Gaining Perspective, featuring: William Reichenstein of IncomeSolver.Com, 10/12/21
We published an article in late September,Pay Attention to Marginal Tax Rates and Not Tax Brackets, that highlighted how the analytic framework for providing retirement income planning advice can be improved. It focused on three decisions that investors sometimes need to make: (1) whether to convert funds this year from a tax-deferred account (TDA), like a 401(k), to a Roth account; (2) whether to contribute this year to a TDA or a Roth account; and (3) how to tax-efficiently withdraw funds in retirement, where withdraw is interpreted broadly to include Roth conversions. The author of that article is with me today to discuss how advisors should approach those decisions.
The real estate market may be cooling slightly, but those who have sold their homes recently or plan to will still be reaping big gains from Westchester, New York, to Oakland, California.
Target Date Funds
Stocks Sniffing A Bear Market Rally
A number of key technical, sentiment and flow based indicators are suggesting we could see a relief in selling pressure over the coming weeks, and perhaps a countertrend rally in risk assets.
This is Not the Market Bottom
Two forecasting methods predict a 54% stock market loss in 2022. Someday the stock market bubble will burst. But the data says we have not seen the worst of equity market declines.
Lifetime Income Fees vs. Costs: Look Beneath the Tip of the Iceberg
Lifetime income solutions are high on the wish lists of defined contribution (DC) plan participants, with the certainty of a guaranteed lifetime income stream ranking as the top feature in our surveys over the past decade.
Dr. Cole Cash and the Next Generation
The one speed bump advisors keep tripping over is that, well, people are funny about their money.
Elizabeth Holmes’ Lesson for Target-Date Funds
In 2003, at age 19, Elizabeth Holmes founded Theranos, and it became a $10 billion company by 2014. But it was a fraud. Aspects of target date funds mirror the Holmes story.
How I Protect Against the Coming Market Crash
Those who are familiar with my articles know that I see market crashes in stocks and bonds occurring in this decade, combined with serious inflation. Readers ask how I recommend protecting. This is it.
Beware of Faux Financial Planning
Whenever I surf television cable news channels, I see the plethora of ads for financial planning. But they are run by companies that sell financial products or are owned by huge insurance companies.
The Elusive Benefits of “Lite” Annuities
This article explores the benefits of annuities with lower explicit fees, a category I dubbed as “annuities Lite” in a previous article that focused on GLWBs.
Our Debt Cannot Be Inflated Away
The U.S. debt cannot be paid, even in inflated dollars. Serious inflation is inevitable that will crash stock and bond markets, in addition to devaluing the dollar.
Why Advisors Should Never Use the Words “Follow-Up”
When you say: “Hi, I’m just ‘following-up…” it sends the message that you care about making the sale more than solving their problem.
Financial Literacy Month: An Opportunity to Empower Investors
Each April, we are moved by hope – it is financial literacy month. To help close the growing savings gap, we strongly feel financial literacy and better knowledge of retirement and financial planning fundamentals are critical to securing more stable financial futures.
Why RIAs Are Going to Lose in Retirement-Income Planning
Does the scenario below sound likely? If so, you are among the thousands of RIAs who are likely to lose significant assets over the next decade.
How to Plan Retirement Income for a Constrained Investor
In this article, I will explain how to structure an income strategy that best serves the needs of constrained investors. Demographic, economic, cultural, and social forces argue for a new approach to retirement planning.
Q1 2022: Tug of War
An unusually strong tug of war between economic forces is playing out in global markets, with a booming economy and low unemployment offset by the effects of the Russian invasion of Ukraine and expanded inflation. Expectations over the timing and magnitude of Fed interest rate increases rapidly evolved as clarity began to emerge around central bank responses to inflation.
Market review Q122
The market was tough in the first quarter. Find out what it means for long-term investors.
Net, Net, Net: Expenses, Taxes and Inflation Can Eat Your Nest Egg – What To Do?
