What retirement issue has hit you or your clients out of left field, and how did you resolve it?
Of course, the severe downtown in the market caused many of us to rethink traditional investment philosophies.
The emergence of alternative investment classes to the mass markets has added diversification that we heretofore, for the most part, did not have available to us. So, for the most part, retirement investment issues have not blindsided us in any way.
My firm utilizes a core and satellite investment philosophy employing tactical asset allocation for our satellite investments.
For retirement portfolios, we emphasis dividend and income equity investments probably value ‘biased’ combined with an small to moderate allocation to immediate and or fixed annuities.
What prospecting methods have been most successful for you in attracting retirement-planning clients?
For me, it has been workplace education and University Extension Saturday workshops. I have also advertised in the employee newsletter of some of the larger employers in Los Angeles.
I have also used www.FreeErisa.com for prospecting with ‘tepid’ results thus far. My firm is also in the process of building retirement planning presentations to be used on LinkedIn and Facebook.
Do you face any frequently occurring retirement-planning mistakes with prospects?
Most are on the beneficiary designation side.
Very few planners or investment advisors actually read the custodial contract for its beneficiary defaults to ensure that they understand how the contract might contradict a client’s beneficiary intentions.
The other is incorrect or out of date beneficiary selection.
On the investment side, it is most often inappropriate allocation for the goal or objective or ‘behaviorally challenged’ investment philosophy – following the ‘noise’ rather than sound investment principles.
What challenges do you face when modeling clients’ retirement incomes and cash flows, and how do you resolve them?
The key issue for us is maintaining purchasing power for our clients. With health-cost inflation being what it has been, forecasting it has been challenging.
To maintain purchasing power, we need our focus to be on income from investments that have equity participation, such as dividend and income and large-cap ‘value biased’ investments with some alternative class investments.
For most of the immediate cash flow at retirement, the blend of immediate and deferred annuities is done in consideration of the retiree’s other retirement resources such as Social Security, Pensions, or non-qualified deferred comp plans, if applicable.
Of course, our core portfolio will extend into mid, small, and emerging investments as appropriate.
What mix of products and solutions do you use most often and why?
Our mix of products — we are fee and commission — is mostly American Funds for our commission investing.
We believe in active management so for our advisory clients we look to no-load mutual funds with little indexing in our client’s core portfolio.
We will use ETFs for a large part our tactical investing in our satellite portfolio, and they may run the gambit – from sectors, industries, commodities, natural resources, to emerging market bets.
Our annuities are purchased for the retirement income stabilization benefit.