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Retirement Planning - US - October 2011

The retirement planning industry is in a state of flux. For the past several years, much of the focus has been on Baby Boomers and helping them save enough to retire. Now that they are beginning to retire, the Baby Boomer focus is less on accumulation than it is on income distribution. Companies have been addressing this need by creating new tools and programs to help both investors and advisors make the transition from the need to save money to the need to make the savings last.

The continued weakness in the economy is also forcing changes. High unemployment, a poor housing market, low interest rates on savings and a volatile stock market is putting investors of all ages on edge. Younger investors have seen their parents and grandparents financially hurt by the recent recession and are much more aware than they used to be of the need to save for the future.

This study is an update of the issues surrounding the retirement planning field, including the effects of the challenging economic environment, aging population, and a changing regulatory environment.

What you need to know:

  • How is the weak economy challenging the retirement planning process for Americans, regardless of where they are in their careers?
  • How are companies changing their focus to address the changing needs of Baby Boomers, as well as the concerns of younger people, many of whom had never even thought about retirement before the recession forced them to do so?
  • What regulations are being considered as the financial services industry is being more intensely scrutinized?
  • How are companies adjusting their retirement plans to meet the changing economic environment?

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Table of contents

  1. Scope and Themes

      • What you need to know
        • Data sources
          • Consumer survey data
            • VMS
              • Abbreviations and terms
                • Abbreviations
                  • Companies mentioned in this report:
                  • Executive Summary

                      • Global pension assets still growing, but U.S. share is shrinking
                        • Investor confidence
                          • Regulatory environment
                            • New market opportunities
                              • New media opportunities
                              • Insights and Opportunities

                                  • Key points
                                    • The new American dream: to save enough money to enjoy retirement
                                      • Figure 1: Most important financial goals, june 2011
                                    • The recession has hit hard
                                      • Figure 2: Percentage of workers very confident about aspects of retirement planning, 2001, 2011
                                    • Most workers have not saved much
                                      • The Great Recession has made younger people more retirement-aware
                                        • Younger workers need help
                                          • Older investors’ confidence is shaken
                                            • Performing retirement needs calculations helps drive retirement savings
                                              • Focus on women
                                                  • Figure 3: Trusted sources of retirement planning information, by gender, July 2011
                                                  • Figure 4: Interest in financial matters and advertising, by gender, February-March 2011
                                                • Small businesses offer opportunity
                                                • Inspire Insights

                                                    • Trend: Retired for Hire
                                                    • Market Size

                                                      • Key points
                                                        • Total retirement assets in U.S. continue to rise
                                                          • Figure 5: Retirement plan assets, year- or quarter-end, selected periods, 2000-Q1 2011
                                                        • IRAs hold most assets
                                                          • Figure 6: Retirement assets by type, end of period, Q4 2010-Q1 2011 (in millions of dollars)
                                                        • Defined contribution plans
                                                          • Figure 7: Defined contribution assets by type of plan, billions of dollars, year-end
                                                      • Competitive Context

                                                        • Key points
                                                          • The most important consideration for rollover candidates is an existing relationship
                                                            • New regulations increase transparency for both plan sponsors and participants
                                                              • Proposed legislation may change some basics about retirement plans
                                                                • Brookings Institution proposal
                                                                  • Individual Recovery Assistance Act
                                                                    • Workforce Fairness and Tax Relief Act of 2011
                                                                      • Plan size determines where loyalty lies
                                                                        • Banks are focusing on 401(k) administration
                                                                        • Segment Performance

                                                                          • Key points
                                                                            • Defined Contribution Plans
                                                                              • Figure 8: Defined Contribution assets by type of plan, 2000-10
                                                                            • DC Plan Activity
                                                                              • IRAs
                                                                                • IRA ownership
                                                                                  • Figure 10: IRA ownership in U.S., by type, 2010
                                                                                • Total IRA Assets
                                                                                  • Figure 11: IRA assets by type of IRA, 2000, 2005, 2010
                                                                                • 401(k)s
                                                                                  • The 401(k) world is changing
                                                                                    • Figure 12: Percentage of companies offering retirement plans, by type of plan and size of company, 2007-10
                                                                                  • How retirement funds are invested
                                                                                    • IRAs
                                                                                      • Figure 13: IRA Assets (billions of dollars), 1995, 2000, 2002, 2004, 2006-10
                                                                                    • 401(k)s
                                                                                      • Figure 14: 401(k) plan assets, end of period, Q4 2010-Q1 2011 (billions of dollars)
                                                                                      • Figure 15: percentage of 401(k) assets in equities, by age, year-end 2009
                                                                                    • Target date funds grow in popularity
                                                                                      • Figure 16: Target date funds’ 401(k) market share, year-end 2006-09
                                                                                  • Marketing Channels

