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Fidelity

Financial advisers not as popular with millionaires as you'd think
Aug 4, 2016 | Investment News
By Liz Skinner
How Advisors Can Get Referrals From Millionaire Clients
Aug 4, 2016 | ThinkAdvisor
By Bernice Napach
Client 'Bad Mouthing' Can Damage Your Business
Aug 4, 2016 | Financial Advisor
By Karen DeMasters
Is Your Millionaire Client About to Switch Advisors?
Aug 4, 2016 | WealthManagement
By Thomas Seubert

Wells Fargo

Most Millennials Don’t See Becoming Millionaires, Study Finds
Aug 3, 2016 | The Wall Street Journal
By Veronica Dagher
Hey millennials, you can save $1 million for retirement
Aug 3, 2016 | CNBC
By Darla Mercado
Hispanic millennials make less, but save more
Aug 3, 2016 | Marketplace
By Donna Tam
Are Millennials Heading For A Retirement Crisis, Too?
Aug 3, 2016 | Forbes
By Richard Eisenberg
64% of millennials are pretty sure they won't save enough money to retire
Aug 3, 2016 | Business Insider
By Myles Udland
Millennials Doubt They Can Save $1 Million for Retirement
Aug 3, 2016 | ThinkAdvisor
By Michael Fisher
Millennials Don't Think They Can Save $1 Million for Retirement
Aug 3, 2016 | WealthManagement
By Thomas Seubert
Survey flags financial gaps between millennial men and women
Aug 3, 2016 | LifeHealthPRO
By Editors
Millennials Think They Can’t Save $1 Million. They’re Wrong
Aug 4, 2016 | Money
By Dan Kadlec
Most Millennials View Retirement Savings Goal as Impossible
Aug 4, 2016 | PlanSponsor
By Lee Barney
Millennials Think They Can't Save for Retirement, Wells Fargo's (WFC) Ready says
Aug 4, 2016 | The Street
By Michael Sheetz

Fidelity

Financial advisers not as popular with millionaires as you'd think

Aug 4, 2016 | Investment News

By Liz Skinner

Millionaires are the bread-and-butter clients of financial advisers, but planners may not be doing enough to keep this important clan content, a new Fidelity survey suggests.
About 45% of millionaires would not recommend their financial adviser to friends or family members, according to a Fidelity Investments' survey of 1,287 affluent investors.
One in five said they are considering giving their adviser the boot.
“I think advisers should not feel overconfident just because their clients aren't telling them they are dissatisfied,” said Bob Oros, head of the registered investment advisor segment at Fidelity Clearing & Custody Solutions.
(More: Look for these traits in millennials to find your next millionaire clients)
With so many discontented millionaire investors out there, advisers should be regularly asking their clients for feedback and communicating with them on the client's terms, he said.
“Assuming everything is OK makes an adviser vulnerable,” Mr. Oros said.
Advisers should create a client experience that leads to a deep connection between them. The client should look forward to sitting down with their adviser or talking with them on the phone.
(More: Advisers need to stay on top of tax game as IRS eyes audits for millionaires)
Regular and varied interactions with clients over the year can help an adviser build those friendship bonds, the way someone might talk on the phone for 20 minutes with a friend one day and engage in a two-minute text exchange with them a couple months later, he said.
Advisers also score best with millionaire investors when they have created a full financial plan for them that is focused on achieving the client's personal goals, the survey data showed.
Having technology that can illustrate clients' progress toward attaining their goals also can help, according to the survey released Thursday.

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How Advisors Can Get Referrals From Millionaire Clients

Aug 4, 2016 | ThinkAdvisor

By Bernice Napach

It’s no secret that referrals are the single most popular way that financial advisors attract new clients, but according to Fidelity’s 2016 Millionaire Outlook Study, out today, only 55% of advisor clients surveyed are likely to recommend their advisor to others. Moreover, 20% were likely to discourage others from working with their advisor or to drop that advisor altogether.
“The first thing advisors need to recognize,” says Bob Oros, head of the RIA segment at Fidelity Clearing and Custody Solutions, “is that consumers have a lot of power in the world we’re in now. Anyone who has a negative opinion of you can actually share that with hundreds if not thousands of individuals…. If you create a negative experience it can get propagated very quickly.”
The challenge for advisors, then, is to minimize the negative experiences of clients while maximizing the positive ones, which sounds like a no-brainer but can be challenging.
In the nomenclature of the Fidelity study, which surveyed clients with $1 million or more in investable assets, excluding retirement assets and real estate, advisors need more clients who are “promoters” of their services and fewer clients who are “detractors” or “passives.” The latter hold neither positive nor negative opinions about their advisor.
Promoters are important clients to have, for many reasons, according to the Fidelity Study:69% of promoters gave at least one referral to their advisor last year62% would follow their advisor if the advisor switched to another firm (only 17% of detractors would do the same)75% of promoters would want their advisor to handle a windfall (only 46% of detractor would)71% of promoters’ assets are managed by a primary advisor (for detractors the equivalent number is 48%)25% of promoters feel they are ahead of achieving their financial goals (only 7% of detractors feel that way)
The Fidelity study has several recommendations for advisors to turn more clients into “promoters” who will be loyal and most likely to refer new clients:
Create and maintain goal-based financial plans. “Financial planning and helping clients navigate their whole financial lives are growing in importance as investment management becomes more commoditized. Yet 44% of millionaires surveyed who work with an advisor don’t have (or don’t know if they have) a formal financial plan,” and 29% reported that their plan was last updated over a year ago, according to the study. The Fidelity study stressed that advisors need to recognize that clients are planning not just for retirement but also for other goals such as buying a home and funding a child’s education.
Offer services beyond investment management, such as estate planning and gifting, tax planning and preparation and assistance with employer-sponsored retirement plans. Providing such additional services can help turn detractors into promoters, according to the study.
Maintain regular contact with clients about the status of their financial plans and goals. “A plan is a living breathing thing that gets reviewed on a regular basis and is fed with new input,” says Oros. “This a shift in the model for some advisors.” The study notes that “regular contact can help keep the [advisory] firm top of mind, and enable advisors to share new information about how they are helping clients with different types of problems.” Oros noted that this regular contact should be based on the client’s terms, not on the advisor’s. That may mean meeting after hours or via FaceTime – whatever serves the client best.
Ask for feedback. “Requesting feedback, either formally or informally, is strongly associated with an investor’s likelihood to recommend,” according to the study. Seventy-nine percent of promoters were asked for feedback compared with less than 50% of detractors, says Oros.
Develop in-depth relationships with clients and their families. Although the advisor/client relationship is business-based, a somewhat personal relationship with an emotional connection has more staying power not only for the immediate client but also for his or her spouse and for the next generation, according to the study. It notes that among promoters, 85% said their spouse was included in financial conversations as were 46% of their children. For detractors the numbers were much lower – 60% and 28%, according to the study.

