Wednesday, January 18, 2012

Serving - and Surviving - the Middle Market

Much of CFS's work is focused on helping to make sure middle-class families can acquire the knowledge and tools necessary to achieve financial security. This includes increasing financial literacy and helping to make sure public policies work to connect working Americans with tools like life insurance, IRAs and other products that are an essential part of the American Dream.

The New York Times ran a piece this week about the challenges of making sure the middle market is properly served. It is a challenge this Blog touched on during the DOL fiduciary debate, when everyone from the Consumer Federation of America to members of Congress worried that the rule would dry up incentives the industry had to serve small savers.

What exactly is the challenge?  The headline sums it up: "Financial Advice for Those with Small Nest Eggs."   The Times, noting Merrill Lynch's decision to tell brokers they would no longer be compensated for working on accounts with less than $250K, wrote:

Nobody has figured out a way to consistently give large numbers of people reasonably priced financial advice across all areas of their life and to do so in an ethical manner.
Knowing the DOL debate is coming back, the whole piece is worth a read for a discussion of the challenge. It is clear the market is moving away from the small and medium saver. What if regulations hasten the move? What can be done to turn it around?