What retirement issue has hit you or your clients out of left field, and how did you resolve it?
Medical premiums. They can approach $1,200 a month or more for a couple before they reach Medicare eligibility, and still a significant amount after that. We now have a separate entry for them, with its own inflation rate.
What prospecting methods have been most successful for you in attracting retirement-planning clients?
Referrals. They’re the most effective way to get clients. If you do an outstanding job for clients, go beyond their expectations, they refer you to others.
Do you face any frequently occurring retirement-planning mistakes with prospects?
Yes, unrealistic expectations of one kind or another. For instance, prospects who want to be more aggressive in their investments to “make up” for an inadequate retirement fund. What’s happening now in the markets is the best illustration of why that won’t work. We believe strongly that you have to remain balanced and conservative and have reasonable expectations for returns over time. Some don’t get that though, and if not, we politely send them elsewhere.
What challenges do you face when modeling clients’ retirement incomes and cash flows, and how do you resolve them?
The biggest one is clients that have unrealistic expectations on what they can withdraw from their savings/investments to live on. Like believing that since stocks have returned an average of 10 percent a year over long periods, they should be able to withdraw that from their portfolio.
I tell clients: “Studies show you can take 4 percent out per year and probably never run out of money Plus, have a rising stream of income to keep pace with inflation.”
For some that may mean tightening their belts a little or waiting to retire to have enough to last over their lifetime. If they cannot accept that, their expectations are unrealistic and maybe we cannot help them.
What mix of products and solutions do you use most often and why?
We design balanced portfolios, period – 40 percent bonds/cash, 60 percent equities, including alternatives. We add a little more equities, if they’re younger, a little less if older. That allocation tempers the downturns, and gives adequate upside. It’s an all-weather approach, because we never know what the forecast is going to be.