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Client 'Bad Mouthing' Can Damage Your Business

Aug 4, 2016 | Financial Advisor

By Karen DeMasters

Financial advisors need to prevent clients from ‘bad mouthing’ them even more than they need clients’ endorsements, according to Bob Oros, an executive at Fidelity Investments.
“Consumers have enormous power today—it’s different from a few years ago. In the past, if a client was unhappy, he or she would complain to a few friends; now a person can reach hundreds or thousands on social media,” says Oros, head of the registered investment advisor segment for Fidelity Clearing and Custody Solutions.
Fidelity on Thursday released its eighth annualFidelity Investments’ Millionaire Outlook study, which explored whether clients would recommend or promote their advisors, or if they would be detractors.
Advisors rely on their clients to drive referrals, which generate 48 percent of new business for advisors and help drive organic growth, says the study of 1,287 investors.
The study found that 55 percent of millionaires are promoters, meaning they are loyal to their advisors and likely to recommend them to others, and 65 percent of those consider their advisors to be their friends.
However, that is only part of the picture, according to the study. Despite seeing the value in hiring professional financial advisors, 45 percent of millionaires would not recommend their financial advisors to friends or colleagues and 20 percent are unhappy enough to consider leaving their advisor and would discourage others from working with the advisor.
“Advisors need to recognize they are acting in a fishbowl today,” Oros says. “Some advisors think if they have not heard any criticism from clients, they are OK. But that is not true. Advisors need to ask for feedback from clients frequently.
“Advisors need be seen as ‘360-degree people,’ not just as one dimensional,” he adds. “They also need to service clients in a way they want to be served, whether that is a steak dinner meeting, an e-mail or a tweet.
“We have entered a ‘referral economy’—where we, as consumers, thrive on sharing the people and things we value with those in our social and professional networks. While this presents a tremendous opportunity for advisors, the challenge is uncovering the formula that drives millionaire clients to recommend them rather than remain silent—or worse—leave,” he says.
According to the study, millionaires who have a formal financial plan developed by their advisors are seven times more likely to recommend their advisors.
This presents an opportunity for advisors to fill a gap with the 44 percent of millionaires who don’t currently have, or know if they have, a formal financial plan. In addition, those who would recommend their advisor feel he or she “helps to simplify all aspects of my financial life,” according to the study.
Clients who recommend their advisors are 44 percent more likely than detractors to interact with their advisors three or more times a year. Also, during recent market volatility, three out of four promoters were contacted personally by phone or in person by their advisors, compared to half of detractors.
Seventy-nine percent of promoters were asked for their views of the advisors’ work over the past year, while 45 percent of detractors have never been asked for feedback.
In addition to being free with their referrals, millionaires who feel good about their advisor tend to keep most of their assets with one advisor and would go to their advisor if they received a windfall. Sixty-two percent of promoters would follow their advisors to a new company.
The study shows “advisors may be overlooking some very critical, foundational behaviors in their relationships with today’s millionaires—behaviors that consider the evolving needs of investors and their desire for personal, customized relationships with their advisors,” says Oros. “These are straightforward strategies that can convert a detractor to a promoter, yet the study shows that not enough advisors are employing them.”

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Is Your Millionaire Client About to Switch Advisors?

Aug 4, 2016 | WealthManagement

By Thomas Seubert

Financial advisors don’t know if their millionaire clients are planning on leaving them, according to Fidelity’s Millionaire Outlook Study.
A quarter of millionaire investors are satisfied but unenthusiastic about their advisors, meaning they are liable to leave. Twenty percent are considered to be outright detractors - unhappy clients with high rates of defection.
Advisors don’t know their high-net worth clients are unhappy because they’re not asking. Almost half of all detractors say their ex-advisor never asked them for feedback. And that will seriously hurt their practice, says Bob Oros, head of the registered investment advisor (RIA) segment, Fidelity Clearing & Custody Solutions.
“We have entered a ‘referral economy' where we, as consumers, thrive on sharing the people and things we value with those in our social and professional networks,” Oros said.
Forty-eight percent of new business for advisors comes from client referrals, and of the millionaire investors working with a financial advisor, 55 percent are considered “promoters,” or clients who actively recommend their advisor.ADVERTISING
More poignant is that 65 percent of promoters consider their advisors to be friends, suggesting an intimacy that goes beyond a typical client-advisor relationship.
To help advisors capitalize on this information, Fidelity outlines what they consider “the new basics” to turn passive and detractor clients into promoters.
Firstly, advisors should document and maintain a holistic financial plan. While benchmark numbers are good, focusing on how investment decisions affect a client’s life is much more important. “Investment is a conduit to the goal, but it’s about the goal,” said Oros.
Secondly, Fidelity’s study found that 70 percent of promoters say their advisors know personal details about their lives and 86 percent involve family members in financial planning discussions, so advisors should work on building family connections.
Oros suggests advisors not only keep track of the larger goals clients have but also keep tabs on less significant life events, in order show clients they care. That may mean something as simple as giving an investor a quick call to congratulate them on their child’s graduation. “It’s really a combination of big events and small events,” Oros added. “And some advisors are missing that.”
Another big part of the problem, according to Oros, is that advisors use strategies that worked 10 to 15 years ago, namely the “rinse-and-repeat” method of keeping a yearly standing appointment with clients, and then forgetting about them for 12 months.
To help with that, as the third part to the “new basics” strategy, Fidelity recommends advisors directly ask clients what they need from their financial planner and then listen to feedback.
“For most advisors, it’s the end-client experience the advisor’s way,” said Oros. “Serve me the way I want to be served.”

