FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
How to attract female clients (Financial Planning)
Women are a very underutilized group when it comes to financial planning. Maybe it’s because as Pew Research notes, “The women’s-to-men’s earnings ratio has remained around 80%” over the past decade. Another hurdle women face is their pay typically peaks at the age of 39 while see earnings growth until almost 50. This makes planning for retirement even more critical for women because of their longer life expectancy. So what can a financial advisor do to gain the trust of female clients? Financial planning suggests the key is education and a continued dialogue.
Nursing home annuities are gaining popularity (Financial Advisor)
The use of nursing home annuities is becoming more popular as baby boomers age. Those who make too much money for medicaid, and too little money for private care, are using single-premium immediate annuities to help offset living expenses. So how do SPIAs work? According to Financial Advisor, “Most states set monthly cash-flow limits somewhere between $US2,000 and $US3,000 for a person to qualify. The common spouse can keep about $US100,000 in assets, which does not include the family home.”
The average age for retirement is levelling off (Think Advisor)
According to a recent study from the Center for Retirement Research at Boston College, the average age for retirement has leveled off after increasing by just two years over the past two decades. The average male now retires at 64 while the average female retires at 62. The recent levelling off appears to be a result of both cultural and structural changes in demographics.
Student loans are a terrible investment (Bloomberg)
New York Fed President Bill Dudley spoke out against the dangers of investing in student loans. Mr. Dudley said, “Unlike virtually all other forms of credit, student loans are generally not underwritten: They are frequently offered to young borrowers who have little or no credit history and little to no current income.” Dudley continued, “Some people who take out student loans don’t end up with these high average returns. The net returns for some may, in fact, be negative.” Post-financial crisis graduate seem to be struggling the most as borrowers of debt coming due in 2009 have paid off just 17% of their original balances.
The state of high yield (Advisor Perspectives)
Heather Rupp, the Director of Research for Peritus Asset Management, sees a ‘benign default environment’ in the years ahead. The sector saw $US1.9 trillion of issuance over the past two years, and much of that was a result of refinancing at lower rates. Rupp notes, “The low interest rate environment and wide open refinancing market have allowed companies to push out their maturities and add liquidity to their balance sheets, positioning them well for the years ahead.”
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