Americans Increasingly Worried About Finances: Many Americans, particularly the young and the least affluent, are increasingly worried about their personal finances, according to a survey by the Consumer Federation of America and the Financial Planning Association.
Among 1,011 adults, the percentage who said that they’re extremely or very worried about personal finances increased from 7 percent to 12 percent for adequacy of income, rose from 8 percent to 14 percent for security of income, jumped from 13 percent to 16 percent for adequacy of savings, and went from 6 percent to 10 percent for amount of consumer debt.
Concerns increased most significantly among young adults and those with low or moderate incomes. Those aged 18 to 24 experienced growing anxiety about adequacy of income (from 5 percent to 21 percent), security of income (from 10 percent to 27 percent), and adequacy of savings (from 14 percent to 21 percent). Lower-income Americans experienced increases in anxiety about adequacy of income Ñ from 14 percent to 23 percent for those with annual incomes under $15,000, and from 6 percent to 18 percent for those with annual incomes of $15,000 to $25,000. The number of respondents with annual incomes of $15,000 to $25,000 who experienced anxiety about adequacy of savings rose from 14 percent to 23 percent.
By contrast, less than 10 percent of those over age 65 and those with incomes over $50,000 said that they were extremely or very worried about security of income, adequacy of income, and adequacy of savings, and only 11 percent of the affluent worried about adequacy of savings.
However, most said they haven’t developed a financial plan Ñ a comprehensive look at their goals with a plan to address how to reach them. Only 46 percent said that they had developed such a plan, with the young (32 percent) and the poor (22 percent) being the least likely to have done so.
FPA Tightens Belt: Hard hit by the sagging economy, the Financial Planning Association has tightened its belt. The group eliminated five staff positions and cut its expense budget by about 5 percent, or $853,000. In a separate but related move, the FPA also restructured its staff resources into a group structure. Under the reorganization, staff will be organized under the following groups Ñ marketing & communications, advocacy, professional development, knowledge management, corporate relations, and support services.
Investment Pros’ Compensation Hits Five-Year Low: Apparently, investment professionals aren’t immune to the effects of the bear market either. Compensation for U.S. investment pros hit its lowest level in five years, with median total compensation for U.S. professionals in 2003 at $148,000, down by 22 percent from 2001 and by 10 percent from 1999, according to a survey by the Association of Investment Management and Research and Russell Reynolds Associates.
Base salaries remained stable, but incentive compensation fell sharply, with median cash bonuses off by 38 percent, from $50,000 in 2001 to $30,800 in 2003. While the survey showed across-the-board declines among all investment sectors and job functions, investment professionals responsible for managing or analyzing assets on a global basis experienced the sharpest drop in compensation. Global equities securities analysts saw median compensation drop by 33 percent, from $230,000 to $155,000, while global equities portfolio managers saw a 40 percent decline in earnings, the greatest single two-year drop among all job categories.
Results indicated a shift in the way that bonuses are determined, with organizational profitability having a more significant impact on compensation than in prior years. Sixty-seven percent of respondents cited overall business performance as the most important factor in determining bonuses, up by 5 percent from 2001, while the number of respondents citing individual business development and investment performance as key factors fell by 5 percent and 4 percent, respectively.
Investment professionals with five or more years’ experience earned a median total compensation of $171,650, 16 percent more than the industry median. For those with 20-plus years’ experience, that figure rose to $205,000 Ñ 39 percent more than aggregate totals. Other factors affecting compensation include employer type/size, type of assets managed, location, job function and CFA designation.
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