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Wells Fargo

Most Millennials Don’t See Becoming Millionaires, Study Finds

Aug 3, 2016 | The Wall Street Journal

By Veronica Dagher

Many millennials say they are skeptical they will ever be millionaires, according to a new study, a finding that reflects the tough job market and high student debt many young adults started their working lives with.
Nearly 64% of working millennials say they will never accumulate $1 million in retirement savings over their lifetime, according to Wells Fargo & Co.’s 2016 study on millennials released Wednesday. The study was conducted online between April 11 and April 26, 2016, by market-research firm GfK and surveyed more than 1,000 U.S. adults between the age of 22 and 35. Participants needed to be employed (not in the financial services/banking industry) and a U.S. resident for at least three years.
Low incomes, the gender wage gap and college loans are some of the reasons for millennials’ lack of optimism, the survey found. Despite their relatively dim view on savings prospects, 59% of millennials have started saving for retirement, while 41% haven’t.
Shaun Luberski, a 21-year-old recent graduate of Temple University, is a bit skeptical she will be able to save $1 million by the time she retires.
Ms. Luberski landed a full-time job as an account coordinator at Philadelphia magazine and works various side jobs in marketing and promotions. She also lives at home rent-free with her parents in Levittown, Pa.
But with roughly $30,000 in student loans to pay back, she isn’t sure she will ever be a millionaire.
“I hate my student loans,” she says. Because of them, she says she isn’t able to move out as soon as she would like and needs to carefully monitor how much she is spending each month on expenses such as Uber rides and meals out.
According to the study, Ms. Luberski has company: 34% of millennials have student-loan debt, with a median debt load of $19,978. For those who have student debt, 75% say it is “unmanageable.”
“There are some real headwinds facing this generation,” says Joe Ready, director of institutional retirement and trust for Wells Fargo. Those headwinds are heightened for millennials who earn low incomes and who aren’t working in their preferred career, he says.
According to the study, the nearly two-thirds of millennials who say they won’t be able to accumulate $1 million report a median personal income of $27,900. The 32% who do expect to save $1 million report a median annual personal income of $53,000.
The study found there are significant differences in the earnings and financial outlook of millennial men and women, with 54% of women reporting they live paycheck-to-paycheck compared with 43% of men. Millennial men report a median personal income of $39,100 compared with $28,800 for women. In turn, the wage gap has real implications for women’s finances now and in retirement, says Mr. Ready,
“Millennial women need to focus on saving and investing now to help put them in good standing for their retirement years,” he says.
There is some hope for the millennial cohort: Those who are saving may already be on the path to becoming millionaires even though they may not know it, Mr. Ready says. Of the 59% who have started saving for retirement, 69% are currently saving in an employer-sponsored plan such as a 401(k) plan.
“Time is on the side of the millennials,” says Mr. Ready, who recommends financial advisers educate millennials about the effect of compounding returns over longtime horizons.
Still, many millennials may also be saving less than the 10% to 15% of their salary that financial advisers often recommend. For millennials who have started to save for retirement, 44% report they are saving 1% to 5% of their income, 33% are saving 6% to 10% of their income and 6% are saving 11% to 14%, the survey found.
To help many of the millennials he works with save more money, Douglas Boneparth analyzes their monthly cash flow. The New York financial planner helps millennials identify essential expenses, such as student-loan payments, from nonessential expenses. like dinners out.
“It helps them prioritize,” he says.

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Hey millennials, you can save $1 million for retirement

Aug 3, 2016 | CNBC

By Darla Mercado

Millennials shouldn't let a modest salary deter them from saving for retirement, as deferrals as low as 5 percent may be able to get them closer to $1 million saved by age 65.
More than half of men and nearly three-quarters of women ages 22 to 35 believe they won't be able to accumulate $1 million in savings, according to the Wells Fargo Millennial Study.
It's easy to see why they feel that way.
The median personal income of the men surveyed was $39,100 and $28,800 for the women."With this generation, their biggest asset is the power of time."-Joe Ready, director of institutional retirement and trust, Wells Fargo
Millennials pointed to significant hurdles that stand between them and retirement security.
For instance, half of the men said their finances were stretched too thin to save for retirement, while 61 percent of women shared the same sentiment.
Slightly more than half of the women said they were living paycheck to paycheck, and 43 percent of the men said the same. The survey of 1,000 millennials was conducted online in April.
College borrowing clearly has encumbered many of these millennials: To that point, 34 percent said that they owe money on student loans, with a median debt amount of $19,978. Three-quarters of those with student loan debt said the debt has become "unmanageable."Millennials, here's how to stash your cash Wednesday, 11 May 2016 | 8:00 AM ET|01:56
Optimism was higher among those who were earning more. Among the 32 percent who expected to reach $1 million in savings, the median annual income was $53,000. More than three-quarters of these millennials are already saving for retirement.
Obstacles notwithstanding, it's possible to save for retirement and fit it into your budget — as long as you start early and gradually increase your deferrals.
See below for a model scenario from Wells Fargo, where a 25-year-old who's earning $32,000 a year deposits 5 percent of her salary into a retirement plan.
Each year, this plan participant ratchets up savings by 2 percent, until reaching a deferral rate of 13 percent.What can you do?
"With this generation, their biggest asset is the power of time," said Joe Ready, director of institutional retirement and trust for Wells Fargo. "Leverage your biggest asset. If you have a workplace plan, get in it."
Instead of being overwhelmed at the idea of stretching a modest salary to address many goals, take a step back.
"The folks who have this weariness about them are people who don't have a plan," said Rianka R. Dorsainvil, a certified financial planner and founder of Your Greatest Contribution in Capitol Heights, Maryland.
"Assign a job to each dollar," she said. For workers who are fresh out of school, this means adopting a spending plan.
Start out with paying down the minimum on your student loan and other debts. If you have any money left over, fund your 401(k) plan at least up to any offered employer match.
If you don't have a retirement plan at work, then consider funding a traditional or Roth IRA. You can contribute up to $5,500 a year to your IRA accounts.
Don't forget that time is your biggest advantage. Even if your salary deferrals to your retirement plan are modest, your investments have many decades to grow.
A bonus for the Roth IRA: Young investors will have to pay income taxes on their deposits now, but they're likely in a lower tax bracket now compared to where they will be when the time comes to take money out of the Roth.
"Many millennials have fear of missing out, that if they're contributing to their 401(k) plan and paying down debt, they won't have any money," Dorsainvil said. "It's a short-term sacrifice."

