the right hand/fingers only are exposed, it means the person is a logical thinker; the left hand/fingers exposed means the person is an emotional and creative thinker.  If the fingers of both hands are showing when arms are crossed, it means the person is a quick decision maker, a fast thinker and can go with either emotional or logical thinking.  When the fingers of both hands are concealed, it shows collusive thinking.  The person can think both logically or emotionally at the same time.  It also means the person is a strong starter, but a weak finisher.  

Is the prospect exposing his or her stomach when sitting across from you? If so, they are open to you and what you are saying; if not, they haven’t opened up.  

If the prospect's body is facing you, that is good, but if they are turned at all, you are losing them.  Finally, Acheson explained what the timing of a prospect’s response to your question conveys.  For example, if you ask, “Are you comfortable with the plan I drew up for you?” a short, brief and direct answer is the most honest.  Anything else—if the prospect hesitates or doesn't answer directly—then you need to probe further to address concerns.

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