Products April 3, 2013

ING U.S. Expands 529 Presence

ING U.S. Investment Management became program manager for the adviser-sold portion of the state of Iowa’s IAdvisor529 Plan.
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The firm handles the program’s investments, product, marketing, sales and distribution, customer service and recordkeeping. Given its expertise in managing retirement assets, ING U.S. IM is well suited to serve the needs for college savings, according to Mark Spina, head of intermediary distribution at ING U.S. IM. Spina pointed out that surveys show college savings is an area of significant concern to investors.

Effective support and education are important for advisers seeking to initiate and build 529 client relationships, Spina said. Customized tools to enable advisers to better assist clients and prospects in understanding and embracing 529 plans as effective vehicles for college savings can be seen on ING U.S. IM’s 529 website.

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“We want to make it easier for advisers to utilize 529 solutions with their client base,” Spina said. “We believe there is significant opportunity for advisers to introduce college savings programs in the years ahead. 529s have not yet been tapped by a significant portion of the population, and we believe the combination of more favorable demographics, rising college costs and the plan’s intrinsic tax and estate planning advantages will make it increasingly important for advisors to guide investors to utilize 529s for this significant long-term investment objective.”

Advisers can choose from age-based funds, static allocation options, and a diversified mix of individual funds. Solutions can be customized based on individual circumstances. The underlying funds are managed by the firm and by other asset managers. All the 529 portfolio options are overseen by ING U.S. IM’s Multi Asset Strategies and Solutions (MASS) team.

Data & Research April 3, 2013

Financial Crisis Promoted Positive Savings Behavior

Following the financial crisis, 56% of investors now believe it is entirely their responsibility to prepare for retirement, a Fidelity Investments survey finds.
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According to Fidelity’s “Five Years Later” study, when the financial crisis started, nearly two-thirds (64%) of investors reported they were either scared or confused, but more than half (56%) indicated they have transitioned from being “scared or confused” to “prepared or confident.”  

Forty-two percent say they increased their contribution rates to their workplace savings plans, individual retirement accounts (IRA) or health savings accounts, and more than half (55%) now agree they feel better prepared for retirement than before the crisis. Conversely, only 19% of investors who are still scared or confused increased their savings rate. As a result, fewer (34%) feel better prepared for retirement than before the crisis.  

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Forty-nine percent say they have decreased their personal debt, and nearly three-quarters (72%) say they have less personal debt now than they did before the crisis hit. Only 31% of investors who are still scared and confused say they reduced personal debt.

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Forty-two percent say they increased their emergency fund, and 80% of these same respondents now say they have a better understanding of their finances than before the financial downturn. Only 24% of investors who are still scared or confused say they increased their emergency fund.  

The study also found 64% of respondents are more interested than before the crisis in guaranteed income products, such as annuities, to provide a steady cash flow in retirement.   

Seventy-eight percent of the “prepared and confident” respondents say their positive actions are permanent changes in their behavior (versus 59% of investors who are still scared or confused).    

“These positive behavioral changes found in the survey are significant, and we are seeing a similar trend with some of our workplace participants increasing their savings since the downturn,” said James M. MacDonald, president of Workplace Investing at Fidelity Investments. “We’re starting to witness a more engaged individual emerge over the last five years, and we’ve seen some of the inertia that held many back start to dissipate. Fidelity has seen a 33% increase in participants seeking guidance with their retirement planning over the last several years, and we know increased engagement will ultimately lead to better outcomes.”

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The study also asked where investors sought help as the financial crisis started to unfold. The leading source for guidance was a financial professional (30%), followed by a spouse or family member (26%).Guidance from financial professionals was also ranked among the highest in helpfulness, at 90%. As a result of the crisis, nearly one-quarter (23%) of respondents now rely more on a financial professional than they did in the past.   

“The financial crisis created an opportunity for financial professionals to provide much needed context and clarity to investors,” said Scott E. Couto, president, Fidelity Financial Advisor Solutions. “While investors are feeling more engaged and accountable for their finances, many are still too conservatively allocated. Financial professionals have an opportunity to help investors regain confidence with taking on an appropriate amount of risk to meet their financial goals.”  

The Fidelity “Five Years Later” study was conducted online among 1,154 adult investors by GfK Public Affairs and Corporate Communication using GfK’s KnowledgePanel during the period of February 12-25, 2013.An executive summary of findings is here.

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