Data & Research March 1, 2011

Tailored Advice Leads to Better Decision-Making

The Center for Retirement Research at Boston College found that customized advice for pre-retirees can help them take smarter actions.
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The Center for Retirement Research (CRR) measured initial reactions to the financial crisis in 2009, and then gave respondents customized advice on how to offset their losses. According to a CRR brief, after receiving advice on the tradeoff between working longer, saving more, and decreased retirement consumption, more than 40% decided to save more and/or work longer.   

About 25% reduced their planned increase in working years, which CRR found to be an appropriate response because these respondents were overestimating the number of additional work years needed to counteract their financial losses.  

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One third did not respond to the advice. The brief said further investigation shows that these “committed non-responders” are older and more likely to have been on track before the downturn. “Perhaps these individuals already have their plans in place, are close to retirement, and feel that they’ve made good prior decisions in preparing for retirement, so they are not swayed by additional advice,” the report noted.  

The brief is here.
The Markets March 1, 2011

Russell Announces Schedule for Index Reconstitution

Russell Investments announced the 2011 schedule for its annual index reconstitution process, which reflects the past year’s global shift in equity markets.
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Russell will post lists of preliminary additions and deletions for the Russell Global Index, U.S. broad-market Russell 3000 Index and Russell Microcap Index on its Web site after the U.S. market closes on Friday, June 10. Updated lists, if necessary, will be posted at the same location on June 17 and June 24.   

Membership changes to Russell’s comprehensive family of indexes will take effect as markets close that final Friday of June and remain in place for the ensuing 12-month period. The final list will be posted on Russell’s Web site on June 27.  

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Russell offers a comprehensive worldwide set of equity benchmarks that covers 98% of the investable universe and accounted for $3.9 trillion in benchmarked assets as of December 31, 2009, according to the announcement. Membership is determined by objective rules, such as market capitalization rankings. Accurate benchmarks are an integral part of Russell’s ongoing process to monitor 8,000 investment manager products worldwide for the firm’s $155.4 billion active investment management business.  

“Russell continues to reassess and refine rules for company inclusion during the reconstitution process in order to minimize index turnover and reduce the impact of reconstitution, while still reflecting precise market representation,” said Sarah McCarthy, senior product manager for Russell Indexes at Russell Investments, in the announcement. 

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