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Hispanic millennials make less, but save more

Aug 3, 2016 | Marketplace

By Donna Tam

Most millennials are trying to save for retirement, but female and Hispanic millennials make less money than their counterparts and are more focused on everyday finances, according to new survey results released Wednesday by Wells Fargo.
The survey focused on how millennials plan for retirement. A $1-million savings goal is supposed to provide enough retirement funds for decades, according to Wells Fargo. While 64 percent of respondents said they don’t think they will ever save enough to hit that mark, nearly 60 percent have started stashing away money anyway.
The bank offers some savings tips along with the survey results, but it’s based on a 25-year-old making $32,000 salary.
“Millennials may not realize that if they start saving consistently by their mid-twenties — and stay invested for the duration of their working years — they will likely accumulate $1 million by the time they retire,” Joe Ready, director of Institutional Retirement and Trust for Wells Fargo, said in a press release.
Ready said a millennial can save $1 million by the time they retire if:
They start saving at age 25At age 25, they earn $32,000 and start saving 5 percet the first yearGet a 2 percent salary bump each yearInvest in the market and get a 7 percent returnIncrease their contributions by 2 percent each year until they are contributing 13 percentCut back on spending by $26 each week
This might be plausible for some millennials. In the second quarter of this year, people ages 25 to 34 earned a median weekly earnings of $753 a week, which equals to $39,159 annually, according to the Bureau of Labor Statistics. For people ages 20 to 24, it was $505 a week, or $26,260 annually.
Additionally, nearly two-thirds of the people who told Wells Fargo's researchers they won’t be able to save $1 million by retirement have a median personal income of $27,900.
The results for female millennials indicates the gender gap exists among younger Americans. Previous reports have said that the millennials would be the ones to close the gap in pay, estimating that that women’s wages would overtake men’s by 2020. The Wells Fargo survey indicated millennial women earn about 74 percent of what men made, which is slightly better than the often-cited 79 percent for the general population.
But a higher percent of female millennials were also more worried than men about their finances and had not yet started saving for retirement, according to the survey results. More of them reported living paycheck to paycheck and felt their finances were stretched “too thin” to save. Seventy-three percent of women didn’t think they could save $1 million versus 56 percent of men.
The Wells Fargo surveyed said that Hispanic millennials also make less, but are more focused on budgeting than the general population. Hispanic millennials reported a median income of $31,100 versus the general population’s $33,800, but they are also more likely to financially support an extended family. Forty-two percent said saving for retirement was a “high priority” versus 35 percent of the general population.
The pay gap among minorities isn’t surprising, given the many reports about pay inequality among for women and other minorities. But, there was one bright spot in the survey: Hispanic millennials had a lot more optimism about their financial futures. Sixty-three percent said they will “do better than their parents,” compared to 49 percent in the overall respondents.
The figure dovetails with a report from Pew last month that indicated young Latino Americans specifically were highly optimistic about their finances. While more than half described their financial situation as "only fair" or "poor,” 90 percent said they expected their finances to get better in the next year.

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Are Millennials Heading For A Retirement Crisis, Too?

