People of Color Report Limited Retirement Investments

They also say they are not making headway on their retirement goals.

Americans who identify as people of color report that they have limited retirement investments and say they’re not making progress toward achieving important retirement goals, according to the 2020 Retirement Risk Readiness Study from Allianz Life Insurance Co. of North America.

Allianz says, despite this, people of color say they feel reasonably prepared for retirement, and that this disconnect potentially shows that they misinterpret their financial situation—putting their retirement readiness at risk.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Fifty-five percent of people of color say they believe they are saving enough in a retirement account, 52% think they have plenty of time to save for retirement and 35% say retirement is too far away to worry about it.

“The level of confidence people of color have in their retirement readiness could be attributed to different cultural values that shape their decisionmaking,” says Cecilia Stanton Adams, chief diversity and inclusion officer at Allianz Life. “Oftentimes, in communities of color, breadwinners are expected to balance support for multiple generations with their personal retirement goals. This complexity, among others, could be responsible for the disconnect we see between perception and reality, putting people of color at higher risk for retirement insecurity.”

Less than half of the respondents (48%) participate in a workplace retirement plan, 33% have life insurance, 21% have an individual retirement account (IRA) and 5% own a variable annuity.

Less than half report making progress toward achieving some of their retirement goals. Only 46% are making progress toward setting long-term financial goals, and just 40% have diversified their holdings. Twenty-five percent have purchased a financial product that provides a guaranteed source of retirement income.

“Given that a recent study from the Brookings Institution found the net worth of a typical white family is nearly 10 times greater than that of a Black family, it’s not surprising that our study shows that people of color may be behind in developing a sound retirement strategy,” Stanton Adams adds. “This highlights an opportunity for people of color to address their financial situation head-on, including working with a financial professional who can help them develop an achievable retirement plan.”

Only 32% of people of color are working with a financial professional. Meanwhile, nearly 70% plan to work in retirement.

Sixty-three percent say they have unexpected, large expenses to pay, and 52% worry about becoming a financial burden to their loved ones. Fifty-three percent are worried that they will not have enough money in retirement to do all the things they would like to do, and 48% are worried they will not be able to stay in their home.

“We believe that people of color want to take more control of their finances but may be struggling to find the right support from a financial professional,” says Aimee Lynn Johnson, vice president of financial planning strategies at Allianz Life. “This leaves room for financial professionals to better serve these communities through education, outreach and support in building retirement strategies than can mitigate some risk.”

Likewise, the MassMutual State of the American Family Study found that only 35% of Indian American families have a retirement plan in place. Korean Americans were the least likely to calculate how much they need to retire (39%) or to have created a clear path for retirement saving (20%), according to the study.

Only 30% of African Americans and 24% of Hispanic Americans said they are extremely confident in their expected retirement age

“It’s important to note that multicultural communities aren’t monolithic when it comes to retirement,” Wonhong Lee, head of MassMutual’s Multicultural Markets said. “Plan sponsors should be cognizant that the various multicultural communities look at retirement differently and have varying degrees of readiness and timetables for retirement.”

He added that education is key to encouraging more retirement planning behaviors among employees overall.

The National Institute on Retirement Security also published a report on the challenges facing Latino workers in the U.S. as they save and invest for retirement. Just under a third, 31%, of Latino workers participate in a retirement plan, compared with 53% of white workers.

“This could be due to the fact that many Latinos have not worked for their employer for one year, work part-time, or are under the age of 21—making them ineligible to participate in a retirement plan,” the paper said. “Among Latinos with access to a retirement plan, only 60.3% also meet the eligibility requirements set by employers, compared to higher retirement plan eligibility rates for all workers (72.9%), whites (76.1%) and all non-white workers (65%).”

CAPTRUST Acquires Retirement Planning Practice From Plante Moran Financial Advisors

The ‘carve-out’ acquisition brings CAPTRUST’s assets under advisement to $400 billion and represents the continuation of an important retirement plan industry trend involving large, diversified financial services firms.

