Podcast Center
Video Center
Webcasts
Resource Center
Events
June 01, 2008 at 08:00 PM
New York – Payout funds, mutual funds that strive to pay regular income to fund holders, are still fresh, and that newness has advisors taking a ‘wait-and-see’ attitude, according to interviews with Income Planning.
The idea of providing a regular stream of income in retirement is one that is getting more discussion as different sectors of the financial services industry seek to meet the need that many boomers will face (see Advisors pan living benefits and payout mutual funds.)
“I tend to use bond ladders because it gives the client more control,” says Rebecca Preston, a financial advisor with Preston Financial Planning, Providence, R.I. “You know what you are getting and when you are getting it.” She says she hasn’t explored payout funds enough to decide whether she would use them with clients but suspects that she would continue to use bond ladders.
However, Preston says she admires companies’ efforts to try and meet the retirement needs that boomers will have.
John Discepoli, a financial advisor with Discepoli Financial Planning, Glendale, Ohio, says that right now he does not invest in these investments for clients because they do not have a sufficient history.
“We keep our investments pretty basic,” he says. If in time, payout funds become more tested, then he says he might take a look at them for clients. However, for the moment, he uses investments such as large and small cap funds, and long and short term U.S. government bonds.
At least one expert in the planning community says that planners she has spoken with don’t seem to be even aware of this new option yet or if they are, are not offering an opinion on them.
