Archives: Articles

Off the mommy-track and into financial planning

The CFP Board Center for Financial Planning and iRelaunch have created the Financial Planning Re-entry Initiative (FPRI), a diversity and workforce development pilot program aimed at increasing the number of female financial planners.

The FPRI’s will help financial services firms establish internships for professional women seeking to return to the workforce, according to a release. FPRI firms will participate in a pilot using these internships. “Re-entry” internship opportunities will be posted on the CFP Board Career Center as they become available.

Firms participating in the initial FPRI pilot include: Edelman Financial Services and United Capital, both sponsored by TD Ameritrade Institutional; Fairport Asset Management and Yeske Buie, sponsored by Schwab Foundation; and Fidelity Investments.

iRelaunch will help employers develop, pilot, source for, present in, and publicize their re-entry programs. The initiative is modeled after similar programs in the financial services and STEM (science, technology, engineering and math) sectors.  

Men returning from a career break are also eligible to apply for and participate in the FPRI program.

To participate in future pilot programs, firms should contact Eddy Demirovic at the Center for Financial Planning at [email protected] 

Vanguard reports fund expense changes

Vanguard recently reported lower expense ratios for 82 mutual fund and ETF shares, including the world’s two largest stock funds and largest bond fund.

Vanguard Total Stock Market Index Fund, with $550 billion in assets, reported lower expense ratios for four share classes: 

• Institutional (VITSX): a half basis point to 0.035%.
• Admiral (VTSAX): one basis point to 0.04%.
• ETF (VTI): one basis point to 0.04%.
• Investor (VTSMX): one basis point to 0.15%. 

The $310 billion Vanguard 500 Index Fund saw reductions across the following share classes: 

• Admiral Shares (VFIAX): one basis point to 0.04%.
• ETF (VOO): one basis point to 0.04%.
• Investor (VFINX): two basis points to 0.14%.

The $178 billion Vanguard Total Bond Market Index Fund saw reductions across the following share classes: 

• Institutional Plus (VBMPX): one basis point decline to 0.03%.
• Institutional (VBTIX): one basis point to 0.04%.
• Admiral (VBTLX): one basis point to 0.05%.
• ETF (BND): one basis point to 0.05%.
• Investor (VBMFX): one basis point to 0.15%.

ETF expense reductions
In addition to the three ETFs listed above, 14 additional Vanguard ETFs experienced expense ratio decreases:

• FTSE Developed Markets (VEA)
• Value (VTV), Growth (VUG)
• Short-Term Bond (BSV)
• Mid-Cap (VO)
• Small-Cap (VB)
• Intermediate-Term Bond (BIV)
• Large-Cap (VV)
• Small-Cap Value (VBR)
• Mid-Cap Value (VOE)
• Small-Cap Growth (VBK), Extended Market (VXF)
• Long-Term Bond (BLV)
• Mid-Cap Growth (VOT)

Two shares report increases   
Vanguard Market Neutral Fund Investor (VMNFX) and Institutional (VMNIX) shares experienced 14 and 16 basis point increases to 1.60% and 1.52%, respectively.  

Dave Ireland returns to SSgA

State Street Global Advisors (SSgA), the asset management unit of State Street Corporation, today announced that Dave Ireland will return to SSgA as the new global head of defined contribution (DC). Based in Boston, he will report to Barry F.X. Smith, head of the Americas Institutional Client Group.

He most recently served as director of defined contribution distribution at Wellington Management, where he helped build its DC business.

Ireland will be responsible for SSgA’s industry-leading, $421 billion global defined contribution (DC) business, including business and product development, thought-leadership, marketing, and retirement-related public policy advocacy. He will lead a team of more than 40, located in Boston, London and San Francisco.

Ireland has more than 13 years of experience at SSgA. He was head of US Consultant Relations, director of the North American Defined Contribution Sales and Strategy and senior investment strategist and portfolio manager for the Global Asset Allocation team, which included SSgA’s Target Retirement Funds.

Waldeck to succeed Marcks as CEO of Prudential Retirement

Prudential Financial, Inc. announced that Phil Waldeck will succeed Christine Marcks as president and CEO of Prudential Retirement, a division of Prudential Financial, Inc., effective June 5. Marcks is retiring after 13 years at Prudential, including 10 years as president and CEO of Retirement.

