From the April 2006 issue of Investment Advisor • Subscribe!

April 1, 2006

Four Planners Who Get It: David Maurice & Lois Carrier

Emotionally Sensitive

David Maurice and Lois Carrier are strong believers in making sure clients are financially and emotionally prepared for retirement. "People have to emotionally adjust to the retirement change," Maurice says. "Everyone who's in retirement planning is in a transition, which means, to some degree, there is turmoil."

As devout followers of the Nazrudin approach to life planning inspired by George Kinder and others, the husband and wife planning team are so convinced that clients need to mentally and emotionally grasp the realities of retirement that they abandoned a thriving planning practice and set up their own shop. Before launching Carrier & Maurice Investment Advisors in Kingsport, Tennessee, at the end of 2002, David and Lois were partners with two other planners in a firm that managed $230 million for 600 clients, most of whom were retired. At the previous firm, retiree clients "would ask us to bring in a psychologist to help prepare them for the changes that will take place during retirement," Lois says. "That wasn't considered to be very important by our partners."

So David and Lois struck out on their own and now manage $15 million for 60 clients; 90% of their firm's revenue comes from retirement planning. While they haven't, as yet, brought in a psychologist, they draw on their Nazrudin roots to help clients adjust to retirement and also distribute several life planning questionnaires to retirees. Having just dropped their NASD license in December, David and Lois are now fee-only and are moving their assets to TD Ameritrade. "We're trying to figure out if we're going to work with no-load annuities, and what we'll do for clients who have annuities that they don't need," David says. "Our focus is generally managed accounts; we design a portfolio from the bottom up using mutual funds and ETFs."

As a profession, David says advisors "have figured out how to accumulate and how much," but now "we have to figure out how to distribute it, and there are some seriously bad ways to do it." Adds Lois: "We haven't had a lot of experience in the [distribution] area as a profession." David says one of the worst distribution strategies an advisor can use are what he calls, "auto-pilot accounts," which are "prepackaged, pro-rata distribution packages that get automatically rebalanced." Clients are duped into thinking they're getting advice, when they're not, he says.

David and Lois have designed a strategy that "avoids distributing any asset classes while they are down" in value, David says. How is this done? "With great difficulty," he says, "because it takes a great deal of attention." First, "the only way you can do it is to build a reserve within the portfolio--liquidity from short-term bonds and cash--that should be eight to 18 months worth of income at the present rate of distribution," he explains. "Then that [liquidity reserve] has to be replenished because obviously [the client] is drawing income. When you replenish, you're doing that during the rebalancing process, so you don't want to replenish with asset classes that are down." He adds: "Every distribution has to be reviewed, and you can't do that with a computer. You cannot automate that."--Melanie Waddell

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