As dangerous as it is to simply extrapolate past returns into future expectations, an even bigger mistake is planning a financial future based on nominal gross returns, forgetting about how large bite expenses, taxes, and inflation will take from the bottom line. Use our premium membership service to forward this article to clients with your logo.
The Latest Innovation in Retirement Planning
Roughly half of adults over the age 55 say their biggest financial fear is not having enough money saved for retirement. Add in inflation, market volatility and low interest rates, and that’s enough for any investor to have serious cause for concern. Those at or near retirement don’t have time on their side.
Enter Constance. Last October, RetireOne, an independent distribution platform for fee-based life insurance products, introduced Constance - a zero-commission, flat-fee annuity built to enable financial advisors to integrate life insurance into client portfolios. With Constance, RIAs give their clients a lifetime income guarantee without cannibalizing their assets under management. By unbundling the insurance component from its underlying investments, advisors can wrap client brokerage accounts, IRAs, or Roth IRAs with lifetime income protection.
My guests today are RetireOne’s president, Ed Mercier, and Dimensional Fund Advisors’ head of retirement distribution, Tim Kohn, on the show to discuss their recent announcement and the trends facing advisors who work with clients approaching or entering retirement.
You Say the Fed Is Behind the Curve? Prove It
If you’re looking for a case-study in economic groupthink, try Googling the phrase “Fed behind the curve.” Informed opinion, it seems, has congealed behind a conventional wisdom that the U.S. Federal Reserve has been too slow to restrain accelerating inflation.
The Price Advisors Will Pay for Ignoring Flat Fees
I’ll take an order of flat fees (otherwise known as retainers) with a side of financial planning. Customers are lining up out the door for this.
Five Ways to Get More Referrals Online
Here are five winning tactics to leverage immediately for more online introductions.
The New Defined Contribution Landscape
The pandemic hastens the evolution of the DC plan landscape and challenges plan sponsors to evolve.
Ask Brad: Are Broker/Dealers Dead?
Why do we still refer to so many firms in the advisory profession as broker/dealers?
PIMCO Updates Its 2022 Glide Path for Target Date Funds
PIMCO’s glide path for target date funds expresses the firm’s collective view on age-appropriate asset allocation that can help prepare defined contribution (DC) plan participants for successful retirements.
Why the 60/40 is Wrong for Baby Boomers
The 60/40 stock/bond allocation is ubiquitous, but that’s stupid because it’s just not right for everyone, especially baby boomers.
The Intuition for Reverse Mortgages
Understanding how reverse mortgages can add value in retirement planning requires an understanding about the peculiarities of sequence-of-return risk that the reverse mortgage can help to manage.
What Awaits Behind the Russia and Inflation Headlines?
The Rest of the Story was a radio show that aired from 1942-2008. Host Paul Harvey revealed little known facts that were previously not reported. The rest of the Federal Reserve story is that it is just pretending to be in control, and the rest of the Russian invasion story is about China and the U.S. dollar.
Can Your Digital Platform Withstand Regulator Scrutiny?
Jasmin and Ryan recently exchanged ideas about trading apps and new software that can help educate investors about key investment principles.
Including Non-Financial Assets in a Client’s Allocation
Neglecting non-financial assets, such as Social Security and pensions, will misstate the risk in a retired (or near retired) client’s asset allocation strategy.
Ask Brad: When is the Wirehouse Model Better than an RIA?
Some observers assume I tell everyone that they should go down the RIA path. That is not the case.
The Three-Legged Stool of Misguided Investment Decisions
A practice built on a stool of products, pricing and performance is doomed to collapse. Competent planning requires a focus on the deeper issues your clients face.
How DC Plan Sponsors Can Engage Diverse Participant Personas
Millennials often say their biggest challenge is being lumped into one category, as if everyone’s needs and aspirations are identical.
FOMC Tightens as Economy Slows
In 2021 the FOMC refused to accept and acknowledge that inflation was getting worse in the second and third quarter and continued with its monthly purchases of $120 billion in Treasury debt and Mortgage Backed Securities.