Waldeck joined Prudential in April 2004 when it acquired Cigna’s retirement business. He currently leads Prudential Retirement’s Investment & Pension Solutions business, which had $185 billion in Institutional Investment Products account values as of March 31, 2017. He has worked domestically and internationally in Prudential’s pension risk transfer, longevity reinsurance, structured settlements and stable value businesses.

Yanela Frias will succeed Waldeck as head of Investment & Pension Solutions. She was most recently Prudential Retirement’s head of Structured Settlements. She also previously served as Prudential Annuities’ chief financial officer. 

Fidelity introduces new Social Security Benefits calculator

To help people better understand their Social Security claiming options and how they can impact income in retirement, Fidelity has introduced a Social Security benefits calculator, available at fidelity.com/SSCalculator. After answering five simple questions, the calculator provides a ballpark estimate of projected monthly and lifetime benefits across different claiming ages.

Envestnet announces enhanced advisor platform capabilities

Envestnet, Inc., the cloud-based platform for registered investment advisors, has introduced four new functions: an Advisor Dashboard, Advice Logix, Client Portal, and Open ENV. The functions were unveiled at the firm’s Advisor Summit in Dallas last week, according to a release.

Advisor Dashboard. The Advisor Dashboard is a “command center for advisors,” with these features:

• Envestnet Analytics for data analysis.
• A task center that prioritizes actions and alerts.
• A “launch pad” for single-click access to client-relationship-management or financial planning tools provided by Envestnet partners. 
• A business planning center that delivers book-of-business revenue analysis, what-if planning, and long-term business plan goal definition.

Advice Logix. Advice Logix supports the account onboarding process. After clients answer a short list of additional questions, Advice Logix creates a Goal Analysis plan for the proposal. Daily progress towards the goals is tracked in the Client Portal and Advisor Portal.

Client Portal. Envestnetannounced new features for its Client Portal:

• Improved account opening and servicing automation.
• A new investor education center with personalized content and benchmarking.
• Improved goal-planning tools with “intuitive” goal selection and tracking capabilities.
• An enhanced document vault for secure file sharing.   

Open ENV. Envestnet also announced these recently-introduced Open ENV integrations and capabilities:

• An improved Open ENV API library, providing access to Client Management, Financial Planning, Performance Reporting, Account Servicing, and Investment Research resources.
• Improved digital integration with custodians for faster processing of account opening, account funding, and account servicing requests.
• Integration with Riskalyze, which allows financial advisors to quantify a client’s risk tolerance and use the data to meet client expectations.
• Integration with Twenty Over Ten, a service specializing in website development for financial advisors.

© 2017 RIJ Publishing LLC. All rights reserved.

A recent Retirement Income Literacy Survey from The American College of Financial Services showed that older Americans (ages 60 to 75, with at least $100,000 in investments) are less retirement income-literate than they think.

While more than three-fifths (61%) of about respondents thought they understand retirement income, only 33% of those surveyed could pass a quiz on life expectancy, long-term care expense, investing and generating retirement income that was administered by The American College (See grade range below). 

The demographic divide

There are significant differences in literacy rates between men and women, college educated and non-college educated, and between wealthier and less wealthy respondents.

• Only 17% of women passed the quiz, as opposed to 35% of men 
• 49% of respondents with over $1 million in assets passed as opposed to 20% of respondents with below $1 million in assets
• 40% of those with a graduate degree or more passed – as opposed to just 9% of respondents without a college degree who passed 

Clueless on strategies to improve retirement security

• Only 33% understand that it is more effective to work two years longer or defer Social Security for two years than to increase retirement contributions by 3% for five years just prior to retirement
• Only 45% recognize that a life annuity can protect against life expectancy risk
• Only 38% of participants in the survey know that 4% is the amount they can afford to “safely” withdraw per year from a retirement account

Long-term care: Out of sight, out of mind

• 82% of respondents do not expect that most older Americans will need long-term care at some point in their lives. When considering long-term care, respondents lack knowledge on several critical items.
• Only 33% know that Medicaid pays for the majority of long-term care expenses provided in nursing homes
• Only 30% know that family members—not nursing homes, assisted living facilities, or hospitals—pay most long-term care costs

Power of retirement literacy

Respondents who passed the quiz were:

• 46% more likely to have a long-term care plan in place
• 36% more likely to feel confident they could manage their own investments throughout retirement
• 16% more likely to have a written plan in place

The American College commissioned Greenwald & Associates for the study. Respondents were asked a number of knowledge, behavior and attitudinal questions about retirement income planning.

