IMHO April 26, 2010

IMHO: Cynic’s “Cull”

I have always taken seriously the notion that news and information should be presented “straight”, and without commentary. 
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But there are times when it’s hard not to just scratch your head and say “huh?” or laugh out loud at some of the stuff that comes across our news desk. 

Here’s a (somewhat cynical) sampling from just the past couple of weeks:

CONFIDENCE MIEN? 

A nationwide survey by Citi and conducted by Hart Research Associates found that 44% of investors report being confident in their ability to retire in financial security as they had planned (said another way, that’s nearly half who DO feel that confident) .  More than a third (36%) said they might need to adjust their plans (so, do two-thirds not see any need to do so?), and (a mere) 16% said they are not confident in their ability to retire in financial security.  Must be a lot of rich uncles out there…MORE at http://www.planadviser.com/Survey_Finds_More_Proof_the_Downturn_Means_Delayed_Retirement.aspx

“NOTHING” DOING. 

Throughout one of the most stressful and volatile markets in memory, the vast majority of participants did exactly what they always do – nothing (though admittedly sometimes that’s the best thing to do).  MORE at http://www.planadviser.com/401(k)_Balances_Not_Quite_Back_to_Pre-Recession_Levels.aspx

OUTSIDE INFLUENCES? 

Those with a workplace retirement plan are (also) more likely to be saving OUTSIDE of work (66% versus 57%, according to Transamerica).  MORE at http://www.planadviser.com/Participants_and_Non-Participants_Have_Different_Retirement_Realities.aspx

AVERAGE SAYS? 

Morningstar says that the 3.8% average target-maturity fund return in the first quarter was slightly below the 4% return during the fourth quarter of 2009 (what does an average of so many disparate offerings tell you, anyway?).  MORE at http://www.planadviser.com/Target-Date_Funds_Extend_Performance_Winning_Streak.aspx

FAMILIAR PHASES? 

MetLife reports that just over a third of plan sponsors say they are unfamiliar with at least some of the particular mechanics of how stable value works. (So apparently two-thirds are familiar with ALL of the mechanics?  MORE at http://www.planadviser.com/Plan_Sponsors_Continue_Use_of_Stable_Value_but_Lack_Understanding.aspx  

CONTROL GROPE? 

Controlling benefits costs is now the top benefits objective for employers, edging out employee retention for the first time since 2006, according to MetLife.  (Is that because costs are so high, or because these days folks aren’t worried about keeping workers?) MORE at http://www.plansponsor.com/Renewed_Focus_on_Employee_Productivity_Driving_Benefits_Offerings.aspx

WORK “OUT?”

A recent report from Hearts & Wallets suggests a growing number of Americans now think of retirement not as when their portfolio reaches a certain level of assets, but when they are no longer able to find full-time employment (here’s hoping the former doesn’t come up before the latter is able to support that “decision.”).  MORE at http://www.planadviser.com/Investors_Not_Buying_Traditional_Retirement_View_Plugged_by_Providers.aspx

“FREE” FALL? 

(Still) leaving money on the table; Hewitt Associates notes that more than quarter of participants did not contribute enough to their 401(k) to receive their full employer match in 2009.  MORE at http://www.planadviser.com/401(k)_Balances_Not_Quite_Back_to_Pre-Recession_Levels.aspx

STABLE, VALUED.

Who needs diversified; While Hewitt Associates notes that premixed portfolios (including target-date and target-risk funds) now (finally) make up the largest portion of employees’ asset allocations (24.7%).  The second-largest allocation was in GIC/stable-value funds (17.1%).  MORE at http://www.plansponsor.com/NewsStory.aspx?id=6442458883&page=2 

KID STUFF. 

More than four in 10 so-called “sandwich generation” parents (41%) continue to provide at least some financial support to their young adult children, according to the 2010 Families & Money Survey by Charles Schwab & Co., Inc.  The biggest worries for mid-life parents are not being able to retire (29%), outliving their retirement money (22%) as well as not saving enough (22%).  A distant fourth – the worry that their children won’t become financially independent (11%). (Personally, I’d be worried about not being able to retire BECAUSE my kids might not become financially independent).  MORE at http://www.planadviser.com/Some_Caught_Between_Supporting_Adult_Children_and_Retirement_Plans.aspx

“UNDER” COVERED. 