ARKF Dividend vs. XLF Dividend: To Pay or Be Paid
We don’t think this is complicated. Do you want to pay to own expensive stocks or get paid to own cheap ones?
How Worried Should I Be About Soaring Inflation?
Supply-chain problems became the almighty boogeyman in 2021 alongside Covid, and now its partner in crime, inflation, is the thing causing anxiety. The Consumer Price Index rose to 7% in December 2021, which is the highest it’s been since the early ’80s. But should the typical consumer be worried about inflation?
The 60/40 Portfolio Has Worst Loss Since March 2020 on Fed Shift
A bedrock of long-term investing, a portfolio split 60/40 between equities and high-quality bonds, is set for its worst monthly slide since the market meltdown in the early days of the pandemic.
What Will Interest Rates be When the Manipulation Ends?
Interest rate manipulation has been achieved through massive money printing that is causing inflation. To control inflation, bond manipulation must stop. When the manipulation ends, bond prices will plummet, and stock prices will follow.
Wall Street's Model Portfolios Are Misunderstood
Large asset managers provide model portfolios for many purposes — as options in 401(k) plans, as blueprints for institutional clients and affiliated financial advisors, and as suggestions for unaffiliated investment advisors. These have the “lather, rinse, repeat” conflict of interest.
Don’t Recommend Financial Planning
“I’m opposed to financial planning,” said no one ever. Yet most of us avoid financial planning, despite the best efforts of the financial media to extol its virtues.
An Economist Looks at School, Marriage, Divorce, and Moving in with Your Mom
Laurence Kotlikoff is a world-class economist who can convince you to pay off your mortgage and make you snort out your nose laughing at the same time; Money Magic is his compendium of life hacks aimed at leaving the reader wealthier and happier.
Man, You've Got This! Or Maybe Not
If a recently widowed client hasn’t fired you, then you are among a lucky few. Here’s a thought experiment that illustrates the vulnerability advisors face when they don’t engage the female half of a couple.
Wall Street’s ‘Model Portfolio’ Boom Gets Slammed in New Paper
A booming $4.9 trillion branch of the U.S. asset management industry is funneling investor cash into funds that are pricier and worse-performing than alternatives, new research claims.
Can You Afford to Join the Great Resignation?
Many of us fantasize about quitting our jobs. In 2021, more people than ever turned that dream into reality. The latest U.S. Bureau of Labor Statistics data show that 4.53 million Americans voluntarily left their jobs last November. This was both a new monthly record and the eighth successive reading above the pre-pandemic high.
How Safe Assets Became Investors' Biggest Risk
Markets are weird right now. The value of risk-free assets has gone all out of whack, and if that doesn't seem scary, keep reading.
Nine Charts Summarizing the 96-Year Capital Markets History
Last year was a good year for stocks, but not bonds. The post-2008 recovery has been spectacular, one of the best 13-year U.S. stock markets. I provide details for the entire 96 years as well as five-year and 10-year sub-periods
Is It Still Worth Investing in Stocks?
If we will experience a lower equity risk premium, how much lower of a premium will make stock investing unattractive relative to bonds?
Lucky 13-Year Investment Returns
In this article, I examine the history of 13-year returns on stocks and bonds to put the most recent 13-year period into perspective. It has indeed been extraordinary.
Are We Being Hustled? A Mental “What If”
Our economic experience could be driven by a con game – a hustle.
Our Top 10 Most Popular Investing Articles of 2021
As is our custom, we conclude the year by reflecting on the 10 most-read investment and planning articles over the past 12 months. Tomorrow, we will highlight the 10 most-read practice management articles.
Dealing with the Demise of the 4% Rule
Media attention has focused on the long-standing “4% rule” and how economic and demographic realities have reduced that guideline. This article discusses related considerations and provides opportunities for retirees dealing with the new normal.
A Brief Quiz on the Economy
Successful investors must answer three questions: Will we have serious inflation? Will interest rates increase? Will stock prices fall?