Information for this study was gathered through online interviews with 1,244 Americans conducted Feb. 16 – March 1, 2017. Respondents were ages 60-75 and had at least $100,000 in household assets, not including their primary residence.

© 2017 RIJ Publishing LLC. All rights reserved.

“The top two things you can do to improve your well-being are to pay off debt and start exercising,” said Jeanne Thompson, senior vice president of Thought Leadership, Fidelity Investments. “Debt and experiencing a reorganization at work can have the biggest negative impact on your overall sense of well-being.”

That was the big takeaway from a recent survey by Fidelity and the Stanford Center on Longevity of more than 9,000 employees that sought to understand how certain events affect a person’s health and wealth, as well as their overall happiness and career.

“A key component of living long and living well is about navigating life events that can impact a person’s finances, health, career, overall happiness and ultimately their overall well-being,” said Tamara Sims PhD, director of the Stanford Center on Longevity Sightlines Project, noting that those conclusions are supported by the Stanford Center on Longevity’s Sightlines Project.

Here are five common life events that have significant and wide-ranging impact on a person’s total well-being:

Taking on or paying off credit card debt or a consumer loan.

• Nearly 70% of women said this led to higher stress levels, compared to 47% of men.
• 36% of women sleep worse (21% of men)
• 34% of women gained weight (17% of men)
• 29% of women were less active (12% of men)
• 59% of women said paying off debt made them happier, compared to 50% of men
• 62% of women indicated their lives were improved (53% of men)
• 44% of women reported lower stress levels (37% of men)

Starting or stopping an exercise routine.

• After starting to exercise, 71% of people felt happier, 56% felt less stress, and 38% were more motivated at work.
• After ceasing to exercise, 69% of people felt less happy, 55% felt more stressed and 20% were less motivated at work. 

Return of adult children to the family home.  

• One in nine Boomer parents surveyed said their kids boomeranged “to the nest” in the past year.
• 68% of parents affected reported they are more stressed, and more than half said they are less happy (53%), less satisfied (54%) and have less leisure time (53%).
• 76% of parents said they face higher expenses; 46% of women reported sleeping worse and 40% reported gaining weight.

A reorganization at work.

• 30% of people surveyed experienced a “reorganization” at work in the past year.
• More employees cited reorganizations as their most significant life event, of the events in the survey.
• 64% of people reported feeling less happy and 30% felt worse about their finances during a reorganization.
• 49% of Millennials reported losing sleep and 63% of women had lower career satisfaction after a reorganization.

Becoming a caregiver.  

• One in four women reported becoming a caregiver for a sick or elderly family member in the past year.
• 78% of women indicated they are more stressed as a result, compared to 66% of men
• 50% of women slept worse (33% of men)
• 43% of women gained weight (22% of men)
• 42% of women stopped exercising (32% of men)
• 37% of women report saving less (26% of men)

Being in the ‘sandwich generation’

• Gen X is the new “sandwich generation,” who are simultaneously raising children, saving for college, retirement and long-term care, paying off debt and caring for parents. 
• 65% of Gen Xers had a life event that negatively impacted their well-being versus 60% of Boomers and 57% of Millennials.

© 2017 RIJ Publishing LLC. All rights reserved.

Jackson aims ‘Cha-Ching’ financial education program at future policyholders

Jackson National, the top seller of variable annuities in the U.S., has launched the Jackson Charitable Foundation, a nonprofit with immediate plans to roll out “Cha-Ching Money Smart Kids,” a financial education program designed to help children become financially empowered adults. 

The Foundation, operating as a 501(c)(3), will support educational programs designed to improve the ways Americans manage their money, a Jackson release said. Its board chair will be Barry Stowe, chairman and CEO of the North American Business Unit of Prudential plc, Jackson’s parent.

