Give Investors a Plan B
January 19, 2009
If mutual fund executives needed a reason to reexamine their fund offerings, retirement calculators and the way they communicate with investors, there were a number of disturbing reports and news last week that should absolutely prod them to do so. And if fund executives aren't rethinking their entire sales and marketing strategies for 2009 and 2010, they should bet their bottom dollar that investors are painfully aware that they need to conduct reality checks on their retirement pictures.
Relief is not at hand. Economists are now widely predicting a recovery will not happen for another one to two years (see front-page story, "U.S. to Lead Economic Recovery-in 2010"). Whereas economists have traditionally pointed to light at the end of the tunnel in one or two quarters, this degree of pessimism is highly unusual. And if it comes true, investors who have been neutral toward mutual fund companies, since they do not blame them for the economic chaos, could turn negative toward companies that continue to tout the tenets of long-term investing and individually cost them thousands of dollars in life savings.
Nearly all of the country has become disgusted with the hope of retiring. More than eight out of 10 Americans fear retirement may not become a reality because of a prolonged weakened economy, according to a survey of 800 investors by the National Institute on Retirement Security. Nearly half define a secure retirement as merely being able to pay for the basic cost of living.
Then there was the Cogent Research report showing that in light of all of the bank failures and government bailouts in 2008, investors are more attuned to whether a mutual fund company will continue to stay in business than in the performance of its offerings (see "At Deadline," opposite page).
Investors are hungering for a partner who can level with them about the state of the market and guide them into a realistically diversified portfolio. If we can help them come up with a new plan, we might be able to keep their business through this mess.
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