Aug 3, 2016 | Forbes

By Richard Eisenberg

We’ve heard over and over that many boomers will face aretirement crisis (if they haven’t already). But if you’re a boomer parent, you’re probably wondering: Will my kids’ generation, the Millennials, face one, too?
Of course, it’s way to early to say for sure either way. After all, these 83.1 million Americans are only 19 to 35. But based on theWells Fargo Millennial Study released today and other data I’ve reviewed, I’d say that quite a few Millennials just may be heading towards a retirement crisis.
The good news: Unlike the boomers, Gen Y has enough time to reverse course.Gallery6 Tough Money Choices For Millennials -- And How To Make ThemLaunch Gallery7 images
(More: What Millennials Wish Their Boomer Parents Would Tell Them)
I think what saddened me most about the findings from the Wells Fargo poll of 1,005 working Millennials wasn’t how much this generation is saving. It was how despondent they seem about their retirement prospects — especially the Millennial women. Consider:64% of the Millennials surveyed said they will never accumulate $1 million in savings over their lifetime (73% of the women felt this way)54% of the Millennial women said their finances were stretched too thin to save for retirement (just 43% of the men said so)52% of respondents overall said stock market volatility makes them worry they will lose their retirement savings in the market
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“This generation is saving and investing for the first time, and the market volatility has been a little bit of sticker shock for them,” said Joe Ready (yes, that’s really his name), director of institutional retirement and trust for Wells Fargo. Ready thinks some Millennials are also scared because they saw what happened to their parents’ 401(k)s in the 2008-‘09 financial crisis.
One reason the Millennial women are gloomier: the gender pay gap. In the Wells Fargo survey, the women reported median personal income of $28,800 and the men earned $39,100. Little surprise that more women (54% to 43%) said they’re living paycheck-to-paycheck.
Credit: Shutterstock
Some Millennials may not understand, however, that accruing $1 million may be within the realm of possibility if they start saving regularly. “One million dollars seems like a big number that’s difficult to achieve,” said Ready. “It’s very doable and manageable, but you have to start early.”
(More: 5 Ways to Give Your Millennials Financial Wisdom)
How Millennials Can Amass a Million
Wells Fargo offers this example: A Millennial with a $32,000 starting salary at age 25 who saves 5% that year and increases the amount by two percentage points each year up to 13% could be sitting on $1 million by age 65. (Caveat: Wells assumes a 2% annual raise and an average annual investment return of 7% — not impossible, but no cinch either.)
The real question is: Will $1 million be enough for a comfortable retirement? Robert Powell, the sharp retirement writer for USA Today and MarketWatch.com, doubts it, and I agree. (Keep in mind that today’s $1 million would be worth around $400,000 to $500,000 when Millennials retire.)
Powell recently wrote in USA Today that older Millennials will need about $1.8 million to maintain their standard of living in retirement. And, he said, younger Millennials will need “upwards of $2.5 million.”
Of course, this presumes the Millennials are saving and investing for retirement. Based on the Wells Fargo survey, that’s a bogus presumption for many.
Many Millennials Haven’t Begun Saving
A full 41% of the Millennials that Wells Fargo surveyed have not yet started saving for retirement. I think it’s fair to assume the percentage of non-savers would be even higher if you roped in unemployed Millennials.
There’s a variety of reasons. Some have just started working or have irregular incomes, so emergency funds are more critical than retirement funds at the moment.
The albatross around their necks of student loan debt and credit card debt is another biggie. Wells Fargo found that 34% owe student loans (median debt load: $19,978); 75% say it’s “unmanageable.”
And in the new State of the Girl survey of Millennial women from CreditCards.com and the 1,000 Dreams Fund (I didn’t come up with the survey’s dreadful title), 94% of the women with student loans said they were worried about paying them back. “It would not surprise me if saving for retirement is not a current priority,” said Sienna Kossman, an analyst with CreditCards.com. “Many Millennials are really worried about affording basic, day-to-day expenses.”
Another obstacle: Many Millennials lack access to 401(k)-type retirement plans. They work part-time, are self-employed or have jobs at small businesses that don’t offer them. Only 52% of the Millennials Wells Fargo surveyed have such plans. “Access is a big issue,” said Ready.
Large 401(k)s for Some
On the bright side, according to a new analysis Fidelity releasedof its customers, Millennials who’ve been fortunate enough to fund 401(k)s for years have impressive results. The average balance for ones contributing for 10 years just reached a record $92,900, up nearly 10% from a year ago.
But many Millennials who have 401(k)s aren’t using them wisely.
What Some Are Doing Wrong
The recent Mobile Millennials survey from Retirement Clearinghouse found that, when changing jobs, 34% of Millennials cashed out of their 401(k)s at least once. “A 401(k) should be your last resort to borrow for any reason,” Ready advised.
And in the Wells Fargo survey, 44% who’ve started saving are only putting away 1 to 5% of income. “We think a target of 10% or more is critically important,” said Ready.
What about IRAs? In a recent survey from TIAA, 35% of Millennials said “they didn’t know enough about IRAs” to consider them; 21% of Gen X’ers said that.
“When you consider that individuals under 50 can only save up to $18,000 annually in their 401(k), it becomes even more clear that individuals — young and old — should meet with a financial adviser to fully understand their financial planning options and ensure a comfortable retirement,” said Dan Keady, a senior director at TIAA.
The Surprise About Their Intended Retirement Age
Now here’s the big shocker from the Wells Fargo survey: Millennials want to retire at 59, on average.
“That surprised me, on the one hand,” said Ready. “On the other hand, this is generation that cares a lot about work-life balance. They say: ‘I want to have a good career in the area I want and I want to retire early.”
I hope they can.
What to Tell Your Millennial Kids
But I know what my fellow parents of Millennials are thinking: The kids will be living longer than we will…who knows what Social Security will be able to pay them in benefits (assuming there’s still a Social Security system)…most won’t have employer pensions.
All true. But youthful optimism is part of being young.
My advice: Pass on to your kids the tips Northwestern Mutual’s Rebekah Barsch offered in this Next Avenue article, “5 Ways to Give Your Millennial Kids Financial Wisdom.”
And tell them what Ready has said to his three Millennial children: “Don’t give away the gift of time. Start saving now.”

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64% of millennials are pretty sure they won't save enough money to retire

Aug 3, 2016 | Business Insider

By Myles Udland

Roughly two-thirds of millennials don't think they'll have enough money to retire.
According to a new survey from Wells Fargo of 1,000 US adults ages 22 to 35 — yes, 35-year-olds, you are millennials — 64% don't think they'll be able to save $1 million, often seen as a nest-egg target to fund a multidecade retirement.
And considering that 74% of respondents don't think Social Security will be available to them at retirement, things are indeed bleak for today's young people who would one day like to not work.
Joe Ready, the director of Institutional Retirement and Trust for Wells Fargo, notes, however, that millennials do have one thing on their side: time.
"Millennials may not realize that if they start saving consistently by their mid-20s — and stayinvested for the duration of their working years — they will likely accumulate $1 million by the time they retire," Ready said.
However!
Ready's advertised math looks, well, ambitious. Here we go:
"A millennial that earns a starting salary of $32,000 at age 25, saves 5% the first year and then increases their savings rate by 2% each year (up to 13%) could accumulate $1 million by age 65. This assumes the earner receives a 2% salary increase annually, is invested in the market and realizes a 7% return on their invested assets."
From 1928 to 2014 the annualized return for the S&P 500 is about 10%. This is good. This would make achieving a 7% return seem pretty manageable.
A paper from last August out of GMO, however, notes that retirees face what is called "sequence risk" when it comes to their retirement, meaning that when you start and stop matters a lot.
This is not to say that someone is better off trying to time the market, but it highlights that in a world where retirement is shifting from defined benefit — things like pensions and Social Security in which savers are promised some fixed regular payment after retirement — to defined contribution — typical modern 401(k)s in which employers match an employee contribution to a savings account that gets invested in the market — market risk becomes more significant for savers. As you'd expect, in a world where savers are more exposed to the market's elements, those elements are more important.
And while some, like Business Insider editor-in-chief Henry Blodget, think the high valuation of the stock market today represents a risk that we could see a crash, what this valuation more conservatively reflects is the likelihood of lower future returns.
Ready notes that millennials do have the advantage of time, which this chart from Andy Kiersz makes obvious.
Time is good. What returns are during that time is less clear. History would say good, fine. Current conditions look less friendly.
And while this is definitely not investing advice, all investing advice comes with the disclaimer that past performance does not guarantee future returns.