The Jackson Charitable Foundation’s first initiative is the U.S. rollout of Cha-Ching Money Smart Kids, a program that teaches basic money concepts to kids ages 7-12 through a series of three-minute music videos portraying relatable animated characters making real-world decisions about money.  

Cha-Ching was developed and launched in Asia in 2011 in partnership with Cartoon Network Asia and Dr. Alice Wilder, the children’s education expert. It was developed under Stowe when he was CEO of Prudential Corporation Asia (PCA), the Asian operations of Prudential plc. 

Cha-Ching currently broadcasts across Asia through Cartoon Network in Hong Kong, Malaysia, Singapore, Philippines, Indonesia, Thailand, Vietnam, and Taiwan, and through free-to-air TV in Cambodia and Myanmar, reaching 34 million households every day. More than 250,000 children in Asia have participated in the classroom version of Cha-Ching Money Smart Kids at schools.

To distribute Cha-Ching to U.S. children and families, the Foundation is investing nearly $3 million and formed partnerships with Discovery Education and Junior Achievement USA.

Discovery Education, the leading provider of digital content and professional development for K-12 classrooms, serving 4.5 million educators and over 50 million students, is beginning an engaging three-year financial literacy program based on Cha-Ching Money Smart Kids for elementary school classrooms nationwide.   The partnership includes no-cost classroom and family activities, educator guides, family activities, a sweepstakes, a broad-based public service awareness (PSA) campaign on the Discovery Family network along with Cha-Ching animated videos, and more. These resources will be available at www.cha-chingUSA.org.

Through a six-year grant from the Jackson Charitable Foundation, Junior Achievement USA (JA) is integrating Cha-Ching Money Smart Kids videos and lessons into its “JA Our City” classroom program, taught to third-grade students by community volunteers. The program is predicted to reach 2.7 million students in 15,000 U.S. schools. 

‘Income for Life Model’ now available to LIMRA members

Wealth2k’s The Income for Life Model 2017, a retirement income solutions platform from Boston-area firm, Wealth2k, will be available to LIMRA members in variations that may include co-branded and white label versions, according to a recent release.

Hundreds of LIMRA members, including insurers, broker-dealers and asset managers, will be able to use IFLM at a reduced price, Macchia told RIJ this week. As broker-dealers try to standardize their producers’ approaches retirement income planning, in part for compliance reasons, having a common system like IFLM will be increasingly important, he said.

“LIMRA members have a huge stake in retirement income,” said Kenneth Cochrane, vice president of Commercial Research at LIMRA, in the release. “In partnering with Wealth2k, our objective is to help our members capitalize on this multi-trillion-dollar opportunity in a manner that institutionalizes the member’s approach to the retirement income market.”

IFLM uses a multi-bucket approach to retirement income planning, with specific assets, including annuities, dedicated to generating income in discrete periods during retirement. The process often calls for reserving the riskiest assets for buckets that won’t be tapped for ten or twenty years, and safe assets for near-term income needs.

The solution features a digital education component, HumanRobo, “that delivers compliant education on retirement income planning,” the release said. It “helps consumers understand the importance of managing key financial risks in retirement while also providing insights on the utility of various product types in an income strategy.”

“In the post-DOL environment, all product recommendations must be secondary to a process that assigns a context and a purpose to each product recommendation. The LIMRA Wealth2k partnership will make it easy for LIMRA members to quickly and easily introduce a process for retirement income that fulfills this need,” said David Macchia, CEO of Wealth2k.

The Department of Labor’s fiduciary rule will create demand for solutions like IFLM, Macchia said, giving advisors a tool for scaling their services at a time of fee compression and for making their recommendations transparent at a time of rising standards of conduct.

The “DOL [fiduciary rule] didn’t arrive in a vacuum,” he said. “It was published at a moment when fintech was rapidly advancing. Where DOL and fintech merge, commoditization of advice, of products, and of advisors themselves is ignited. Executing properly on retirement income can be a winning strategy for LIMRA members to mitigate the worst effects of commoditization.”

