Uncertainty is prevalent for Retirement Plan Advisors. Uncertainty is not just for plan advisors only. Uncertainty exists for plan sponsors, investment management firms, all based upon what may or may not occur with the Department of Labor, and the Securities and Exchange Commission.
As advisors look to continuously improve and as plan sponsors look to improve the benefits offered to plan participants, today, all must realize where our industry sits.
What we Know Today
In the book “Investor Behavior The Psychology of Financial Planning and Investing” Lucia Fung and Robert Durand address the personality traits that place an investor either in the bottom 30%, the top 30% or somewhere between the two categories. The authors conclude that by incorporating 41 questions researchers can determine which of the Big Five personality traits (among Extraversion, Agreeableness, Conscientiousness, Neuroticism and Openness to Expand/Openness to intellect) an investor falls into. Although there do exist Five total factors, 2 of the 5 factors are dominant – Neuroticism and Extraversion.
Economists Jonathan Morduch and Rachael Schneider documented the financial lives and patterns of 235 low-and moderate income families to write “U.S Financial Diaries: How American Families Cope in a World of Uncertainty.” The book chronicles the experiences of families who are going through financial uncertainty and how the families react.
Americans have heard for years that a good job, steady savings and a bit of luck can equate to stability and a comfortable retirement. Today we learn that savings and a good job are neither a birthright nor are they easily obtainable. In the past mobility was present in the workforce as often there was more opportunity across town or across the state.
The need for Financial Wellness is front-and-center for all companies however then biggest challenge facing employers today is that those individuals, who are in need of Financial Wellness, will not take the time to seek it. Which begs the question, what is the benefit of the best Artificial Intelligence in the land if those who need it refuse to use it?
