Data & Research February 21, 2019

LIMRA SRI Urges Advisers to Diversify Their Clientele

A new survey report from LIMRA Secure Retirement Institute finds four in ten black Americans suggested that they feel they don’t have enough money to work with a financial adviser.

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LIMRA Secure Retirement Institute (LIMRA SRI) has published a new survey report, “Black Americans and Retirement Planning: Bridging the Advice Gap,” exploring black American’s perceptions and preferences around financial advisers.

According to LIMRA SRI, black Americans are a little less likely than the general U.S. population to be working with a financial adviser, at 33% versus 37%. In addition, LIMRA SRI’s survey data suggests black Americans with a financial adviser are less likely to consult their adviser before making financial decisions about their retirement. In general, LIMRA SRI says, black Americans are more likely to first consult immediate family members for financial advice.

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The survey report says four in 10 black Americans feel they don’t have enough money to work with a financial adviser. According to LIMRA SRI researchers, black Americans “show a greater willingness than the general population to learn more about products and services that can help manage their financial priorities, and enhance financial security.”

When it comes to life insurance, the LIMRA report says there is only a minimal difference in ownership. Sixty percent of black Americans own life insurance, compared with 59% of all Americans. Additionally, the research found that there was no difference (both 68%) between black Americans and all Americans when identifying with the sentence, “I personally need life insurance.”

The LIMRA SRI study suggests that overall, black Americans feel less financially secure compared to all Americans. About half of all Americans feel financially secure, while only four in 10 black Americans reported feeling that way.

LIMRA SRI research reports can be accessed here.

Compliance February 20, 2019

U.S. Supreme Court Lets Stand Denial to Compel Arbitration in USC ERISA Lawsuit

Plaintiffs' claims over retirement plan investment and administration fees against the University of Southern California may now proceed.

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The U.S. Supreme Court has denied the University of Southern California’s (USC)’s petition to have the high court determine whether participants who filed a lawsuit challenging the management of the university’s two Employee Retirement Income Security Act (ERISA) retirement plans should be compelled to arbitrate their claims pursuant to an agreement signed with the university.

The plaintiffs in the case were required to sign arbitration agreements as part of their employment contracts. These agreements stated that these employees could only arbitrate claims brought on their own behalf. Denying a motion to compel arbitration, the 9th U.S. Circuit Court of Appeals concluded that the dispute fell outside the scope of the arbitration agreements because the claims were brought on behalf of the ERISA plans, not the individuals.

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With the denial Supreme Court’s denial to review the case, participants may proceed with their lawsuit.

The lawsuit against USC notes that in March 2016, the university made certain changes to its plans. It removed one of the plan’s four recordkeepers for future contributions, eliminated hundreds of mutual funds, removed certain fixed and variable annuity investment options, and froze contributions to certain other fixed and variable annuity investment options. The changes made by the university resulted in participants now being offered a total of approximately 34 investment options, rather than 340, across the plans’ three remaining recordkeepers.

However, the complaint says, despite these changes, the defendants in the case continue to include high-priced investment options in the plans, retain three recordkeepers, and continue to allow excessive recordkeeping fees to be charged to the plans. The complaint also alleges that as part of the communications about the changes to participants, the university acknowledged that the plans’ previous structure caused the plans to pay unreasonable recordkeeping and investment fees.

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