Top 5 Stories of 2017: Finance

By John Hilton

It was a very busy year in financial services. Our website visits grew by 72 percent to five million as we brought you comprehensive coverage of the industry. This week, we will bring you our top five most popular 2017 stories in life insurance, annuities, finance, politics, health insurance and the DOL fiduciary rule.

One thing is certain about 2017 and Wall Street: The financial advisors who work the markets will not soon forget this bull market.

The Dow Jones will close the year posting a remarkable 25 percent growth. Everybody made money in this market -- at least on paper anyway.

So it's not surprising that our top five financial stories were less about issue-oriented hard news and more advice-driven, positive stories on how advisors can take advantage of the bull market. Our most-read stories were those showing advisors what clients want and need, and how to help them reach their financial goals.

No. 1: Rothification Could Chill Retirement Savings Landscape, Analyst Says

This October story discussed a plan floated in Congress to limit tax-free contributions to 401(k) accounts -- essentially a conversion to Roth IRAs.

A Roth strategy would allow Congress to raise money now instead of collecting the tax revenue decades from now when 401(k) owners withdraw funds. For the time being, the plan was returned to the back burner.

At the end of 2015, the average 401(k) balance stood at $96,288, and the median balance was $26,405, according to Vanguard.

The average IRA account balance at the end of 2015 was $99,017 and the average IRA individual balance combining all accounts owned by the individual was $125,045, according to the Employee Benefits Research Institute.

No. 2: 8 Things Advisors Can Learn From Johnny Depp

Readers were likely drawn to this story due to the Johnny Depp connection. Depp reportedly lost millions in investments and sued his financial advisors.

Depp, whose earnings total $650 million, filed a lawsuit against The Management Group, a financial advisory firm he hired in 1999. The lawsuit accused the financial advisory firm of “engaging in years of gross mismanagement, self-dealing, and at times, actual fraud.”

Depp’s legal papers said he assumed his advisor “was behaving as a loyal fiduciary and prudent steward of his funds and finances.”

For its part, The Management Group denies the allegations, saying in a countersuit against Depp that it “did everything possible to protect Depp from his own irresponsible and profligate spending.”

No. 3: Prepare Your Clients to Retire Early With This Checklist

This story focused on the realities of early retirement and the frank conversation required to make it a responsible option to recommend.

There are some harsh realities linked to any talk of an early goodbye to one’s working years – and savings is at the top of the list.

“By and large, early retirement only makes sense for individuals who have enough saved to cover 70 to 80 percent of their pre-retirement income, as that's usually the amount needed to maintain one's standard of living in retirement,” said Karen Wimbish, senior vice president at U.S. Bank Wealth Management.

No. 4: Dear Advisors, Four in 10 Say They Need $1 Million To Retire Happy

About 40 percent of U.S. career professionals estimate they’ll need $1 million to “retire comfortably,” according to an Employee Benefits Research Institute study.

Yet the average 401(k) balance at Fidelity-administered retirement plans is only $92,500 in 2017, according to the company. (Although that figure is up $4,300 from 2016.)

While incomes vary, and 401(k)s aren’t the only source of retirement income, financial advisors are on the hot seat with many clients who don’t have near $1 million in their retirement savings.

That leaves money managers playing either the “blame game” or the “reduced expectations” game (or maybe both) with their clients, who don’t yet see the handwriting on the wall.

No. 5: Are 401(k)s Contributing to the 'Retirement Crisis'?

In this September opinion piece, our Kim O'Brien looked at the impact of 401(k)s on retirement planning.

According to an Investment Company Institute report, as of March 31, 2017, 401(k) plans held an “estimated $5 trillion in assets and represented 19 percent of the $26.1 trillion in U.S. retirement assets. In comparison, 401(k) assets were $2.8 trillion and represented 17 percent of the U.S. retirement market in 2006.”

The 401(k) is different from the defined-benefit pension plans that dominated in the past. Employers hired professionals to manage those pension plans and determine savings rates to meet guaranteed benefits. With the 401(k), that responsibility is now on workers.

Sadly, instead of guaranteeing payouts like fixed annuities and life insurance do, 401(k) plans can and do expose retirement savings to steep fees and major swings in the stock market. While some workers may enjoy the added flexibility offered by a 401(k), many have a hard time getting ongoing advice and avoiding investment pitfalls.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.