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Retirement Planning > Retirement Investing

Five Questions for the Retirement Advisor

By Ed McCarthy, CFP, RICP

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1. What retirement issue has hit you or your clients out of left field, and how did you resolve it?

Eckerline: There wasn’t one retirement issue that hit me unexpectedly, but one that hit some of my clients was the decline in value of the safe part of their portfolio — mainly fixed income that has usually been non-correlated to the stock market. In the current credit crisis, fixed-income instruments like muni bonds have dropped significantly in value, causing retirees concern.

2. What prospecting methods have been most successful for you in attracting retirement-planning clients?

I have found in the current market, people — especially retirees — are looking for advice to make sense of what is going on. I’ve been reaching out to my clients and increasing my client contact through client education seminars, weekly e-mails, and most importantly client meetings. My clients know I’m there for them and have shared that with others, which has led to many new referrals.

3. Do you face any frequently occurring retirement-planning mistakes with prospects?

Many retirees underestimate what they need for income in retirement. When we sit down and do a Wealthbuilder, which is one of our planning tools at Merrill Lynch, we need to include a budget.

When they start writing things down, many retirees — specifically new retirees and those about to retire — are surprised that spending isn’t much lower in retirement.

4. What challenges do you face when modeling clients’ retirement incomes and cash flows, and how do you resolve these challenges?

One of the biggest challenges is the issue of life expectancy. Many of my clients that are retired have parents still alive and active that are in their nineties, so they need me to assume one of the spouses, if it’s a couple, lives to age 95 or 100. Their money needs to last a long time, so we need to have frank discussions on spending.

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

In my work with retirees, I develop an asset-allocation model with a mix of investments that fits the clients risk profile, time horizon, asset base and goals. I profile the client to answer those questions and then implement a solution utilizing a number of different investments to help them achieve their goals for the lifestyle they want.

I partner with them and make sure their portfolio is flexible, so we can adapt to life’s changes as they occur. We review and rebalance the portfolio on a regular basis to make sure we are on track.

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