Client Service September 22, 2015

Russell Quiz Shows Advisers Their Superpowers

An online game challenges advisers to pin down their adviser style.
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An online quiz from Russell Investments walks advisers through several client and investing scenarios: Your client in retirement wants to live high on the hog, or a younger client is looking for information about you online, to name two. Advisers can choose the answers that best fit their own situation and receive a snapshot of their advising and investment decision-making style: traditionalist, hunter, architect, CEO or power user.

Traditionalist advisers, for instance, have “a firm set of beliefs, a customer service mindset, and a Milton Friedman Bobblehead,” according to Russell’s site. Along with the light remarks are solid suggestions for practice management, a catalogue of an adviser’s likely strengths and how to approach a range of client situations. Navigating these real-life investment and business scenarios helps advisers learn more about their decision-making styles and access resources to help address some practice management challenges. The quiz generates potential solutions, resources and best practice approaches.

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While playing, advisers can step back and consider the best course of action in scenarios that may keep them up at night. Also included are the adviser’s possible associated superpowers, opportunities and risks. Superpowers for the five types range from data analysis to tech know-how to gorgeous spreadsheets to ambidextrous texting thumbs, for example.

As well as their personal snapshot result, Russell Investments shares insights and best practices for handling the various situations encountered throughout the online journey. Risks for the traditionalist, for instance, are that the client is not always right, and one-to-one service can make it hard to expand a book of business.  

Pointing out that gamification has been extremely popular among consumers, Kevin Bishopp, a director in Russell Investments’ U.S. adviser-sold business, says the firm thought financial advisers might find some benefit from it. “The quiz is designed to be fun, fast and informative for advisers,” Bishopp says. “The goal is to provide real-time information and practical advice to help advisers better tackle common concerns, such as how to construct a more tax-efficient portfolio, more effectively manage time and build business scale, as well as work through challenging situations presented by clients and the markets. By answering just a few questions, advisers receive information on potential solutions, resources and best practice approaches.”

Scenarios in the quiz include:

  • Your lowest revenue clients take the most time/resources to manage
  • A cost-conscious client asks you what you do to earn your fee
  • A client asks about robo-advice

The “What kind of adviser are you?” quiz, which is mobile and tablet compatible, does not ask for any personal information and is on Russell Investments’ website.

The Markets September 22, 2015

Schwab Finds Equities Dominate SDBAs in Retirement Plans

In the second quarter, participant account balances in the Schwab Personal Choice Retirement Account were down 0.07% from the first quarter, but up 3.8% from June 2014.
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According to Charles Schwab’s institutional SDBA Indicators Report, a benchmark of retirement plan participant investment activity within self-directed brokerage accounts (SDBAs) using data from participants in the Schwab Personal Choice Retirement Account (PCRA), plan participants invested 47% of new assets into equities in the second quarter of 2015.

This compares with just 30% in the prior quarter. Flows into mutual funds dropped to approximately 10% in the second quarter, down from 38% in the first three months of the year.

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SDBAs are brokerage accounts within retirement plans that participants can use to invest in stocks, bonds, exchange-traded funds, mutual funds and other securities that are not part of their plan’s core investment offerings. The average balance in PCRA was $206,564 at the end of the second quarter, representing growth of 3.8% from June 30, 2014. Participants age 50 and older remain the largest age demographic in the PCRA at 53.3%, while the average age is 49.

According to the Schwab data, mutual funds continued to be the top asset allocation at 39% of all portfolios, a decrease of 2% from last year. Allocations to equities remained the same at 28% and cash (17%), exchange-traded funds (14%) and fixed income (2%) rounded out participants’ portfolios.

NEXT: Specific sector holdings within SDBAs

Participants averaged just fewer than six trades during the second quarter, which is consistent with the low number of quarterly trades executed historically.

The data also reveals specific sector holdings within each investment category:

  • Among exchange-traded funds, investors allocated the most dollars to U.S. Equity (45%) and International Equity funds (17%). Commodity funds (4%) and International Fixed Income (1%) represented the smallest allocations.
  • With regard to mutual funds, Large Cap funds represented 30% of all allocations, followed by Taxable Bond (19%), International (16%), Hybrid (14%) and Small Cap funds (13%).
  • Apple (AAPL) was the top overall holding, growing to 12.14% of all portfolios. As a result, Information Technology (28%) was the largest sector holding for individual securities, followed by Financials (14%) and Consumer Discretionary (12%). Utilities and Telecommunication Services represented the smallest allocation, each accounting for just 2% of participants’ portfolios.

The second quarter 2015 report, as well as prior reports, can be found at www.schwab.com/sdbaindicators.

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