A Centers for Medicare & Medicaid Services (CMS) report on the new health care reform law released Friday estimated that 1.4 million fewer Americans will be enrolled in employer coverage as a result.  That’s a net number, by the way.  The report goes on to note that about 14 million people may lose employer-provided coverage due to a variety of reasons, including more low-wage workers moving to an expanded Medicaid program and some employers, especially smaller companies and those with low average salaries, being “inclined to terminate” coverage (of course, no one knows exactly how this will play out (I suspect this is a conservative estimate), but IMHO 14 million losing their current employer-based coverage, while (ostensibly other) employers will be picking up (another) 13 million seems like a lot of disruption).  MORE at http://www.plansponsor.com/CMS_Report_Says_1point4M_Fewer_Americans_to_be_in_Employer_Health_Plans.aspx  

So – what do you think?  Did I miss any?

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Data & Research April 23, 2010

HNW Show Slightly Shifting Views about Retirement

High-net-worth (HNW) consumers remain concerned about maintaining their lifestyle in retirement and slightly more concerned about paying for health care in retirement, according to a survey by The Phoenix Companies, Inc.
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The annual survey by Phoenix, a provider of insurance solutions to HNW consumers, looks at U.S. adults with a net worth of $1 million or more, not including any debt and the value of their primary home. When it comes to retirement, that segment is traditionally  more focused on protecting their lifestyle in retirement than running out of money— but amid the depths of the recession last year Phoenix saw a greater concern about running out of money (see “Some HNW Individuals Push Back Retirement Plans”). This year those very concerned about outliving their money went down slightly to 35% from 38% in 2009. Concern about having to modify their lifestyle in retirement held steady, with 42% reporting they are very concerned, compared to 44% in 2009.

While concerns about retirement lifestyle and outliving savings remained, this year Phoenix also noted an uptick in concern about the ability to pay for health care in retirement (61%, up from 56% in 2009). Walter Zultowski, senior adviser at The Phoenix Companies, Inc., noted that some of the concern could be due to a halo effect caused by health care reform, but it could also be that the discussion around health care caused people to realize their real health-care risk in retirement.

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Zultowski noted that while short-term concern about outliving savings might have subsided, respondents still seem concerned about retirement risks in general. When asked to select their retirement risk concerns, 47% selected outliving assets, up from 40% in 2009. Other risk concerns saw more responses, however, including inflation (55%, up from 50%), not being able to live comfortably (50%, up from 44%), and health care (49%, up from 42%).

“What we have going on here is that for the current time being they’re feeling a little more comfortable than they did last year but all of this has kind of sensitized them to their retirement in the future,” Zultowski told PLANADVISER. “They’ve seen what might happen to them should they see another huge downturn when they’re getting ready to retire.”

Furthermore, the results show that HNWs have slightly redefined their comfortable standard of retirement, Zultowski said. This year 62% said a comfortable standard of living in retirement would be less than 100% of current income, up from 58% the previous year. “Their expectations or views as to what would make for a comfortable standard of living in retirement has tempered a little bit,” he said.

‘Negative Wealth Effect’

While HNW consumers showed modest optimism about the economy and an improved sense of financial security, they have not returned to pre-2009 levels. The survey found that for the first time in recent years, HNW consumers experienced a “negative wealth effect,” or feeling less wealthy than they had the year before. More than half (52%) of respondents reported feeling less wealthy than last year, with only about one-quarter (26%) feeling wealthier. That’s still improved from last year, when almost three-fourths (74%) reported feeling less wealthy.

Amid the financial crisis, it seems that more HNW consumers turned to financial advisers and developed a financial plan. The percentage with a written financial plan (44%) was up from 39% in 2009—the greatest percentage ever, Zultowski noted.

More than three-fourths (79%) of respondents indicated they are receiving financial advice from an adviser on a regular basis, up from 73% last year. Loyalty to advisers is also looking brighter. Of those with a primary financial adviser, 9% reported that they plan to look for a new one in the next months, down from a record high of 13% last year.

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