Five Questions for the Retirement Advisor

Yes, I find that prospects believe they have a right to keep their standard of living and income needs at the same or higher levels in retirement and, in most cases, believe it is our obligation to do that for them.

Getting prospects to be realistic about the assets they have available to fund their retirement needs and how inflation will eat into those needs over time is a very long process. It is a process of education.

4. What challenges do you face when modeling retirement income and cash flows, and how do you resolve them?

The biggest challenge I find when modeling a client’s retirement plan, especially with regard to income and cash flow, is finding a successful plan that works on paper and then making certain that it can be implemented in reality.

It is critical to understand the difference when modeling between the expected total rate of return and the actual dollar cash flow the portfolio will generate to meet the retiree’s needs. In most years, there is a major disconnect between the two. This has been especially evident when managing portfolios in these turbulent times.

5. What mix of products and solutions do you use most often and why?

We use a mix of investments that include laddered individual fixed income securities (CDs and short- term notes) for safety, balance, and for managing cash flow. To hedge long-term inflation, we use stock managers of mutual funds that we have analyzed for risk-adjusted rates of returns.

We add exchange traded funds (ETFs) in select market sectors and then fill in the balance with non-correlated alternative investments, which can include absolute return funds, futures, commodities and real estate when required.

We will dynamically allocate and reallocate these as we see changes in the global economies.

We strive for a portfolio with consistency, low volatility and good overall balanced returns.