Despite the financial stress of the pandemic in 2020, most workers did not take withdrawals from their 401(k) plan, and the majority continued to contribute, the Investment Company Institute (ICI) found. The ICI reported that 1.1% of savers in defined contribution plans stopped contributing in the first half of 2021, compared with 2.0% in the first half of 2020. The number of savers taking withdrawals remained static with 2.8% taking out funds in the first half of 2021 as well as the first half of 2020.
A new study found that technology plays a role in investor satisfaction with a wealth management firm. The survey found that overall client satisfaction was linked to a firm’s level of technology and digital capabilities during 2020. Most respondents (84%) said they were satisfied and viewed their wealth management firm as a leader in technology. Also satisfied were the nearly three quarters (70%) of respondents who said they saw their firm as comparable to others in terms of technology. Among those who said their firm lagged others, only 38% reported satisfaction. More than half of those surveyed said they want their advisor to use technology to answer questions about their accounts.
While many are just beginning their careers, nearly one quarter of Generation Z are seeking professional financial advice, according to a new study. The so-called Gen Zers represent the youngest segment of investors. The oldest Gen Zers are 24. The group surveyed noted they want expert financial advice due to the pandemic and its impact on the economy and markets. Respondents also noted that their top financial priorities were paying bills, saving for retirement, and paying off debt.
A recent AAII Investor Sentiment Survey found investors less bullish on equities. Among investors surveyed in the week ended September 8, 2021, 38.9% believed stock prices would increase in the next six months. This was a decline from 43.4% in the previous week. Respondents citing a neutral sentiment increased to 33.9% from 23.2%. Investors with a bearish sentiment, expecting stock prices to fall, declined to 27.2% from 33.3% in the previous week.
A recent survey found more than 50% of advisory firms are in the process of preparing for the Department of Labor’s fiduciary rule. The DOL will begin enforcement of the rule on December 20, 2021, according to the report. The remaining half of respondents said their firms were ready. The rule sets a fiduciary standard for financial advisors making recommendations for investors about retirement plans and individual retirement accounts (IRAs). Among respondents, 75% of firms cited new technology as a priority to implement the rule and 25% cited policies.
Half of workers (50.1%) polled by the New York Federal Reserve said they expect to keep working beyond age 62. The Fed noted the total is down 2% from a year ago. The number of workers expecting to work longer than age 67 also declined. Researchers noted that about 10% of workers have enough saved to retire early. In addition, many workers over age 55 experienced employment changes in 2020, either by resignation or layoff. Nearly half of those over the age of 55 seeking jobs were long-term unemployed. (AARP)
A recent survey of advisory firms found that implementing the new advertising and marketing rule introduced by the Securities and Exchange Commission is the leading issue for advisors this fall. Nearly 60% of firms said the ad rule was the biggest compliance topic this year. The new rule allows advisors to use testimonials and endorsements for the first time, with conditions. Advisors are also focused on other issues such as the impact of Covid-19 on business and continuity plans and dealing with digital assets.
Many retirement savers have not put away enough assets to support what they expect to need in the future, according to a recent survey. Only 41% of respondents said they have tried to calculate how much savings they will need. About one-third said they expect to retire before 65 and would take reduced Social Security benefits. The poll included nearly 1,000 individuals between the ages of 40 and 73 who were working part- or full-time. Overall, 74% were saving for retirement.
The Social Security trust fund will run out of funds sooner than anticipated due to the economic impact of the pandemic. According to the 2021 report from the SSA Board of Trustees, the trust funds are projected to run out of money in 2034, which is one year earlier than forecast in last year’s report. Social Security would be able to pay 78% of projected benefits compared with 79% projected in 2020.
Paying down debt has been a priority for many adults as the economic recovery continues. According to a recent study, debt declined 20% since 2019. The report noted that adults hold an average debt of $23,325 (outside of mortgages). Workers are setting aside about one third of monthly income to pay off debt. Outside of mortgages, the top source of debt is credit cards (19%). Other sources were car loans, education loans, and home equity lines of credit. The survey, conducted in March, included more than 2,300 adults.