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Millennials Doubt They Can Save $1 Million for Retirement

Aug 3, 2016 | ThinkAdvisor

By Michael Fisher

Yes, the wage gap exists, and it’s a ‘real issue’ for millennial women, Wells Fargo finds in a survey
A majority of employed millennials doubt they will amass the $1 million many experts think they will need to see them through a multi-decade retirement, Wells Fargo reported Wednesday.
Wells Fargo said they were too pessimistic, that if they start saving in their mid-20s and remain invested during their working years, they likely can accumulate a $1 million nest egg by the time they retire.
GfK conducted an online survey in mid-April of 1,005 “general population” millennials ages 22 to 35. Participants needed to be employed, though not in the financial services/banking industry, and a U.S. resident for at least three years.
According to the survey, 64% of working millennials said they would never accumulate $1 million in savings over their lifetime. Fifty-nine percent said they had started saving for retirement, while 41% had not, explaining that they were not earning enough to do so.
Wells Fargo did some math, and found that a millennial who earns a starting salary of $32,000 at age 25, saves 5% in the first year and then increases the savings rate by 2% each year (up to 13%) could accumulate $1 million by age 65.
This outcome assumed that the worker would receive an annual 2% salary increase, be invested in the market and realize a 7% return on the invested assets.
“Making the math work to accumulate savings means that millennials must start saving early in their working lives,” Joe Ready, director of institutional retirement and trust for Wells Fargo, said in a statement.
“Millennials have the power of time on their side and need to embrace it. They can get started by reducing discretionary spending by $26 each week and directing that savings to their 401(k) plan, starting at age 25 — it’s feasible.”
Saving Nevertheless
The poll found that nearly two-thirds of millennials who doubted they would be able to accumulate $1 million reported a median personal income of $27,900, and half of those had started saving for retirement.
Thirty-seven percent said they were putting away more than 5% of their income, and 7% were putting away more than 10%.
The 32% who said they did expect to save $1 million reported a median annual personal income of $53,000. Seventy-seven percent had started saving for retirement, with two-thirds deferring more than 5% of their income, and 28% putting away more than 10%.
Thirty-four percent of millennials in the survey reported student loan debt, with a median debt load of $19,978. Three-quarters of those who had debt said it was “unmanageable.”
Yet, 70% of this group were still saving for retirement, at an average savings rate of 5.5%.
The survey revealed stark differences in the earnings and financial outlook of millennial men and millennial women:Median personal income — $39,100 vs. $28,800Report living paycheck to paycheck — $43% vs. 54%Finances stretched too thin to save for retirement — 50% vs. 61%Don’t believe they can accumulate $1 million in savings — 56% vs. 73%Have already started saving for retirement — 61% vs. 56%Average percentage of income saved — 7.3% vs. 5.7%
“The wage gap between male and female millennials clearly exists, and it’s a real issue,” Ready said. “It’s important that younger women focus on saving and investing now, as this strategy will help put them in good standing for their retirement years.”
Financial Health and Retirement
More than eight in 10 millennials in the survey said saving for retirement was an important part of becoming a “financial adult,” and that seeing people who were comfortably retired inspired them to save more for their own retirement.
At the same time, only 45% said they had “an established routine” for reviewing their finances, and 54% said they had a monthly budget. Of the 46% who did not have a budget, 37% said they did not need one, and 33% said it was not a priority.
Fifty-nine percent of respondents expressed discomfort about investing their money in the current economic climate. More than half said stock market volatility made them worry that they would “lose their retirement savings in the market.”
“The fact that half of millennials have a fear of losing their savings in the market concerns me because being invested in the market at this age is only going to benefit this generation for the future,” Ready said.
“The market has continued to generate returns for the long-term investor, and it is absolutely critical that younger people recognize this.”
Seventy-three percent of millennials in the poll supported auto-enrollment in 401(k) plans, but just 29% said they were offered that option.
Seventy-one percent said they would value a financial coach to help them understand the complexities of their retirement plan.
A quarter of respondents said they were “extremely” or “very” interested in using a gamified app for financial planning or advice, and 16% were similarly interested in using a digital advisory service for financial planning.
The poll found that millennials would like to retire at an average age of 59.
How Hispanic Millennials Differ
The survey included an additional oversample of 500 Hispanic millennials for comparison purposes. Wells Fargo noted that about a quarter of the Hispanic population in the U.S. comprises millennials, citing Pew Research Center’s analysis of U.S. Census Bureau data.
It found that key differences exist between the way Hispanic and general-population millennials perceive and make decisions about their finances.
Thirty percent of Hispanic millennials surveyed said they currently provided financial support for two or more generations of their family, compared with 14% of general-population millennials. Even so, 63% of Hispanic millennials said they would “do better than their parents,” compared with 49% of general-population millennials.
Hispanic millennials reported a median personal income of $31,100, $2,700 less than the general population. In addition, their median student loan debt of $10,267 was well below the $19,978 median reported by general-population millennials.
The study found that Hispanic millennials were concentrating on their present-day finances at a higher rate than the general population: 66% said they had a monthly budget, compared with 54% of the general population.
However, Hispanic millennials were saving for retirement at a rate of 52%, versus the general population of 59%. That said, 42% of Hispanic millennials considered saving for retirement a “high priority,” compared with 35% of the general population.

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Millennials Don't Think They Can Save $1 Million for Retirement

Aug 3, 2016 | WealthManagement

By Thomas Seubert

Most millennials incorrectly assume they’ll never accumulate $1 million over the course of their lifetime, according to the Wells Fargo Millennial study conducted by GfK, released Wednesday. Sixty-four percent of millennials believe they’ll never accumulate that amount.
“Millennials may not realize that if they start saving consistently by their mid-20s—and stay invested for the duration of their working years—they will likely accumulate $1 million by the time they retire,” said Joe Ready, director of Institutional Retirement and Trust for Wells Fargo.
Often cited as the benchmark to fund a multi-decade retirement, $1 million may not even be enough for the younger generations planning ahead.
But, as the study indicates, a lot of the issues facing young investors have to do with their outlook as a result of life after college—not so much their savings habits.ADVERTISING
Over a third of millennials have student loan debt, with the median debt load exceeding $19,000. Seventy-five percent of those with student loans describe their debt as “unmanageable.” Even after taking out loans, more than half of the younger generation say they are not working in their preferred career.
Despite their debt load, many in this generation are putting money away for retirement. Six in 10 millenials have begun investing, with 44 percent saving 1 to 5 percent of their income, 33 percent saving 6 to 10 percent and 6 percent saving 11 to 14 percent.
In the report, Wells Fargo suggests millennials earning a salary of $32,000 at age 25 save 5 percent of their income, increasing their savings rate 2 percent each year, up to 13 percent. Reaching $1 million in savings by age 65 is conceivable, assuming a 2 percent annual salary increase and a 7 percent return on assets.
For the generation as a whole, says Ready, it all comes down to saving as much as possible, as soon as possible. “Millennials have the power of time on their side and need to embrace it.”

