In Practice October 17, 2013

Young, Contented, But Fickle Investors

Investors who are younger and have less wealth are content with their financial advisers, but also quicker to leave them, according to Spectrem Group research.
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For the first time in years, investors at all wealth levels are reporting an increase in satisfaction with their advisers, according to “Relationships With Advisers,” Spectrem’s third-quarter wealth segmentation report. But younger and less wealthy investors are the least content—and the least loyal.

Adviser satisfaction and loyalty is highest among the wealthiest investors, Spectrem’s report found. Younger and less wealthy investors, on the other hand, are the least likely to stay with an adviser if he or she changed firms.

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Spectrem’s Wealth Segmentation Series looks at investors from three wealth segments: Mass affluent (net worth of $100,000 to $1 million), millionaire ($1 million to $5 million), and ultra-high-net-worth ($5 million to $25 million). Categories do not include the investor’s primary residence.

Overall, adviser satisfaction is highest among ultra-high-net-worth investors at 80%, an increase of 7% over the 2013 satisfaction percentage.  Satisfaction among millionaires barely moved, from 72% to 73%, and rose from 69% to 72% among the mass affluent.

While in some cases the year-to-year improvement is slight, the overall satisfaction for the period 2009 to 2013 has gone up more than ten percentage points, from 61% to 72% percent among mass affluent investors, and from 72% to 80% among for ultra-high-net-worth investors. The wealthiest investors also report the greatest appreciation for adviser recommendations and advice over the past year, from 65% to 75%.

Key findings in the report include:

  • Investors who rely on advisers want more information and more frequent communication. Investors have a variety of ways they want to receive communication (telephone, email, social media), and they want advisers to be flexible in their approach.
  • Millionaires are working more with advisers than in the past, but want them to branch out into estate or long-term health care planning.
  • Ultra-high-net-worth investors are looking for better information from their advisers through the presentation of high-quality content in newsletters or in blogs.
  • Almost three quarters of mass affluent and millionaires use an adviser; even more for ultra-high-net-worth investors.

“You can expect investor satisfaction to be higher when the markets are doing well, and with the economy in a state of recovery,’’ said George H. Walper Jr., president of Spectrem Group. “But building loyalty with clients is the key to a long-term relationship.”

More information on Spectrem’s report, which includes insights on adviser satisfaction among wealthy investors and “Wealthy Investors to Financial Advisers: Information, Please!,” is available online.

Data & Research October 17, 2013

Retirement No Longer An Exit from Work Force

Older Americans’ views on retirement are changing, with fewer people seeing it as a complete exit from the world of work, according to a new survey.
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The survey, conducted by the Chicago-based Associated Press-NORC Center for Public Affairs Research, found the line between working and retirement is shifting. Eighty-two percent of people age 50 or older, who are currently working and not yet retired, said it is likely or very likely that they will do some work for pay during their retirement. One-third of retired Americans said they did not have a choice in the matter. That figure increased to 54% for retirees younger than 65

The recession has affected retirement planning; before the recession, most people planned to retire at age 57, while the average age now is 62. Forty-seven percent of current workers now plan to retire at a later age than they expected when they were 40. Financial need, health and the need for benefits were cited as the most important factors in their retirement decisions.

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Thirty-nine percent of workers age 50 or older said they had $100,000 or less saved for retirement, not including pensions or homes. Twenty-four percent said they have less than $10,000 saved

“The survey illuminates an important shift in Americans’ attitudes toward work, aging and retirement,” said Trevor Tompson, director of the center. “Retirement is not only coming later in life, it no longer represents a complete exit from the work force. The data in this survey reveal strikingly different views of retirement among older workers today than those held by the prior generation.”

 

According to research by the center, the portion of the U.S. population age 50 or older is not only growing, but becoming healthier. Projections show those age 65 and older will increase to 19% of the population by 2030, up from 13% in 2010. At the same, those age 55 and older make up the quickest growing segment of the work force; by 2020, about one-fourth of American workers will be age 55 or older.

The survey also found:

  • With older workers, 61% favor raising the cap on income subject to Social Security taxes and 41% favor reducing Social Security benefits for those with higher incomes. In contrast, 29% favor gradually raising the minimum Social Security age, and 21% favor changing the way benefits are calculated so cost-of-living increases are smaller;
  • Twenty percent of working Americans age 50 or older said they have experienced age discrimination in the job market or at work since turning 50. Forty-four percent of those who experienced such discrimination have looked for a job in the past five years, compared with 16% who did not experience such discrimination;
  • The nature of a person’s work shapes their view of whether age is an asset or liability. Twenty-eight percent who work in professional services see age as an asset, while only 3% of those in manufacturing agree; and
  • About half of workers age 50 or older said their boss is younger than them. Those with bosses older than them are less likely to cut back on hours than with younger bosses (9% vs. 23%). Those with older bosses are more likely to consider age an asset to their career (39% vs. 20%).

Research for the survey was conducted nationally by phone with 1,024 adults age 50 or older. The phone interviews were conducted between August 8 and September 10.

More information, including the survey results, can be found here.

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