The FIDx Five: Fifth Edition
Retirement, Annuity, & Fintech Insights
In this week's edition, we look at the possible impact of the SEC more strictly enforcing Reg BI, how advisors and clients views compare in relation to financial topics, and recent trends in the retirement industry.
Stronger Enforcement of Best Interest Regulations
As the SEC continues the ongoing implementation of and compliance with Regulation Best Interest (Reg BI) and Form CRS (Client or Customer Relationship Summary), the Insured Retirement Institute (IRI) has reached out to Congress with a request to increase funding for the initiative. According to a budget request from the SEC, they’re looking to increase the size of their staff by almost 8% (about 250 employees). Funding, or the lack thereof, could have a direct impact on Life and Annuity companies. With stricter enforcement coming, Insurers and Distribution companies are urged to take a look at their current systems and practices to avoid a disruption in sales. (Warren S. Hersch, July 20th, 2022, Why Life Insurers Should Watch SEC’s Big Request for More Funds, Link)
According to the “32nd Annual Retirement Confidence Survey,” 80% of retirees say they are living comfortably. Retirees who participated in the survey defined living comfortably as “having enough money to meet 100% of their needs.” For future retirees, 73% are confident they will have enough money to live comfortably in retirement. On the downside, 27% of retirees say they have gone back to work. (Chris Carosa, July 13th, 2022, How Do Retirees Define A ‘Comfortable Retirement’ And Should That Matter To You?, Link)
Advisor vs. Client Perspectives
In a study done by Investment News, a disconnect was found between the perspectives of advisors and clients. The survey asked advisors “What services help establish your value?” The survey asked clients “What services would you pay for?” The results showed high disparities between what advisors find important in terms of establishing value, and what clients are wiling to pay for. For example, 79% of advisors believe investment management helps establish value, but only 42% of clients are willing to pay for successful investment management. Additional disparities included retirement planning (76%-30%), tax planning (59%-38%), and insurance planning (40%-7%). (Lauren Drapeau, August 1st, 2022, Reframing Retirement Income Discussions, Link)
FinTech & Confidence Through Advisors
Envestnet conducted a survey of 2,158 participants, ages 25-65, with an annual household income of $100,000 or greater. The survey uncovered consumer’s opinions on financial advisors and financial technology. According to the survey, 54% of Americans wish there was more sufficient technology that could handle their personal finances. Among respondents who currently work with a financial advisor, 76% say financial apps and technology are important. When it comes to feeling financially secure, 62% of respondents who work with an advisor feel financially secure compared to 22% without an advisor. (Alex Padalka, August 1st, 2022, FA’s Can’t Escape the Need to Offer Digital Services, Link)
Stock Market Recovery
July saw the best monthly results for the DOW and the S&P 500 since November 2020, and the Nasdaq’s best month since April 2020. The DOW jumped 6.7%, the S&P 500 jumped 9.1%, and the Nasdaq jumped 12.3%. Considering the nationwide concern over rising interest rates and rising inflation, this is great news for investors planning for retirement. (M. Corey Goldman, August 1st, 2022, Stocks Lower, Earnings, Jobs and Inflation In Focus – Five Things To Know, Link)
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