Money and Old Age: Installment Four


The fourth panel on May 3 discussed aging and wealth from the standpoint of the “financial solutions provider” (the investment product provider). Representatives of Allianz, PIMCO, Empower Retirement and Eaton Vance suggested the following:


A hot topic in investment today is how a company stacks up on the ESG analysis: is the company Environmentally responsible, are its business practices Sustainable, how transparent and ethical is its Governance? While 70% of European investment is driven by ESG to some degree, the U.S. experience is far lower. But ESG will become more important in the U.S. First, there is a positive correlation between higher market value as a percentage of book value where companies have high ESG scores, so these companies are better investments. Second, millennials are more and more demanding ESG compliance.


Discussion of “target date” funds, that aim for liquidity at a set date (e.g. when a person is to retire or a child starts college). These funds generally change portfolio mix away from possibly volatile equities as the target date approaches. Consistent with all other panels, there was agreement that investors need to stay in equities for the long haul. Target date funds are “outmoded.”


People with advisors are 33% more successful than those without (source or detail not explained). Younger investors can invest without great customization of advice until they reach their fifties. At that point, peoples’ life situation, style, goals etc. become individualized and at that point they need individual advice.

And again echoing a prior panel, this group discussed who bears the economic risk of providing economic guarantees for a life-time annuity? How does the insurer hedge the risk? Hedging mechanisms (not identified) are costly. But there is need that some part of retirement funds be like a salary, a defined lifetime periodic payment (annuity).


Discussion of resistance of some advisees to paying management fee. Per the panel: “cost is not expense.” It is a mistake for investors to look for “no fee” programs. The issue is the net result. It is true that pressure on fees will continue, but without “workplace savings” there is great need for advisors.



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