Stop waiting on interest rates to manage DB risk and volatility!
What if a plan sponsor could take steps to help minimize costs and control volatility in their defined benefit (DB) plan regardless of the interest rate?
A recent paper published by Principal Financial Group® says it can be possible. (PDF: 694 KB)
It’s a common belief that interest rates have nowhere to go but up. And because bond investments typically go down in value when interest rates go up, plan sponsors may be avoiding investments in bonds in favor of other options. As the duration – that is, the length of the maturity of the bond – extends longer, the larger the decline in the bond investment will likely be if interest rates increase. So plan sponsors that invest in bonds have generally been sticking to shorter duration bond investments.
If a plan sponsor feels interest rates will go up, should they avoid bonds – and in particular longer duration investments? According to this article, that is not necessarily the case. Read more
Change is difficult. And I’m not talking about the shirt I changed this morning because my wife said the buttons were holding on for dear life. No, I mean the kind of change that reinvents the very foundation we have grown accustomed to for so many years. The foundation that maybe we helped create and have used to thrive under for the better part of our careers.
We know it’s necessary. It’s the right thing to do.
Many believe we’re nearing a crossroads in the retirement services industry. Participants simply aren’t saving enough. And despite the bells and whistles each service provider is coming up with to support employee education, the reality is that if left to their own device, individuals are not making the necessary decisions to control their own retirement destiny. Read more
The Health-Wealth Connection – Understanding the power of a physically and fiscally fit workforce
I was at an industry meeting recently speaking to a group of employers, retirement plan record keepers, and financial advisors about the state of retirement readiness in America as we move from old America (working for one employer and defined benefit pension plans) to the new America (multiple jobs and defined contribution plans).
The central theme of the talk was that while Americans are not saving enough, viable solutions to get more Americans on track are becoming increasingly clear. We just need to move faster. Read more
Image your practice 10 years from now and think about the world we might be working in. What comes to mind? What does your client base look like? Where does your business come from? How might you start laying the tracks today for future opportunities? Enough questions, it’s answer time: if I’m in your shoes, two areas I might start to invest in are Generation Y and Hispanic investors.
We’ll hit on Gen Y in another post, for now let’s focus on the Hispanic market. I recently read a whitepaper that estimates in the next 20 years Hispanics will represent 31% of the work force.1 That’s a tremendous amount of growth, and more and more Hispanic employees will have access to some type of retirement plan.
Although retirement is not a new concept to U.S. Latinos, planning for retirement does have different meanings, and “saving” may not necessarily be part of it, especially for those who are in the early stages of an immigrant experience. Working with Hispanic employees is more than just speaking Spanish. It’s about cultural influence. Read more