Julia Johnston-Ketterer

About Julia Johnston-Ketterer

Julia Johnston-Ketterer is a senior director in the Syndicated division. She has more than 15 years of experience leading research initiatives on the client- and supply-sides of the financial services industry focusing on investors, advisors and broker-dealers. Prior to joining Market Strategies, Julia was vice president of business development for Market Probe, Inc. and research associate for Richard Day Research, where she managed financial services clients and conducted client satisfaction studies and PR research programs. Julia also spent ten years at Fidelity Investments. While there, she built a research team that provided primary and secondary research to internal marketing and communications partners. Julia earned an MBA in finance and communications from Simmons School of Management and a bachelor’s degree in French and international relations from the University of Wisconsin-Madison. While she can claim having twice bungee-jumped in New Zealand, Julia’s current adventures outside of work include being a hockey mom, taking hikes with her dog and planning her next family beach vacation.

As DOL Fiduciary Rule Sits on Ice, Is It Thumbs Up or Thumbs Down for Advisors?

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While the Debate Continues, the Upside of the Ruling Lies With the Investor

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Whether the Department of Labor (DOL) fiduciary rule continues to be delayed, eventually takes effect or ends up being repealed, the proverbial beans have been spilled, as many advisors and their respective firms have already taken the actions needed to comply, thus proving some areas of debate true and others false.

Here are the facts: more than one-quarter (27%) of all affluent investors and over one-third (36%) of advised investors—those currently working with a financial advisor—are now familiar with the DOL fiduciary rule, which expands the definition of an investment advice fiduciary. Among those who are familiar, most (74%) have taken action in the form of talking to their financial advisors, reading about the topic online, discussing the ruling with friends and family and/or reviewing the fees paid for the investments they own. Yet, only 4% have considered changing advisors, debunking the myth that the fiduciary rule has the potential to impose heavy churn on advisors’ client base, and suggesting that there’s more than meets the eye to the investor-advisor relationship. Continue reading

Few Distributors Weather Decline in Investor Loyalty

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As a consequence of waning trust in the financial services industry, affluent investors appear to be retrenching, consolidating their investment accounts and concentrating more of their assets with a single distributor firm. While this is positive for primary distributors, it’s imperative that they increase customer loyalty of affluent investors to retain these new assets.

According to Investor Brandscape, investors report an average of 2.03 distributor relationships this year, down from 2.31 in 2015. Concurrently, the average percentage of assets that investors direct to their primary distributor, the firm with which an investor holds the largest proportion of his or her portfolio, has significantly increased to 81% from 70% in 2015.

Interestingly, the trend toward asset consolidation is driven by Millennials, Gen Xers and 2nd Wave Boomers, as these investors report holding a larger proportion of their portfolios with their primary distributor this year. Yet there is an inverse relationship between number of distributor relationships and age. Boomer and Silent Generation investors generally have fewer distributor relationships compared with Millennial and Gen X investors. Continue reading

Forces of Change in the Investor Market

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At the start of writing this year’s Investor Brandscape, the presidential campaign was in full swing, bringing to light a deep political divide spanning the country. Since then, nonstop media attention has been inflating investor anxieties, with topics such as the US election, terrorism and geopolitical events such as Brexit perpetuating investor beliefs that the future of investments is both unpredictable and largely uncontrollable.

Closer to home, the financial services industry is experiencing regulatory changes that could potentially impact more than $16 trillion of retirement assets.1 As a result, affluent American investors report deteriorating trust in the investment community and in traditional financial advisors in particular. As the saying goes, trust takes years to develop but a minute to lose. The reality is that the financial services industry is already heavily regulated, yet the DOL fiduciary ruling is fueling investor perceptions that registered investment professionals put their own needs ahead of their clients. This mistrust trickles down to distributors and product providers as well, creating the dire need for the industry to proactively communicate with frequency and consistency that investors’ interests have always come first in the advisory equation. Continue reading

Go Where the Fish Are Biting: Targeting Investors Who Are Ready to Act

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Any successful angler knows when fish get hungry and what they will bite. The same concept holds true for asset managers and distributors. By definition, affluent investors have portfolios comprising a variety of investment accounts in which their assets are held. However, the majority of affluent investors are unlikely to make an investment in the near future, seemingly content to keep their current investment portfolio unchanged for the time being.

Recognizing how critical it is for distributors and asset managers to identify and understand the subgroups of affluent Americans who are likely to make an investment purchase, we present the “ready-to-act” (RTA) investor segments. Based on purchase intent level, we’ve identified three segments of RTA investors, who are likely to do one of these in the next three months:

  1. Open an investment account
  2. Invest in a mutual fund
  3. Invest in ETF shares

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Plan Sponsors Look to Providers for Support

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Plan Sponsors Looking for Provider Support

By most accounts, Americans are not saving enough for retirement and the probability of millions of future retirees running out of money is high. Plan participant reliance on employer-sponsored retirement plans as a top source of retirement savings has never been greater. This presents a significant pressure point that 401(k) plan providers face in an industry that has become highly scrutinized from a legal and regulatory standpoint.