                                                                                    • Key points
                                                                                      • RIAs positioned to gain market share in 401(k) market
                                                                                        • Banks are in a good position to reach younger investors
                                                                                        • Market Drivers

                                                                                          • Key points
                                                                                            • Automation is driving increased participation
                                                                                              • Low interest rates hurt savings
                                                                                                • People are working longer and past projected retirement age
                                                                                                  • Figure 17: Annual Civilian Labor-Force Participation Rate for Americans Age 55 and Older, by Gender, 1985–2010
                                                                                                • Market volatility and weak economy increase interest in planning
                                                                                                  • Greater percentage of the U.S. population is younger
                                                                                                    • Figure 18: Population, by generation, 2011
                                                                                                  • Housing market shows slight improvement, though still weak
                                                                                                    • Unemployment continues to be high
                                                                                                      • Figure 19: U.S. Unemployment rate, 2001-10
                                                                                                    • Fewer brokers, more accounts
                                                                                                      • Figure 20: Number of financial advisers, by channel, 2004-10
                                                                                                    • Minorities have lowest incomes but are growing fastest and becoming more educated
                                                                                                      • Figure 21: Median annual household income by race/Hispanic origin, 2005-2009 (in 2009 CPI-U-RS adjusted dollars
                                                                                                      • Figure 22: Percentage change in unemployment, by race/Hispanic origin, 2007-10
                                                                                                      • Figure 23: Population projections at various ages (000), by race, 2011-16
                                                                                                      • Figure 24: Number of degrees earned, by educational level and race/Hispanic origin, 2000 and 2008
                                                                                                    • Portfolios are improving, but saving isn’t
                                                                                                    • Leading Companies

                                                                                                      • Key points
                                                                                                        • Fidelity is the largest defined contribution recordkeeper in two of three categories
                                                                                                          • Figure 25: Top 10 DC recordkepers by the number of plan sponsors as of Dec. 31, 2010
                                                                                                          • Figure 26: Top 10 defined contribution recordkeepers by number of participants as of Dec. 31, 2010
                                                                                                          • Figure 27: Top 10 defined contribution recordkeepers by AUM, as of Dec. 31, 2010
                                                                                                        • Fidelity the number one choice for IRA rollovers
                                                                                                        • Innovation and Innovators

                                                                                                          • Key points
                                                                                                            • Wells Fargo
                                                                                                              • Fidelity
                                                                                                                • Bank of America Merrill Lynch
                                                                                                                  • Left Coast Solutions unveils new mobile app
                                                                                                                    • ING focuses on retirement
                                                                                                                      • JPMorgan Retirement Services created a social media forum for plan sponsors
                                                                                                                      • Marketing Strategies

                                                                                                                        • Key points
                                                                                                                          • New media provides opportunity to target messages more specifically
                                                                                                                            • Figure 28: Prefer online tools to other channels, including written materials, calculators, tools, what-if scenarios), 2011
                                                                                                                            • Figure 29: Interested in participating in financial planning/retirement planning webinars via the internet, 2011
                                                                                                                            • Figure 30: Interested in in-person financial and retirement planning seminars, 2011
                                                                                                                            • Figure 31: Interested in telephone advice and guidance, 2011
                                                                                                                          • Print ads
                                                                                                                            • T. Rowe Price
                                                                                                                              • Figure 32: T. Rowe Price print ad, August 2011
                                                                                                                            • Thrivent
                                                                                                                              • Figure 33: Thrivent print ad, June 2011
                                                                                                                            • Wells Fargo
                                                                                                                              • Figure 34: Wells Fargo print ad, June-July 2011
                                                                                                                            • Direct mail advertising
                                                                                                                              • Principal
                                                                                                                                • Figure 35: Direct mail ad, Principal, August 2011
                                                                                                                              • Fidelity
                                                                                                                                • Figure 36: Fidelity direct mail ad, July 2011
                                                                                                                              • USAA
                                                                                                                                • Figure 37: USAA Direct mail piece, July 2011
                                                                                                                              • Edward Jones
                                                                                                                                • Figure 38: Direct mail ad, Edward Jones, August 2011
                                                                                                                              • Online and email advertising
                                                                                                                                • Fidelity
                                                                                                                                  • Figure 39: Fidelity online ad, August 2011
                                                                                                                                • ING
                                                                                                                                  • Figure 40: ING email ad, August 2011
                                                                                                                                • Vanguard
                                                                                                                                  • Figure 41: Vanguard online ad, August 2011
                                                                                                                                • Television advertising
                                                                                                                                  • Fidelity
                                                                                                                                    • Figure 42: Fidelity television ad, 2010
                                                                                                                                  • TD Ameritrade
                                                                                                                                    • Figure 43: TD Ameritrade, 2011
                                                                                                                                  • Wells Fargo
                                                                                                                                    • Figure 44: Wells Fargo television ad, 2011
                                                                                                                                  • Ameriprise
                                                                                                                                    • Figure 45: Ameriprise television ad, 2011
                                                                                                                                  • Charles Schwab
                                                                                                                                    • Figure 46: Charles Schwab television ad, 2011
                                                                                                                                • The Consumer—Type of Account and Balances

