CHERRY HILL, NJ and NEW YORK, NY, December 9, 2021 – TD Wealth today announced the findings of its annual Retirement Readiness Study, revealing that the confidence of Mass Affluent business owners saw a sizeable 13% increase (up 95% vs 82% in 2020) when asked about their confidence in their financial plans' ability to generate income needed during retirement.
Additionally, most High-Net-Worth business owners (97%) also expressed confidence that their financial plans will be able to generate the income needed during retirement (vs. 94% in 2020 and 95% in 2019).
But amid a pandemic, there are still concerns. Economic uncertainty and market volatility continue to remain top concerns when it comes to business owners achieving their financial goals this year. However, emerging as additional top concerns for business owners in 2021 was inflation and rising interest rates, especially as the country continues to grapple with the economic recovery in the wake of the COVID-19 pandemic.
“While business owners today are concerned about the external pressures that may be potential threats to their retirement confidence, they also continue to understand that a successful path to retirement means staying the course and weathering short-term volatility for potential longer-term success,” said Ken Thompson, Head of U.S. Wealth Shared Services, TD Bank.
Despite continued uncertainty, 62% of business owners reported that they did not make any changes to their retirement planning because of the pandemic. Of business owners who did make changes to their retirement planning, they cited changes such as asset allocation (44%), making plans to postpone retirement (34%) and lowered contributions to retirement (32%).
Hybrid Advice Boosts Retirement Confidence for Business Owners
Six-in-ten business owners (59%) reported that they work with a financial advisor and many found that this leads to greater confidence in their financial success in the long-term. According to the survey, confidence is higher among business owners with a financial advisor (55% compared to 43% of those without a financial advisor).
“Financial advice moved to center stage over the past eighteen months, and business owners are seeking out personalized advice and investment opportunities to meet their shifting needs. Hybrid and digital investing solutions are table-stakes for the wealth management industry, but the financial advisor is here to stay,” said Alyson Klug, Head of U.S. Wealth National Sales, TD Bank. “While the industry is seeing a rise in clients wanting to be more hands-on with their investing, those same investors must be comfortable investing and have the time to invest on their own, as well as be armed with the right information needed to invest. If any of those three pieces are missing, there is value to be found with having a financial advisor relationship to help ensure greater confidence and create a goals-based financial plan.”
As business owners are confident in their retirement plans by working with a financial advisor, many, and particularly younger business owners, are also increasing their communications with their advisors. Seventy-six percent of business owners reported a change in the frequency of communication with their advisor over the past year amid market volatility. Sixty-three percent of business owners under the age of 34 communicated more with their advisor over the past year, compared to 26% of business owners aged 55 and older.
Further, the survey found that 43% of business owners used an automatic, digital investing platform (e.g., robo-advisor), and usage was higher among younger business owners aged 34 and below (46%).
Business Owners Seek More Advice from Financial Partners Amid “Great Resignation”
Business owners were not immune to the growing trend of individuals choosing to leave their place of employment for new opportunities, as 42% of High-Net-Worth business owners reported that they lost employees because of the pandemic compared to Mass Affluent business owners at 37%. Thirty-six percent of business owners reported difficulties in hiring new employees in 2021, citing COVID-19 health concerns (64%), salary / wage offering (35%) and the location of their business (33%) as reasons that they have had difficulties.
“Despite the challenges that business owners continue to face in the wake of the pandemic, many found financial partners paramount," said Thompson. "A financial institution and advisor not only can help business owners with establishing financial goals and a long-term investment plan, but they can also act as an objective sounding board to help business owners navigate the many stages of their financial and business lifecycles.”
Business owners found a bright spot in outside advice, as 77% reported that they were at least somewhat satisfied in their bank’s role in helping their business over the past year. Of business owners who work with a financial advisor, 82% reported that they felt supported by their advisor over the course of the past year.
TD Wealth commissioned Maru/Matchbox to conduct a survey targeting business owners with investable assets over $100,000 with the objective of finding out about their retirement plans and the future of their business. Questionnaire was up to 15 minutes in length and fielded in August 2021. All sample is sourced through the Maru/Blue proprietary panel and partners. A total of 747 responses were collected.
About TD Wealth
Through TD Bank N.A., TD Wealth’s Private Client Group and its affiliates work with mass affluent and high net worth individuals and institutions to help build, preserve and transition wealth. TD Wealth is committed to helping individual investors, institutional and non-profit organizations gather and potentially grow their assets by building long-lasting relationships and is affiliated with one of the 10 largest financial institutions in the U.S., TD Bank, America’s Most Convenient Bank®. From private banking, securities, investment advisory services, private trust, and estate planning, to institutional trust, including retirement planning, captive insurance and trustee services, TD Wealth creates and delivers customized and integrated wealth management solutions. Banking, investment and trust services are available through TD Bank. Securities and investment advisory products are available through TD Private Client Wealth LLC, member FINRA/SIPC (TDPCW).TD Wealth is a service mark of The Toronto-Dominion Bank. For more information, visit http://www.tdbank.com/investments.
TD Wealth is not a tax or legal advisor. You must consult with your own tax and legal advisors for specific advice pertaining to your estate planning needs.
About Maru Group
Maru is a world leading CX and Insights Software & Advisory Services company. Maru was founded to disrupt the data and insight delivery industry with a combination of Software & Advisory Services delivering data in real-time via a unique service model. Maru helps its clients make informed decisions in near real-time by combining proprietorial software, deep industry experience and access to the best minds in research. Maru's flexible service model means our clients can choose to self-serve our Software directly to create, launch and analyze projects; or choose to utilize our Software with knowledgeable support from insights experts. Maru successfully delivers major national and international CX and CEM programs for Enterprise organizations.