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Jeff Levine

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Jeffrey Levine: Delay Social Security Benefits as Long as You Can

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Now is the perfect time for advisors to prove their value to their clients, especially those on a fixed income, according to RIA Buckingham Wealth Partners, which has clients in all 50 U.S. states.

One way that the firm is achieving that is through the implementation of its Design | Build | Protect philosophy for its clients, regardless of their age and whether they are pre-retirees or retirees, according to Jeffrey Levine, its chief planning officer.

The philosophy “combines elements of what’s often referred to as life planning, with an evidence-driven approach to the technical elements of a financial plan, along with some unique ways to implement the monitoring/updating phase of an ongoing planning relationship,” he explained.

By email, we asked Levine a series of questions on what he and his firm are doing to help clients overcome the various challenges investors are facing in 2022.

THINKADVISOR: How is Buckingham Wealth Partners helping clients with market volatility in 2022?

JEFFREY LEVINE: There are a number of ways in which we’ve tried to help clients deal with recent market volatility. First and foremost is communication and education, and we’ve done that through a variety of channels, including emails, webinars and, as desired, in direct one-on-one discussions.

When we create client portfolios, we do it with the long term in mind. And over the long term, we “know” that there are going to be good markets and bad markets, periods of high volatility and low volatility, etc.

Following our evidence-based approach, we don’t generally look to make dramatic shifts in asset allocation in response to the “news of the day.” Instead, we strive to keep clients focused on the long-term benefits of remaining invested in an appropriately allocated portfolio.

Of course, that’s not to say that there aren’t some very meaningful actions that can be taken to benefit, at least [in] some way, from market volatility. In many of our clients’ taxable accounts, for instance, we’ve made trades to capture losses that will be used (hopefully) to offset future capital gains. Other clients have benefited from Roth conversions at lower valuations.

How is Buckingham Wealth helping retired clients with inflation in 2022? What would you suggest other advisors do to help retired clients this year?

Inflation represents a major challenge for lots of clients, but those living on fixed incomes are particularly vulnerable. When it comes to retirees, planning to deal with (potential) inflation starts with making the right “big picture” decisions. One of those big decisions is when to begin claiming Social Security benefits.

Everyone’s situation is different, but we’re big believers in the general benefits of delaying Social Security, when possible. Notably, delaying Social Security benefits is one of the best inflation-fighting tools a (pre-)retiree has at their disposal, because those benefits are subject to annual cost-of-living adjustments (COLAs). The larger a client’s monthly benefit, the greater impact of those COLAs.

Another big picture item is the client’s asset allocation. A well-diversified portfolio should help mitigate the impact of a variety risks, including the risks associated with inflation. Of course, it also helps to get the more micro decisions “right” too. In that regard, I have to give a lot of credit to our Investment Committee, and the entire investment team.

Notably, we had inflation protection built into many of our portfolios prior to the elevated inflation we’ve seen. More specifically, our allocation to [Treasury inflation-protected securities] has been helpful, as well as our general tendency to keep maturities relatively short. In recent years, we’ve also introduced some alternatives into our portfolios that aren’t correlated with long-term interest rates. So, that’s also helped some clients.

On the broader planning side, we’ve updated our assumptions for long-term inflation to reflect recent developments and our current thinking. Those assumptions are a critical element in our client’s financial plans.

That said, assumptions are just that … it’s what we assume will happen, but there’s no guarantee. To that end, thankfully, while it’s not perfect, software can help us to model the impact(s) of higher-than-expected inflation to see how it could impact a client’s long-term financial plan.

How is Buckingham Wealth helping clients with annuities in 2022?

Annuities are not something that we currently use a lot in our planning. That said, where appropriate, we will work with third parties to implement solutions to help meet specific clients’ needs.

Having said that, we’re keeping our eye on a variety of developments in the annuity space. There (finally) seems to be a push to create some more RIA-friendly [multi-year guaranteed annuities], and even some income annuities. I’m excited to see what develops there, and how it may be able to be incorporated into our overall planning.

How are you helping pre-retirees in 2022? What would you suggest other advisors do to help pre-retiree clients this year?

How are you helping retirees in 2022?

While there are certainly some differences between pre-retirees and retirees, I’m not sure that I would split our client experience between the two groups so starkly.

At a high level, we strive to implement our Design | Build | Protect philosophy for our clients, regardless of their age. That philosophy combines elements of what’s often referred to as life planning, with an evidence-driven approach to the technical elements of a financial plan, along with some unique ways to implement the monitoring/updating phase of an ongoing planning relationship.

As our chief planning officer, I get to focus my time primarily on the technical elements of financial planning. The challenge for a quickly growing large firm is, “How do you create a system that’s able to deliver a standardized planning experience, but that is able to take into consideration the unique planning needs of every client?”

Our answer to that question is our Wealth Planning Conversations. Each Wealth Planning Conversation consists of a variety of key elements, including our evidence-driven default perspective on the particular strategy, issue, etc., a description of what we believe is the appropriate role for an advisors, a list of best practices, helpful resources, and even a conversation guide to help advisors consider how to best communicate the issue with clients.

Through these Wealth Planning Conversations, advisors are empowered to deliver a standardized, yet customizable experience for clients. Certain Wealth Planning Conversations, which we refer to as Essential Wealth Planning Conversations, apply to virtually all clients, regardless of their age or current situation.

For example, our Annual Tax Planning Wealth Planning Conversation can be an element of the planning experience for everyone.

By contrast, other Wealth Planning Conversations, such as our QCD Wealth Planning Conversation, may only apply to retirees, while an Education Planning Wealth Conversation will generally apply only to clients with younger children, and who are still in the accumulation phase.