                                                                                                                                  • Key points
                                                                                                                                    • 401(k)s most popular type of retirement savings account
                                                                                                                                      • Figure 47: Types of retirement account, by gender, June-July 2011
                                                                                                                                      • Figure 48: Types of retirement account, by age, June-July 2011
                                                                                                                                      • Figure 49: Types of retirement account, by household income, June-July 2011
                                                                                                                                      • Figure 50: Types of retirement account, by marital/relationship status, June-July 2011
                                                                                                                                    • Total retirement savings
                                                                                                                                      • Figure 51: Total value of all household’s retirement savings accounts, by gender, June-July 2011
                                                                                                                                    • Higher incomes lead to larger retirement accounts
                                                                                                                                      • Figure 52: Total value of all household’s retirement savings accounts, by household income, June-July 2011
                                                                                                                                  • The Consumer—Impact of the Economy

                                                                                                                                    • Even with the weak economy, people are saving for retirement
                                                                                                                                      • Figure 53: Have made changes to the amount saved in retirement savings plan(s), by age, June-July 2011
                                                                                                                                    • However, retirement planning is not high on list of priorities
                                                                                                                                      • Figure 54: Retirement planning activities that have been conducted in the past, by gender, June-July 2011
                                                                                                                                      • Figure 55: Retirement planning activities that have been conducted in the past, by age, June-July 2011
                                                                                                                                      • Figure 56: Retirement planning activities that have been conducted in the past, by household income, JuneJuly 2011
                                                                                                                                      • Figure 57: Retirement planning activities conducted, June – July 2011
                                                                                                                                  • The Consumer—Account Activity

                                                                                                                                    • Most prefer to monitor accounts themselves
                                                                                                                                      • Figure 58: Retirement planning activities that have been conducted in the past, by gender, June-July 2011
                                                                                                                                      • Figure 59: Retirement planning activities that have been conducted in the past, by household income, June-July 2011
                                                                                                                                      • Figure 60: Retirement planning activities that have been conducted in the past, by education, June-July 2011
                                                                                                                                    • Older respondents more likely to keep tabs on retirement account
                                                                                                                                      • Figure 61: Retirement planning activities that have been conducted in the past, by age, June-July 2011
                                                                                                                                  • The Consumer—Attitudes about Retirement Investing

                                                                                                                                    • Wide gender gap in retirement planning knowledge and involvement
                                                                                                                                      • Figure 62: Attitudes about retirement and retirement planning, by gender, June-July 2011
                                                                                                                                    • Concern about comfortable retirement exists at all ages
                                                                                                                                      • Figure 63: Attitudes about retirement and retirement planning, by age, June-July 2011
                                                                                                                                    • Respondents with higher incomes are happier with their plans and understand them better
                                                                                                                                      • Figure 64: Attitudes about retirement and retirement planning, by household income, June-July 2011
                                                                                                                                    • Race affects attitude toward and readiness for retirement
                                                                                                                                        • Figure 65: Attitudes about retirement and retirement planning, by race/Hispanic origin, June-July 2011
                                                                                                                                      • Retirees are happier than most with their plans
                                                                                                                                        • Figure 66: Attitudes about retirement and retirement planning, by employment, June-July 2011
                                                                                                                                    • The Consumer—Trusted Sources for Advice

