Employers kick former workers out of 401(k) plans to cut costs | Experts: Personal experience, fear drive LTCI sales | Commentary: Advisers should examine a range of expense variables
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March 27, 2013
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Employers kick former workers out of 401(k) plans to cut costs
A growing number of companies are kicking former workers out of their 401(k) plans if they have small balances in an effort to reduce administrative fees. "It's a barnacles-on-the-bottom-of-the-boat problem," said Spencer Williams, CEO of the Retirement Clearinghouse. Typically these workers' funds will automatically roll over into an IRA. MarketWatch (3/26)
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Industry Update
Experts: Personal experience, fear drive LTCI sales
People who have seen loved ones in need of long-term care or are caring for them are more motivated to buy a long-term-care insurance policy, experts say. "You should never make a financial decision based on emotion. But in this case, it's extremely hard for clients, and even myself, to separate emotions from the finances," says Bernard Krooks, an elder-law specialist. The New York Times (tiered subscription model) (3/25)
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Commentary: Advisers should examine a range of expense variables
Financial advisers often use a single rate of increase to calculate a client's retirement-income needs, but a more accurate method would be to consider expense variables separately, writes Waldean Wall of Allianz Life Insurance. In a series of charts, Wall illustrates the potential effects of future health care costs, income taxes, housing costs and general living expenses. A client's circumstances can amplify problems arising from flat-increase assumptions, he writes. Financial Advisor online (3/25)
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Survey: Exchanges getting more favorable among employers, retirees
Health insurance exchanges are gaining favor among employers, 60% of whom are reconsidering health coverage options for their retired employees. According to an Aon Hewitt survey of employers, about 20% are connected with private insurance exchanges, and two-thirds of respondents say they are considering private exchanges. Business Insurance (tiered subscription model) (3/26)
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Other News
Financial Literacy
Stick with investment strategy, despite fear of loss
Throwing out a rational investment plan because the market dips or because you learn about an enticing-sounding alternative is the biggest mistake investors make, writes Carl Richards, director of investor education at the BAM Alliance. While it can seem boring, he writes, "the key to investing success is having a diversified, well-designed plan and sticking to it for a long, long time." The New York Times (tiered subscription model) (3/25)
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Keep financial literacy simple, relevant and fun
Financial-literacy lessons that stick are ones that aren't too complex for their audience, include reasonable goals and provide some fun along the way, says Annamaria Lusardi, head of the Global Center for Financial Literacy. "People learn by seeing things repeated, but we don't make multiple financial decisions about buying a house or going to college, so games help," she says. Kiplinger.com (3/22)
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Building Your Practice
Surveys: Advisers and clients see relationship differently
Financial advisers and affluent clients hold decidedly different views on whether they have a close relationship, according to surveys by Accenture Wealth and Asset Management Services. While 67% of advisers say they have a "personal relationship" with clients, 38% of high-income investors see the relationship as "personal," the surveys found. InvestmentNews (free registration) (3/26), Financial Advisor online (3/26), AdvisorOne (3/26)
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Potential pitfalls in buying a financial-planning firm
The prospect of buying an established financial-planning business may appeal to a new planner as a way to jump-start a practice or acquire clients quickly, but the matchmaking process can be tricky, writes Michael Kitces. Many potential sellers don't wish to announce their intentions, and many clients have trouble transitioning from one planner to another, Kitces writes. New planners also often fail to exercise the proper due diligence in ascertaining a firm's value, he writes. Nerd's Eye View blog (3/25)
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The will to succeed is important, but what's more important is the will to prepare."
-- Bobby Knight,
American basketball coach
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