Majority of Younger Americans are Not Saving

An ING survey found that one quarter of Americans (28%) say nothing has gotten in their way of saving for retirement.

The ING Direct survey also found that a majority of Americans (89%) agree that saving for retirement should start with your first job and continue throughout your working life. More than a third (34%) of those who deduct a percentage of their paycheck and just under half (47%) of those who give a fixed amount, don’t know how much they currently contribute. And a third of Americans (33%) think it’s okay to defer retirement savings to pay for another need.

Americans of all ages and sexes are neglecting retirement planning, but there are clear differences between older and younger generations, ING found. And while women are often making financial and purchasing decisions for their households, the survey found they are not taking the same care as they plan for their own golden years.

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ING’s data found that most younger Americans are not heeding the call to save for retirement. Less than a third (32%) of those in their 20’s are currently contributing to a retirement plan. Student loans are clearly one of the contributing factors to a lack of a nest egg; one in five (21%) Americans in their 20’s say paying off student loans is a higher priority than retirement. Less than half have checked their credit score (43%) or read about financial planning (42%), and less than one in five (19%) have an emergency fund.

Conversely, older Americans are starting to wisen up, says ING. About half of those 40 or older have used a 401(k) to save for retirement. Nearly half (46%) of those in their 50's think they are saving enough for retirement. Less than half of those 50-59 have created a will (48%) or purchased term life insurance (49%). Almost all (91%) of those 50-59 believe saving for retirement should start with your first job and continue throughout your working life to ensure a secure retirement. More than half (54%) of those 50-59 disagree that just 5% yearly annual salary contribution to a retirement plan will provide a secure retirement.

As for gender differences, women aren't preparing for retirement as well as men are, but they are more likely to admit their mistakes. The survey revealed that women are more likely than men to say that they wish they had started saving for retirement earlier. And of those women, the majority (58%) wish they had started saving in their 20's.

National phone surveys were conducted in August and September 2011 among 2,000 adults over the age of 18. 

Sponsors More Satisfied with Providers than Advisers

According to an Anova Consulting Group survey, small-market retirement plan sponsors report that defined contribution providers (or recordkeepers) are delivering a higher level of client service than retirement plan advisers.

The research found that overall, plan sponsors with less than $5 million in plan assets are generally highly satisfied with their service contacts at the provider/recordkeeper, but only somewhat satisfied with their retirement plan advisers. More than 1,000 plan sponsors in the adviser-sold space responded to the survey; 88% said they are “very satisfied” with their provider’s service contact/relationship manager, compared to 77% who are “very satisfied” with their retirement plan adviser.

“As the DC industry has matured and consolidated, successful providers have increased their focus on plan sponsor service in order to boost client retention” said Richard Schroder, President of Anova Consulting Group. “Results from the plan sponsor research we’ve performed over the past decade show a consistent upward trend in satisfaction scores for providers’ client service levels and personnel.”

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The same research also reveals that retirement plan advisers have not kept pace with these rising service levels, particularly among smaller plan sponsors, according to Anova. Differentials in service ratings are most pronounced for sponsors of plans under $5MM in assets, who tend to be more dependent on their advisers for plan administration assistance. Areas of particular concern include frequency of client contact and taking a proactive (versus reactive) approach to the relationship (83% of plan sponsors are very satisfied with the level and method of contact with their providers vs. 74% for financial advisers). For larger plans between $5-$25MM in assets, advisers are more attentive to plan sponsors, with the gap between recordkeeper and adviser service levels narrowing considerably and even reversing in some cases.

“In an increasingly competitive marketplace, customer satisfaction will continue to be a key differentiator among advisers in building and maintaining successful practices,” suggests Schroder. “This study reinforces the necessity for retirement plan advisers to place further emphasis on the quality of their relationships with clients. Similar to what has occurred at the provider level, it will become ever more important for advisers to demonstrate a high level of service to their clients in order to differentiate themselves from their competition and build loyalty, especially as fees and the overall value provided by financial advisers continue to come under increased scrutiny.”

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