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Survey flags financial gaps between millennial men and women

Aug 3, 2016 | LifeHealthPRO

By Editors

Nearly two-thirds of working millennials say they will never accumulate $1 million in savings over their lifetime, according to a report.
Wells Fargounveils this finding in its 2016 “Wells Fargo Millennial Study.” Conducted by GfK, the survey polled more than 1,000 U.S. adults between the ages of 22 and 35, with an additional oversample of 500 Hispanic millennials for comparison purposes.
The report reveals that 6 in 10 millennials (59 percent) have started saving for retirement, whereas 41 percent have not. Of the millennials who are not saving for retirement, 64 percent say they are “not making enough money to save for retirement.”
Related: What millennials want from work and lifeRELATEDMillennials mooch off their parents now but plan to support them financially later
More than half of people aged 21 to 45 expect to provide monetary support to their parents.
“Saving $1 million is often noted as a nest-egg target to help fund a multi-decade retirement, so we wanted to find out if today’s millennials think they can get there,” says Joe Ready, director of Institutional Retirement and Trust for Wells Fargo. “A majority don’t think so.
“Millennials may not realize that if they start saving consistently by their mid-twenties — and stay invested for the duration of their working years — they will likely accumulate $1 million by the time they retire,” Ready adds.The Savings math
Millennials who earns a starting salary of $32,000 at age 25, saves 5 percent the first year and then increases their savings rate by 2 percent each year (up to 13 percent) could accumulate $1 million by age 65. This assumes the earner receives a 2 percent salary increase annually, is invested in the market and realizes a 7 percent return on their invested assets.
“Making the math work to accumulate savings means that millennials must start saving early in their working lives,” says Ready. “Millennials have the power of time on their side and need to embrace it. They can get started by reducing discretionary spending by $26 each week and directing that savings to their 401(k) plan, starting at age 25 — it’s feasible.”
According to the study, the nearly two-thirds of millennials who say they will not be able to accumulate $1 million report a median personal income of $27,900. Fifty percent of those have started saving for retirement.
Of the millennials who say they won’t be able to save $1 million but have started saving for retirement, nearly four in ten (37 percent) are saving more than 5 percent of their income, and 7 percent are putting away more than 10 percent.
“Almost half of the group who don’t think they can reach $1 million have already started saving; this group is on the right track in terms of already developing strong savings habits. The path to creating a sizeable nest egg is more achievable than many millennials might realize,” says Ready.
Of the 32 percent who do expect to save $1 million, the median annual personal income reported by this group is $53,000. Seventy-seven percent have started saving for retirement. Two-thirds of those are deferring more than 5 percent of their income, and 28 percent are putting away more than 10 percent.
Related: 6 ways to market life insurance to millennials
Student loan debt, career preferences
According to the study, 34 percent of millennials have student loan debt, with a median debt load of $19,978. For those who have debt, 75 percent say their student loan debt is “unmanageable.” Yet, of this group, 70 percent are still saving for retirement, at an average savings rate of 5.5 percent.
Millennials tend to value jobs they “love” more than ones with high income or strong benefits. The study found that fewer than half of millennials are fully employed in their preferred career. Six in ten (63 percent) of millennials say that having a job they love is more important than a high income and many benefits.
Related: Millennials are pretty cocky about their investing skills
More than 4 in 10 (44 percent) of millennials describe themselves as “fully employed in their preferred career.” A little more than half (54 percent) of 30- to 35-year-olds are fully employed in their preferred career, as compared to 36 percent of those in their twenties. Thirty-two percent are fully employed but not in their preferred career.
Millennials have worked, on average, for 4.8 employers, but 40 percent say they would like to work for one employer their whole career.Millennial women face financial struggle
According to the study, there are significant differences in the earnings and financial outlook of millennial men and women.
“The wage gap between male and female millennials clearly exists, and it’s a real issue,” says Ready. “It’s important that younger women focus on saving and investing now, as this strategy will help put them in good standing for their retirement years.”
Hispanic millennials focused on finances
About a quarter of the nation’s Hispanic population are millennials, and there are key differences between the way Hispanic millennials and general-population millennials perceive and make decisions about their finances.
One of the more profound differences between these two groups is the extent to which Hispanic millennials provide financial support for extended family. Nearly a third (30 percent) of Hispanic millennials say they are currently providing financial support to two or more generations of their family, versus 14 percent of general-population millennials. Despite this difference, Hispanic millennials are more optimistic about surpassing the lifestyle of their parents, with 63 percent saying they will “do better than their parents,” in comparison to 49 percent of general-population millennials.

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Millennials Think They Can’t Save $1 Million. They’re Wrong

