Products March 7, 2016

Voya Financial Rolls Out Planning Program

Voya Financial Advisors expands adviser services with an Advanced Planning Program.
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Voya Financial Advisors Inc., the broker/dealer business of Voya Financial, has unveiled a new Advanced Planning Program to help financial advisers nimbly meet their clients’ needs. 

Services in the program are delivered by a team that draws on a suite of expanded resources and integrated technology capabilities, Voya says. A central platform delivers a single seamless experience to help advisers provide better plan implementation and adoption. “Each member of the team is experienced and holds advanced designations,” says Michael Berry, a certified financial planner (CFP) on Voya’s Advanced Planning team. 

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The ultimate goal is to get clients organized and emotionally attached to their plan, Berry explains. Team members can walk advisers through a “clear and thoughtful process” as they receive technology and guidance during the development of a client’s financial plan. “This provides them with more time to focus on deeper client discussions and to identify effective solutions,” he says.

Advisers and their clients can follow this structured process during the creation of a plan, Berry says, and there is a clear focus on defining and quantifying the value of the adviser’s role throughout the experience. Plans are completed with the support of digital resources and reviewed regularly to make adjustments based on life changes and market events. This collaborative process fosters ongoing communication and shifts the focus away from short-term investment returns to a client’s broader financial goals.

This approach, with its new emphasis on the relationship, helps advisers establish stronger connections with their clients. Voya says the approach allows for more productive meetings and fewer ad hoc requests.

The program is led by a credentialed services team equipped with targeted resources and best-in-class technology platforms. The new program complements a recent service offering of Voya’s, which allows advisers to improve their practice efficiency and build stronger relationship-based business models.

“Voya wants to help advisers expand the way they support their clients,” says Tom Halloran, president, Voya Financial Advisors. “This includes deepening those relationships and staying focused on financial planning and retirement readiness.”

More information is at Voya’s website.

Data & Research March 7, 2016

Overly Confident Investors May Take the Biggest Falls

Can advisers predict which investors are more likely to sell in market downturns?
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Investors—especially those affected by short-term trends—are understandably rattled by recent stock market dips. But it turns out some people may be more likely to make investment mistakes during a down market, according to a personal financial planning expert who says that overconfidence tops the list. Other research shows that a substantial percentage of advisers concentrate efforts on supporting their clients through staying the course in rocky markets. 

Now is an important time for investors to remember that many mistakes can be made in this economic environment, says a personal financial planning expert from the University of Missouri. In a study published in The Journal of Personal Finance, Rui Yao, an associate professor of personal financial planning, has identified several risk factors for people who are more likely to make investment mistakes during a down market.

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Yao analyzed data from the 2008 FPA-Ameriprise Financial Value of Financial Planning Research Study. That study included data about people who made a common investment mistake: moving their financial assets into a cash position during a down market without income interruptions or increased spending needs.

Most commonly, investors sell off stocks and place the cash in a bank account until the market recovers, according to “Factors Related to Making Investment Mistakes in a Down Market.” Men, Asian Americans, wealthy investors, people who are overconfident in their knowledge of the stock market and people who are loss-averse are more likely to panic and sell on the dip, Yao finds.

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“Asian Americans often move to cash positions during down markets because, culturally, they are much more likely to trade on the stock market more frequently and take a short-term investment approach as opposed to a more rational long-term approach,” Yao says. “However, market timing and frequent trading rarely pay off.”

Another driver of investment mistakes is overconfidence, Yao says. “If a person has too much confidence in the market or in their own abilities as an investor, they are much more likely to sell low, which is illogical, but common,” she explains.

These findings can help advisers forecast which of their clients may be at risk for making investment mistakes. Yao recommends observing how clients react during a down market. Do they appear overconfident or fearful of losing money? These reactions can help advisers guide their clients through challenging times, teaching them to better understand market movements and to overcome mental biases. This way, they can lessen their chances of making investment mistakes.

Once the market bounces back and investors view their portfolios in a more positive light, advisers should create a plan with guidelines about what to do if and when the market takes another dive. Research shows that retirees and pre-retirees who work with a financial adviser on a plan are more confident about their retirement income. 

“During a down market, every mistake an investor makes is magnified,” Yao says. “If financial planners can identify those who are more at risk to make these mistakes, they can more effectively work with the investors beforehand to help prevent them from making such mistakes.”

Yao’s previous research examined opportunities for advisers to educate plan participants about investing during a tough economy.

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