Financial Planning: Recession Prompts More Retirement Questions
At a recent investment education seminar at a large hospital in Boston, Matthew Morrow witnessed what he says is a shift in who were asking some of the more poignant questions.
Morrow, a partner and financial adviser with Munroe Morrow Wealth Management in Brookline, Mass., said of the more than 85 people who showed up, a significant number of them were in the 20-year age group.
“The questions were very much focused on doing better financially. They wanted to know things like how should they save for retirement or whether they need a Roth IRA,” Morrow said. “There is a generation coming up that is far more focused on the long term.”
The $74 million MAFCU Federal Credit Union in Brookline, Mass., has partnered with Munroe Morrow for nearly three years. Over that time period, the cooperative has noticed a number of changes in how members are taking more control of their retirement and financial planning. Part of that awareness is likely tied to the last recession and the way it ate away at savings as consumers tried to stay on top of paying down debt in the wake of high unemployment and foreclosures.
“Social security – people are losing faith in that it will be around. They may not have a pension,” Morrow said. “They are aware that the burden is more on their back.”
MAFCU’s partnership with Munroe Morrow has helped the credit union enhance the scope of services to its members, said Paula Kerwin assistant vice president of business development and marketing at MAFCU. The credit union especially values the firm's expertise, availability, and responsiveness, she added.
“Over the past few years, more than 100 employees of our affiliate groups have attended [their] financial education sessions, which are offered free to our affiliates as a benefit of MAFCU membership,” Kerwin said.
Members of MAFCU are offered personalized financial planning, investment management and insurance planning through Munroe Morrow’s team, which is made up of financial representatives with LPL Financial. The firm also offers free investment service consultations and financial advisers meet with members at the credit union’s branches several times a month.
Morrow said members are asking harder questions about whether they’re saving enough or if they need to beef up their retirement contributions. Low interest rate concerns have prompted queries about other options beyond their money market accounts and certificates of deposit.
“Usually, the concerns center around a transition in their lives such as changing jobs,” Morrow said. “They’re not sure what to do with an old retirement plan or perhaps they’ve retired and they want to know what to do with their savings.”
Credit unions may have an advantage over other big firms when it comes to investment services, according to a 2012 Temkin Experience Ratings survey. When it came to the overall investor experience, credit unions had a 65% favorability rating ahead of ING Direct, which had 62%, E*Trade and Merrill Lynch, both at 59%; Morgan Stanley Smith Barney and TD Ameritrade, both at 57%; and Wells Fargo Advisors at 54%.
Still, investment service penetration continues to be a challenge for some credit unions. Affluent investors are least likely to turn to banks and credit unions for their investment and insurance needs, a Prudential Financial study revealed. The firm defined affluent as those with an average of $348,000 of investable assets. What may help credit unions is offering certain types of products and services such as brokerage accounts and remote banking, the data showed.
Morrow said his experience with members has been more holistic. One big piece of the approach is ensuring that a financial adviser is readily available at the branches. The Munroe Morrow Team will easily be on site at least eight times a month.
“In order for this to work for everyone, we have to make ourselves available for members who want to talk,” Morrow said. “I just met with a member for an hour and a half to talk about what she was doing with retirement planning, eliminating debt and building capital.”
Unlike some bigger and older firms and the relationships they have with their clients, Morrow said the goal here is not turn members into money-making entities. Since they’ve built a loyal affinity towards MAFCU, the hope is to continue that connection with the investment firm. MAFCU is the only credit union Munroe Morrow has a partnership with.
“We are another resource that allows members to have access to someone that will give objective opinions and advice,” Morrow said. “We’ve found that members love their credit union. Our goal is to establish long-lasting relationships built on integrity and mutual trust.”