Data & Research April 3, 2013

Middle Class in Need of Financial Advice

Middle-class Americans need professional financial advice, but many do not think they can afford it, a NestWise source says.
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Middle-class Americans have never had more responsibility over their personal finances than they do today, creating a growing need for access to personal financial advice, Esther Stearns, CEO of NestWise—a subsidiary of LPL Holdings Inc.—told PLANADVISER. “Our industry has to a great extent underserved this demographic,” she said.

Forty-seven percent of all middle-class households are concerned about their retirement savings, according to NestWise, which launched in 2012 and serves the financial needs of the middle class through independent, fee-based advisers. For many Americans, 401(k)s are the primary form of investable assets, but 57% are uncomfortable making investment decisions about their company’s retirement plan.

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In addition, 58% of middle-class Americans report rebalancing either sporadically or never. If investors do not rebalance regularly, their risk exposure may not be aligned with what’s appropriate for their financial circumstance and risk tolerance, Stearns said.

Recently released survey results from the Bankers Life and Casualty Co. Center for a Secure Retirement (CSR) found that when it comes to developing a retirement savings goal, only one-fifth (21%) of middle-income retirees and pre-retirees calculated a monthly retirement income goal number; and only one in 10 (13%) determined a total savings goal number to reach. (See “Few Income Goals, But Lots of Worry.”)

Despite the fact that the majority of Americans think they could benefit from professional financial advice to get them on track, NestWise found that 35% of middle-class households do not work with a financial professional because they do not think they have enough money to invest. In addition, 31% of middle-class Americans do not work with a financial professional because they do not think they can afford one.

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.

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