In Practice May 23, 2008

Talking to Twentysomethings

Because “401(k)″ is likely not being renamed any time soon, advisers might need to find more effective ways of getting around opaque financial terms with the new breed of American workers.
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Generation Y and the Baby Boomers do not hold many water cooler conversations, according to the most recent workplace study by employment services company Randstad USA. A survey of 3,494 adults says that 51% of Boomers report having little to no interaction with their younger co-workers. As Baby Boomers retire, their knowledge might not be transferring to the younger generation, who communicate differently than their older counterparts.

Research from Mintel suggests that the financial industry might not be effectively communicating in order to capture the potentially lucrative group of twentysomethings that make up a huge segment of the population (see Y Not?). Although the 78.5 million Baby Boomers nearing, and in, retirement are the obvious focus of the retirement industry right now, the 79.8 million members of Generation Y comprise an even larger market.

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The report says Generation Y (considered in this survey to be born between 1980 to 1988) is probably changing the face of global business in the most dramatic way since women entered the workplace back in the years before Boomers were born. The study characterizes Generation Y as unwilling to live by the old-school rules, even more so than Generation X (born between 1965 and 1979).

That is even evident in the financial advising industry. Younger advisers are increasingly more attracted to different segments of the field, opting for more independent routes than traditional wirehouses, according to a recent Cerulli Associates report (see Recruiting Young Advisers Requires Less Traditional Approach).

The different outlook of younger workers might require different financial education. Selling to this younger generation could be difficult simply because of the wording of products. The report says Generation Y requires clear and direct communication styles—not explanations littered with jargon, acronyms, and “spin-doctoring.”

To view the full 2008 World of Work report, go here.

 

 

Data & Research May 23, 2008

Advisers Want More Focus on Them

AssetMark was the number one rated asset management firm for focusing on advisers, in a recent survey of adviser attitudes toward firms in their client portfolios.
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The study by the Financial Research Corporation and Horsesmouth found that 72% of respondents strongly agreed that AssetMark is focused on advisers. Other top scorers were Dimensional Fund Advisors (65%) and Russell Investments (62%), compared to the average firm score of 35%.

The survey analyzed the responses of 1,800 advisers, who evaluated firms’ focus on advisers and high-net-worth investors, quality of retirement solutions, branding and marketing strategies, and overall trustworthiness. Overall, the firms did not garner a lot of positive “strongly agrees’ in many areas, but advisers seemed satisfied with the service they receive from asset management firms.

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The survey demonstrated a divergence of responses from advisers. “There really is no average adviser or average view going on in the marketplace,’ Bill Nicklin, CEO of Horsesmouth told PLANADVISER.com.

But even the myriad of responses demonstrate that advisers put an importance on provider relationships.

“Just like investors look to advisers for a trusted long-term partner, that’s the same thing that advisers are looking to for their wholesalers and the firms that they work with,’ Nicklin said. “There are firms that on a consistent basis are spending time and resources on advisers to help them build their business, and are really focused on helping advisers do their business better, as opposed to simply pushing new products.’

He also points out that some firms might be trying to be adviser-focused, but just are not going about it in the right way. “Part of what we tried to do in all of that research is bring forth a solid in-depth look at what advisers want and how they want it,’ Nicklin said.

Retirement Income

Retirement solutions are increasingly important for advisers, but most advisers do not “strongly agree’ that any particular firm is known for its retirement solutions (but 84% at least “somewhat agree’). Of the responses, the top firms for retirement solutions in the report were: GE Asset Management, Waddell & Reed, Principal Financial, Jackson National, and Prudential/Skandia.

In Focus

Although only one-third of advisers surveyed strongly agreed that the firm in their portfolio focused on them, most (88%) would somewhat or strongly agree. The report says the top five firms that advisers considered focused on them were: AssetMark, Dimensional Fund Advisors, Russell, Waddell & Reed, and GE Asset Management.

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