What retirement issue has hit you or your clients out of left field and how did you resolve it?
The idea of people running out of money before they get to retirement. It’s a sobering reality for most people; it’s no longer sales hype for advisors. For us, it’s a matter of spending a lot of time and addressing reality: telling them things that we know that they may not want to hear but we feel like they need to hear, and then talking about how we’re going to restructure their plans for retirement, how we’re going to repair the portfolio that they’ve got.
What prospecting methods have been most successful for you in attracting retirement planning clients?
We wish we did a better job of prospecting, and quite frankly, in this environment, our clients have been with us for over 20 years. We have focused on taking care of clients more than we have been looking out (for new clients). We know that that’s the wrong thing from a marketing perspective, but we think our clients deserve that.
Do you encounter any frequently occurring retirement-planning mistakes with prospects?
I think the typical one is they are making too many emotional-behavior mistakes. We all have a tendency to put too much weight on recent events and not enough on the long view; and when it comes to their portfolios, they want to take them to be much more conservative at the wrong time.
What challenges do you face when modeling clients’ retirement income and cash flows, and how do you resolve them?
We’ve looked at this fully invested strategy using broadly diversified assets for the long term –we still believe in that. But we think we may need to be making some changes to our models to allow us to be more adaptive and to make some more responsive changes when we sense that we are getting into some of these very difficult situations.
To that end, we’ve actually tried to use some of what I’ll call non-traditional investments, where the money manager has flexible portfolios with flexible asset allocation. The manager has total discretion to go anywhere, buy anything, even short-selling them, to take advantage of those markets.
But the one basic principle that we will not deviate from and it’s a core philosophy to us: If we can’t understand it, if it’s not liquid, if it’s not transparent, and if we can’t explain it to an eighth grader, we won’t buy it.
What mix of products and solutions do you use most often with retirement planning clients and why?
We use a broad group of pretty traditional stuff. We use stocks and bonds, mutual funds and annuities.