Debt is a source of anxiety and stress for many: Northwestern Mutual

Nearly three quarters of Americans struggle with debt and their burden is significant in terms of both size and duration, according to Northwestern Mutual’s 2017 Planning & Progress Study.

Given the fact that the median household income in the U.S. is around $50,000, that most people couldn’t lay their hands on $2,000 easily, and that Americans have about $4 trillion in non-mortgage consumer debt, according to NerdWallet, that number isn’t surprising.

The latest Northwestern Mutual survey of about 2,000 Americans ages 18 and older showed:

• 47% of Americans owe at least $25,000, with average debt of $37,000, excluding mortgage payments.
• Among those with debt, 45% spend up to half of their monthly income on debt repayment.
• More than 10% say their debt exceeds $100,000.
• 36% of those surveyed said they will be in debt for between 6 and 20 years
• 14% expect to be in debt for the rest of their lives
• Mortgages (29%), credit card bills (19%), and personal educational loans (7% for general population/23% for Millennials) were the most common sources of debt.

The research released today is part of the 2017 Northwestern Mutual’s Planning & Progress Study annual research project exploring Americans’ attitudes and behaviors toward finances and planning. The Study launched earlier this month with a look at the current state of financial optimism. 

Four in 10 Americans said debt has a “substantial” or “moderate” impact on financial security and the same number consider debt a “high” or “moderate” source of anxiety.

When asked what would help their financial situations the most, 26% of those surveyed said, “Eliminating all debt” and 29% said, “Earning significantly more money.”

When asked how they would use a $2000 windfall, 40% said they would pay down debt.

Americans said they spend 40% of their monthly income (after paying for necessities) on entertainment, leisure travel, hobbies, and more. One in four Americans surveyed said that “excessive/frivolous” spending was the financial pitfall to which they are most prone. Those managing debt said they used the following payment strategies:

• “I pay as much as I can on each of my debts each month” (35%)
• “I pay off debts with the highest interest first and make minimum payments to others” (19%)
• “I pay what I can when I can” (18% of general population/25% of Millennials)
• “I make minimum monthly payments to each creditor” (17%)

Harris Poll conducted the 2017 Planning & Progress Study for Northwestern Mutual. The poll included 2,117 American adults aged 18 or older (2,117 interviews with U.S. adults age 18+ in the General Population and an oversample of 632 interviews with U.S. Millennials age 18-34) who participated in an online survey between February 14 and February 22, 2017. 

At Transamerica, your voice can be your password

Transamerica has launched Transamerica Voice Pass, a technology developed with Nuance Communications, Inc., that “leverages voice biometrics technology within a natural language understanding system” in order to increase security in call center operations.

“Customers calling Transamerica’s customer care service centers will be able to more easily and securely authenticate and access their accounts while also identifying the reason for their call, simply by speaking,” according to a Transamerica release this week.

Transamerica claims to be the first U.S. company to use the unique sound of the customer’s voice for authentication. Customers who adopt this service option can securely access their accounts merely by speaking the phrase, “At Transamerica, my voice is my password.” No additional passwords, PINs, security questions or subsequent calls are required.

Voice Pass matches each caller’s voice with his or her unique voiceprint on file. The voiceprints contain 100 physical and behavioral voice characteristics.  to identify and verify an individual by their unique voiceprint. While effective in reducing acts of fraud, Voice biometrics reduces acts of fraud and authenticates 80% faster than PINs, passwords and security questions. 

XY Planning Network to partner with FMeX

XY Planning Network (XYPN) said its 400 member firms will receive one year of complimentary access to Financial Media Exchange’s advisor marketing content library, and receive a discount to the service thereafter.

Financial Media Exchange, or FMeX, provides white label content to the financial services industry for sales and client relationship development. Advisors can send FMeX’s content from a phone, desktop or tablet to clients via email, LinkedIn, Facebook, Twitter, websites, blogs or daily newsletters.

XY Planning Network, with over 400 advisors, is a turnkey financial planning platform for fee-only financial advisors serving their Gen X and Gen Y peers. XYPN provides its members with compliance support services, marketing support, business tools and templates, and a wide range of technology solutions.

© 2017 RIJ Publishing LLC. All rights reserved.