CAPTRUST Financial Advisors has announced another 2020 acquisition, this one taking the form of a “carve-out” transaction that will see the retirement planning practice of Plante Moran Financial Advisors (PMFA) join the rapidly growing practice.

Prior to this acquisition, the PMFA practice was 100% owned by Plante Moran—one of the largest certified public accounting, tax, wealth management and consulting firms in the United States. PMFA retained ownership of the firm’s individual wealth management practice, and remains under the umbrella of the larger Plante Moran organization. According to CAPTRUST’s leadership, with the addition of the PMFA retirement plan advisory team, the firm has surpassed $400 billion in assets under advisement (AUA).

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The advisory team at PMFA is led by partners Dori Drayton and Susan Shoemaker, who will be joining CAPTRUST as senior vice presidents. Along with Drayton and Shoemaker, 11 additional team members will transition to CAPTRUST. The group joining CAPTRUST is based in Grand Rapids, Michigan, and Southfield, Michigan, and it advises on approximately 200 institutional clients and 240 retirement plans, representing more than $6 billion of institutional assets.

“Susan and Dori have built a phenomenal team; they made us better immediately and we believe they will benefit from the significant scale we have built in the retirement business at CAPTRUST,” says Rick Shoff, managing director of CAPTRUST’s adviser group. “Despite the volatile market conditions, CAPTRUST has continued on its growth trajectory, which has been further bolstered by the four teams we have added this year.”

This is the 42nd team to join CAPTRUST since 2006 and the fourth this year. Consistent with previous deals, the retirement plan advisory team from PMFA will take on CAPTRUST branding. At the same time, Plante Moran, through PMFA and affiliated entities, will retain its broader wealth management clients, meaning Plante Moran will be providing investment consulting, financial planning, trust, insurance consulting, estate planning, business succession and tax planning services.

“It was clear from the beginning that CAPTRUST was the ideal partner to take our team into the next chapter,” Drayton says. “Our clients will immediately be able to tap into CAPTRUST’s participant advice capabilities, a deep research team, and world-class customer support technology. We look forward to introducing our plan sponsor clients to our new colleagues at CAPTRUST.”

Those readers who have been tracking retirement industry merger and acquisition (M&A) action over the past several years will recognize this transaction as the latest in a series of deals that are slowly but surely reshaping the look and feel of established advisory practices. Simply put, well-established retirement plan advisory practices are being both purchased and offloaded by major diversified financial services companies such as Plante Moran.

In this case, it seems clear that the broader Plante Moran organization does not feel retirement planning is part of its core business, nor does it want to continue to make the significant technology and staffing investments needed to service this line of business. So it is seemingly capitalizing on the “sellers’ market,” i.e., the fact that retirement plan advisory firms targeted in acquisitions are seeing very generous offers. In this environment, serial acquirers such as CAPTRUST are not hesitating to pay premium prices to bring on board well-established practices that will immediately expand a firm’s geographic footprint.

On the other side of the spectrum stand firms such as OneDigital and HUB International. These firms are in a similar position to the Plante Morans of the world, but they are making the opposite move and are seeking to rapidly and significantly expand their capabilities in the retirement advice market. Their motivations appear to be the ability to cross-sell their many other products and services to the large client sets touched by the plan adviser community.

HUB International started its buying spree of established retirement plan advisory and wealth management firms in January 2019, when it announced the acquisition of Sheridan Road Financial. The buying streak continued last September, when HUB announced six acquisitions of firms that were part of Global Retirement Partners (GRP). This round of acquisitions brought on board EPIC Retirement ServicesStoneStreetWashington FinancialPerennial Pension & WealthWhartonHill and Inter-Mountain Retirement Partners (MRP).

OneDigital has been similarly active in the M&A market. The national health care and insurance benefits provider acquired Resources Investment Advisors LLC, an advisory network headquartered in Overland Park, Kansas, earlier this year. The acquisition represented the largest single assemblage of deals in OneDigital’s history, as it touched on 13 different advisory firm entities.

«