Additionally, plan sponsors have high expectations of their plan providers to offer outstanding service quality and competitive fees without sacrificing strong investment option performance. Alternatively, plan sponsors feel the pressure as internal company directives demand offering a successful 401(k) plan with greater participant engagement using fewer resources and smaller budgets. As such, plan sponsors are focused on cost reduction more than ever and cite plan administration fees as the top reason for switching record keepers. However, despite the demand for cost containment, significantly more plan sponsors indicate that adequately preparing participants for retirement is a top three area of focus for 2016. Continue reading

Lower Fees Drive Demand for ETFs in 401(k) Plans

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Driving Demand of ETFs

Plan sponsors are consolidating their investment menus to reduce cost, which should be giving DC investment managers cause for concern. Nearly two-thirds (65%) of plan sponsors point to investment fees as one of the primary factors they find most challenging to manage. Amidst the heightened attention on fees and expenses, we find increasing interest in ETFs, especially among larger plans which tend to be trend setters in the industry.

Nearly a quarter (23%) of 401(k) plans include ETFs in their investment menus today, and another 10% of plan sponsors indicate interest in adding these products going forward. Among plan sponsors who currently offer or plan to offer ETFs in the next 12 months, “lower fees” is tied with participant interest and demand as the primary driver of the appeal of these products. Close behind is the recommendation of a plan consultant or advisor, whose suggestions are likely influenced by the potential to lower the fees associated with investments in the plan. Continue reading

DC Plans Shifting From One-Size-Fits-All to One-On-One Retirement Advice

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One-on-One Retirement Advice

A growing number of plan sponsors report they are focusing more on helping employees adequately plan and prepare for a secure retirement, a welcome development that can help combat the lack of retirement readiness among 401(k) participants.

This is great news considering:

  • Auto-enrollment adoption has stayed flat for several years
  • Many plan sponsors are leaving auto-features out of the plan
  • The majority of plans (54%) offer only one source of investment advice

Up until now, one-size-fits-all 401(k) retirement plans have been the main strategy. However, it appears that 401(k) plan sponsors are starting to reconsider this approach. This year, Cogent has found evidence of increasing interest among plan sponsors in adding new forms of advice, as more than one-quarter (27%) are likely to start offering access to an advisor, and one in four (25%) is likely to give participants access to one-on-one advice from a third party. Nearly as many (23%) are likely to incorporate online investment models provided by the plan provider. Interest in offering new modes of advice are stronger among the Mid-sized, Large and Mega plan segments, in-line with a general trend in the 401(k) market where larger plan sponsors tend to be the early adopters of new features that ultimately increase in popularity across all plan size segments. Continue reading

DC Investment Managers Fighting to Survive

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Fighting to Survive

It’s tough being a DC investment manager these days. Plan sponsors are offering fewer investment options within their 401(k) plans than in the past—an average of 13 today compared with upwards of 20 in previous years—and consequently are reducing the number of investment managers they include in their plan lineups all in an effort to
reduce plan costs. Brand awareness is down significantly for many DC investment managers this year, suggesting that plan sponsors are less eager to add new managers to their lineups than they have been in the past. As a result, consideration scores are lower for several investment managers this year.

Plan sponsors’ heightened focus on fees is even more evident in the reasons they cite for dropping an investment manager. For the first time in our survey, the desire to cut fees and expenses outranks investment underperformance as the most common reason plan sponsors would end a relationship with an investment manager. In fact, more than one-third (34%) of Mega plan sponsors, those with at least $500 million in plan assets, cite the need to reduce fees/expenses as a reason for dropping an investment manager. Continue reading

Defending Cost for Value in the 401(k) Market

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401(k) plan sponsor focus on fees is intensifying. In fact, managing plan costs is now cited as the #1 challenge in offering a successful plan to employees saving for retirement. Moreover, fees are gaining even more attention this year than ever, as one in three (33%) plan sponsors anticipate conducting a review of other 401(k) providers, and plan administration fees are identified as the top reason that plan sponsors would switch recordkeepers.

Yet the focus on fees is not limited to plan administration costs. In this year’s Cogent Reports’ Retirement Planscape®, we observe a significant decrease in the average number of investment managers included in plan lineups, suggesting that plan sponsors are consolidating their investment menus in an effort to reduce expenses. Continue reading

Cracking the Code on Heavy Traders

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Cracking The Code on Heavy Traders

Think you know about Heavy Traders? Think again.

While Heavy Traders, affluent investors who make 10+ trades per month, only represent about 5% of the affluent population, they are an investor segment worth the time, attention and resources of distributors and asset managers’. For years, it has been assumed that Heavy Traders:

  1. Are self-directed investors
  2. Do not use investment advice
  3. Invest only individual securities

But our research tells us otherwise. Read on to learn about key profile characteristics of Heavy Traders and why the above statements are misperceptions of this small but important segment.

Who Exactly Are Heavy Traders? 

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