What retirement issue has hit you or your clients out of left field, and how did you resolve it?
The main retirement issue confronted by many clients was the fact that they have had to reconsider their ability to retire at the present time due to their portfolios being down to a level that makes them uncomfortable pulling that trigger. We are still in the process of calculating the impact to our clients’ spending abilities.
What prospecting methods have been most successful for you in attracting retirement-planning clients?
Asking prospects if they would like a second opinion on their portfolios. Most individuals’ portfolios were down 30-40%, and in most cases, ours were not — as we typically err on the side of being more conservative. Showing prospects how we did it has been helpful.
Do you face any frequently occurring retirement-planning mistakes with prospects?
I have seen that many prospects got caught up in the bull run and had way too much in equities and in the international markets specifically. Even the bonds many held were longer term and lower quality then what was appropriate for individuals who wanted to retire soon.
What challenges do you face when modeling clients’ retirement incomes and cash flows, and how do you resolve them?
The main challenge that we have faced is trying to keep our payouts to clients under 5%. This has become increasingly difficult in a difficult market where both stocks and bonds were down significantly. We have been monitoring these payout ratios carefully and in some cases asking clients to pare back their spending temporarily until the markets recover.
What mix of products and solutions do you use most often and why?
We use an open platform of mutual funds with some ETFs and high quality bond ladders. This strategy has served our clients well as we have the flexibility to use thousands of managers and index funds to fill our allocations with the safety net of individual bonds that are of the highest quality.