                                                                                                                                      • Independent advisers are the most trusted source of advice
                                                                                                                                        • Figure 67: Type of institution most trusted to give retirement planning advice, by age, June-July 2011
                                                                                                                                        • Figure 68: Type of institution most trusted to give retirement planning advice, by household income, June-July 2011
                                                                                                                                        • Figure 69: Type of institution most trusted to give retirement planning advice, by employment, June-July 2011
                                                                                                                                        • Figure 70: Type of institution most trusted to give retirement planning advice, December 2008
                                                                                                                                    • Cluster Analysis

                                                                                                                                        • Retirement Squirrels
                                                                                                                                          • Demographics
                                                                                                                                            • Characteristics
                                                                                                                                              • Opportunity
                                                                                                                                                • Disinterested Ostriches
                                                                                                                                                  • Demographics
                                                                                                                                                    • Characteristics
                                                                                                                                                      • Opportunity
                                                                                                                                                        • Self-reliant Pensioners
                                                                                                                                                          • Demographics
                                                                                                                                                            • Characteristics
                                                                                                                                                              • Opportunity
                                                                                                                                                                • Cluster characteristic tables
                                                                                                                                                                  • Figure 71: Retirement planning clusters, July 2011
                                                                                                                                                                  • Figure 72: Types of retirement account, by retirement planning clusters, July 2011
                                                                                                                                                                  • Figure 73: Have made changes to the amount saved in retirement savings plan(s), by retirement planning clusters, July 2011
                                                                                                                                                                  • Figure 74: Total value of all household’s retirement savings accounts, by retirement planning clusters, July 2011
                                                                                                                                                                  • Figure 75: Retirement planning activities that have been conducted in the past, by retirement planning clusters, July 2011
                                                                                                                                                                  • Figure 76: Retirement accounts that have been monitored in the past, by retirement planning clusters, July 2011
                                                                                                                                                                  • Figure 77: Attitudes about retirement and retirement planning, by retirement planning clusters, July 2011
                                                                                                                                                                  • Figure 78: Type of institution most trusted to give retirement planning advice, by retirement planning clusters, July 2011
                                                                                                                                                                • Cluster demographic tables
                                                                                                                                                                  • Figure 79: Retirement planning clusters, by gender, July 2011
                                                                                                                                                                  • Figure 80: Retirement planning clusters, by age, July 2011
                                                                                                                                                                  • Figure 81: Retirement planning clusters, by household income, July 2011
                                                                                                                                                                  • Figure 82: Retirement planning clusters, by race/Hispanic origin, July 2011
                                                                                                                                                                  • Figure 83: Retirement account clusters, by education, July 2011
                                                                                                                                                                  • Figure 84: Retirement account clusters, by marital/relationship status, July 2011
                                                                                                                                                                  • Figure 85: Retirement account clusters, by employment, July 2011
                                                                                                                                                                • Cluster methodology
                                                                                                                                                                • Appendix—Simmons Cohort Analysis

                                                                                                                                                                  • Optimism is cautiously returning
                                                                                                                                                                    • Figure 86: Attitude concerning current personal financial situation, Fall 2008-winter 2011
                                                                                                                                                                    • Figure 87: Outlook concerning future personal financial situation, Fall 2008-winter 2011
                                                                                                                                                                    • Figure 88: Outlook on the American economy, Fall 2008-Winter 2011
                                                                                                                                                                • Appendix—Trade Associations

                                                                                                                                                                  Companies Covered

                                                                                                                                                                  • Charles Schwab Corporation
                                                                                                                                                                  • ING Group
                                                                                                                                                                  • John Hancock Financial Services, Inc
                                                                                                                                                                  • JPMorgan Chase & Co
                                                                                                                                                                  • JPMorgan Invest LLC (BrownCo)
                                                                                                                                                                  • Merrill Lynch & Co. Inc
                                                                                                                                                                  • Nationwide Financial Services, Inc.
                                                                                                                                                                  • Paychex, Inc.
                                                                                                                                                                  • Principal Financial Group, Inc.
                                                                                                                                                                  • T. Rowe Price Group, Inc.
                                                                                                                                                                  • The Vanguard Group, Inc.
                                                                                                                                                                  • Wells Fargo & Company

                                                                                                                                                                  Retirement Planning - US - October 2011

                                                                                                                                                                  £2,684.63 (Excl.Tax)