Aug 4, 2016 | Money

By Dan Kadlec

It is easier than you imagine. It's also not enough.
Despite an impressive head start, millennials overwhelmingly say they will not be able to put away as much as $1 million in their lifetime, new research shows. Yet with three or four decades to save, that mark should actually be fairly easy to hit.
Six in 10 working millennials (those ages 22 to 35) have begun saving for retirement, according to a report from Wells Fargo. That’s an impressive rate given other research that shows Gen X started saving at a median age of 27 and boomers, 35. By comparison, millennials began saving at age 22. So they are ahead of the game.
Millennials aren’t doing everything right: They often leave too much money in cash. But target-date funds and other managed accounts that are default investments in company 401(k) plans are changing that and steering their investments in a good direction. Some 85% of millennials use managed accounts, compared to 73% of boomers, Wells Fargo found.
With an early start and proper diversification, and a boost from 401(k) features like auto enrollment and auto escalation of contributions, the $1 million mark should be a slam-dunk for many. “They are engaged,” says Joe Ready, director of Wells Fargo Institutional Retirement and Trust. “They get it.” They know they have to start saving young. He calls the $1 million mark—and even retirement by age 60—“very doable.” (A bigger question is whether $1 million is enough. More on that later.)
Yet 64% of millennials say $1 million is out of reach, Wells Fargo found. As you might expect, there is far more optimism among millennials with high paying jobs: Those who say they will not hit the $1 million mark have median annual income of $27,900. Those who say they will hit the $1 million mark have median annual income of $53,000. Half of those who do not expect to hit the mark have begun saving, while three-quarters of those who expect to hit the mark have begun saving.
Getting to $1 million for a young person isn’t the chore you might imagine. Consider a simple scenario: These hypothetical millennials start their career at $32,000 a year and receive 2% pay raises every year. They start by saving 5% of pay but increase savings by two percentage points each year until they are saving 13% of pay. They earn a 7% annual average return. At age 65, such savers would have $1.2 million.
The problem is that $1 million 40 years from now will hardly qualify as rich. If inflation averages 3% a year, that $1 million will have the same spending power as $306,000 today. Even if we get 40 years of 2% inflation—unlikely, but closer to what we’ve seen lately—that nest egg will be worth just $453,000 in today’s dollars. Not terrible. But not wealthy. At today’s annuity rates, that sum would buy less than $2,500 of monthly income for life.
“Is it enough,” asks Ready. “I don’t know. But it’s a flying start towards something.”
And that is the main point. Start with a simple plan to secure a baseline of future financial security—then find ways to add to it along the way. Max out your 401(k). Open a Roth IRA. Dedicate more of your pay raise to savings. After retiring a debt, don’t spend the monthly savings—save it.
Read next: 6 Bad Money Habits That You Need to Quit Right Now
Millennials will collect Social Security benefits of $2,000 to $3,000 a month in their late 60s. They need to save enough to generate $3,000 to $4,000 of additional income, says John Papadopulos, head of Walls Fargo’s retirement business. The later you start, the more difficult that becomes. Beginning to save at age 32 would generate just half the nest egg as starting at age 23, Wells Fargo estimates.
Getting to $1 million isn’t all that tough if you start early. But getting beyond that is probably a smarter goal.

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Most Millennials View Retirement Savings Goal as Impossible

Aug 4, 2016 | PlanSponsor

By Lee Barney

Of this group, only 50% has started saving for retirement.
The majority of working Millennials, 64%, do not think it will be possible for them to save $1 million—frequently cited as a savings target—over the course of their lifetime, according to the Wells Fargo Millennial Study.

Fifty-nine percent have started saving, but 41% have not, with 64% of this group saying the reason is simply because they don’t make enough.

“Saving $1 million is often noted as a nest-egg target to help fund a multi-decade retirement, so we wanted to find out if today’s Millennials think they can get there,” says Joe Ready, director of institutional retirement and trust at Wells Fargo. “A majority don’t think so. Millennials may not realize that if they start saving consistently by their mid-twenties—and stay invested for the duration of their working years—they will likely accumulate $1 million by the time they retire.”

Wells Fargo projects that if a Millennial age 25 earning $32,000 starts saving 5% and increases their savings rate by 2% a year up to a 13% threshold, they could have $1 million by the time they are 65. This assumes that they get a 2% raise every year and earn a 7% return.

Of the 64% who view a $1 million nest egg as an impossibility, their median income is $27,900. Fifty percent of this group has started saving for retirement, 37% are putting away more than 5% of their income and 7% are saving more than 10%.

Of the 32% who do expect to achieve a $1 million retirement nest egg, their median income is $53,000. Seventy-seven percent have started saving for retirement, with 66% of them putting away more than 5% of their income and 28% more than 10%.

The study also found that 34% of Millennials have student loan debt, which averages $19,978. Seventy-five percent of those who have student loan debt say it is “unmanageable.” Nonetheless, 70% of them are saving for retirement at an average savings rate of 5.5%.

NEXT: Challenges for Millennial women
As with other generations, Millennial women face more financial challenges than their male counterparts. Their average income is $28,800, compared to $39,100 for men. Fifty-four percent of Millennial women say they live paycheck to paycheck, compared to 43% of Millennial men, and 61% of Millennial women say their finances are stretched too thin to save for retirement, compared to 50% of men. Perhaps more tellingly, 73% of women in this demographic group do not believe a $1 million nest egg is attainable, compared to 56% of men, and only 56% of women have started saving for retirement, compared to 61% of men.
“The wage gap between male and female Millennials clearly exists, and it’s a real issue,” Ready says. “It’s important that younger women focus on saving and investing now, as this strategy will help put them in good standing for their retirement years.”

Eighty-five percent of Millennials view saving for retirement as an important step towards becoming a financial adult, and 82% say that witnessing people who are comfortably retired makes them want to save more for their own retirement. However, less than half, 45%, regularly review their finances, and only 54% have a budget.

Millennials are also equity-shy. Fifty-nine percent say the current economic climate makes them uncomfortable about investing, and 52% worry about the volatility in the stock market depleting their savings. Seventy-four percent do not believe Social Security will exist by the time they retire.

GfK conducted the survey for Wells Fargo among 1,005 Millennials in April.

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Millennials Think They Can't Save for Retirement, Wells Fargo's (WFC) Ready says

Aug 4, 2016 | The Street

By Michael Sheetz

The millennial generation, considered ages 22 to 35, is in the workforce yet the majority in a recent Wells Fargo (WFC) survey see no possibility to accumulate the more than $1 million necessary to retire at age 65.
Wells Fargo Director of Institutional Retirement and Trust Joe Ready thinks the survey numbers reveal an underlying issue with saving.
"Those that said they can't, only one third was saving 5%, and only 7% of them were saving the needed 10% or more and we contrasted that to the 'I cans' and there's a big difference," Ready said on CNBC's "Squawk Box" Thursday.
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The Wells Fargo survey of 1,500 millennials found that 64% believe they will never accumulate $1 million in savings over their lifetime, with the remaining 32% thinking they will.
"Two thirds [of those who believe they can save enough] were saving 5% or more and 20% were saving 10% or more," Ready noted.
The remaining question is of future earnings, as millennials are not at the point of peak earnings in the careers. An additional bright spot noted in Ready's survey is that six out of 10 millennials have begun saving for retirement already.
Wells Fargo is a holding in Jim Cramer's Action Alerts PLUS charitable trust portfolio. Want to be alerted before he buys or sells the stocks? Learn more now.
Separately, TheStreet Ratings team rates Wells Fargo as a "buy" with a ratings score of B.
This is driven by some important positives, which TheStreet Ratings believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks TheStreet Ratings covers. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and attractive valuation levels. TheStreet Ratings feels its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: WFC

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