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November 25, 2001 at 07:00 PM
Advisors Counseled To Assess Clients’ Mortality Risk
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A well-known financial services consultant says investment advisors should include the risk of premature death in the mathematical models they use to analyze client portfolios.
Louis Harvey, president of Dalbar Inc., Boston, says professional advisors often talk about the importance of buying a wide range of stocks, bonds and other securities to guard against market fluctuations.
Advisors also speak in general terms about the importance of buying life insurance to protect spouses and children, Harvey says.
But the Sept. 11 attacks and consumers worries about the subsequent anthrax scare, show that advisors ought to take advice about life insurance a step further, he says.
Instead of simply talking about life insurance, advisors should include the risk of premature death in the same sets of equations they use to calculate retirement asset needs, Harvey says.
“The basic idea is to look at mortality risk from a portfolio perspective,” he says.
Harvey has tried to help investment advisors act on that recommendation by posting a guide to mortality risk on the Dalbar Web site, at http://www.dalbar.com.
