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Why won’t people ask for help?? June 23, 2015

Posted by forwardfinancialplanning1 in Financial Planning.
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As a financial planner, it never ceases to amaze me when I consider the number of people who are approaching retirement without having ever done any analysis.  Many Americans are simply floating along day-to-day and have never taken the time to consider two fundamental questions regarding their preparedness for retirement.  (1)  Do I have enough financial resources to retire? and (2)  What will I do with my time in retirement?

A recent study puts this into perspective for the academic niche that TIAA CREF serves.  The TIAA CREF Faculty Career and Retirement Survey grouped respondents (all were age 50 or older) into three categories: (1) “Traditional retirees”—those planning to retire at normal retirement age (comprising 35% of respondents).  (2) “Reluctantly reluctants”–those who want to retire at normal ages, but expect to be working longer (16% of respondents) and (3) “Reluctant by choice”–those who simply expect to work past normal retirement ages (49%)

One of TIAA-CREF’s most perplexing findings is that of the “Reluctantly reluctants”, 50-67% had never done any analysis.to determine if they were financially capable of retiring.  Likewise, of the “Reluctant by choice” group, 60-90% had never engaged in any serious consideration regarding how they would use their time in retirement.

We need to  also keep in mind that these survey respondents are some of the most highly educated people in the country!  Yet, so many don’t t attempt to answer those two fundamental questions or seek help in finding the answers.  One can’t help but be reminded of the famous Yogi Berra quote,  “If you don’t know where you are going, you might wind up somewhere else………..”


US Chamber of Commerce swallows the Kool-Aid June 15, 2015

Posted by forwardfinancialplanning1 in Uncategorized.
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The broker dealer world has been staging a media campaign to circumvent the proposed Department of Labor rule which would expand ERISA fiduciary status to financial professionals who provide advice to IRA’s.  In an attempt to preserve their commission flows and revenue sharing arrangements with retirement plan administrators, broker dealers have employed a “fear tactic” suggesting that if required to be fiduciaries (and therefore place their clients’ interests ahead of their own) broker dealer employees will stop servicing small employer plans and individuals all together.

The US Chamber of Commerce has taken the bait!!   They recently published a report entitled  “Locked Out of Retirement” which concurs with the broker dealer argument.  So in essence, the Chamber of Commerce is embracing a business model which essentially says, “in order to serve this market, we have to fleece the employees with biased advice and a very opaque cost structure.”

Well, this “research” paper contains the answer to its own stated problem—the advisor who provides advice in these circumstances must charge “a level fee” for his/her advice.  Perhaps that’s too simple for the authors of the paper to comprehend, or perhaps the Chamber embraces opaqueness in pricing.  The advisors who are serving this market today are obviously reaping enough income for it to be worthwhile.  Under this new proposal, they will simply have to show this income directly via the level fee that they charge to provide it, instead of hiding it via incomprehensible (to most employees) 12b-1 fees and revenue sharing arrangements with other plan providers.