Six Steps for Effective Social Security Claiming
Clients struggle with making right the Social Security claiming decision. This article provides a six-step process to guide clients through the complexity of Social Security.
The Fed's Taper: Accelerando
High inflation and strong economic data may make the Fed hurry to conclude asset purchases.
If Your Client-Service Model Ain’t Broke… Fix It Anyway!
Service offerings that were premium yesterday may be considered ho-hum today. To keep your clients loyal and attract new business, you need to continually create “delight” with strategic updates.
Make 2022 the “Year of the Wild First Line”
If your marketing stank this year, follow these simple instructions and make 2022 better.
Portfolio Positioning for the $1.2 Trillion Infrastructure Bill
Regardless of which side of the aisle you are on, the Infrastructure Investment and Jobs Act affects everyone financially and mentally, and advisors should prepare client money and minds for this historic (albeit non-transformational) event.
How To Supercharge Your Practice with Surge Meetings (Part 2)
In this article, I share steps 2 and 3 of my three-step process for how I used surge meetings to turn my chaotic practice around and triple our revenue in three years.
The Dubious Assumptions Underlying Stock and Bond Prices
Expected returns are derived in two distinct ways: from Federal Reserve actions, since it is manipulating bond prices, and from momentum, which is driving stock prices. How long can both last?
Four Reasons Why Your Marketing Isn't Connecting With Prospects
If you’re struggling to attract new clients, it’s because prospects have a difficult time differentiating you. Prospective clients face four realities that will overwhelm their decision-making process.
Why Retirement Risk Requires Dynamic Planning
Retirement planning is complex and risk in retirement is real. To improve the confidence clients have in working with an advisor, you need to prepare them for changes in retirement and avoid the talk of probability of failure and success. Ongoing adjustment-based planning aligns clients’ perceptions of risk in retirement with reality. This often results in small course corrections with many retirees finding they can spend more than originally planned. My guest, Justin Fitzpatrick, is here to discuss new research and technology that helps advisors paint a more realistic picture of what retirement could look like and guides clients through retirement more successfully.
Higher Interest: Debt Influences Demand for Secure Retirement Income
It’s well-studied that factors like debt and financial uncertainty impact the way people feel about retirement and prepare for it. In this series, BlackRock explores insights from our 2021 DC Pulse research and additional work with the Employee Benefit Research Institute (EBRI) to recognize inequities and help find ways to build a better retirement for all.
The Unprecedented Concentration Risk in U.S. Equities
The fate of the global economy and stock markets rests on the successes of just a few megafirms that reside in the U.S. But have the prices of the world’s largest companies been bid up beyond what is reasonable and fair?
How to Prove the ROI of Holistic Financial Planning
How can we quantify the value of our advice across the board? We can quantify the value of investing, but our tools are not aligned with the shifting advisor value proposition.
Why the 60/40 is Not Dead, Will Never Die, and Why You Can't Kill It
The 60/40 is not dead, will never die, and you can’t kill it. That won’t stop the financial media and investment firms from staging mock funerals.
Hiring a Financial Advisor is Foolish (until it isn’t)
The reason so many folks think they don’t need an advisor is because they had a bad experience with someone they thought was a financial planner who turned out to be nothing more than a salesperson.
Bond Market’s Inflation Bets Reach Highest in More Than a Decade
Bond traders are boosting expectations for U.S. inflation to levels not seen in over a decade amid concern supply-chain bottlenecks and resurgent consumer demand will keep lifting the cost of goods and services.
Democratic Split on Taxes, Spending Imperils Deal Deadline
Congressional Democrats are at odds over both the tax and spending sides of a bill to enact the bulk of President Joe Biden’s economic agenda, putting in question the goal of party leaders to strike a deal by the end of the week.
The 60/40 Portfolio Isn't Dead, Just More Expensive: Allison Schrager
Volatile, pandemic-riven markets for stocks and bonds has Wall Street ready — again — to declare the traditional 60/40 portfolio split a dead strategy. The prospect of a low-growth, high-inflation economy (stagflation) dims the prospects of both investment categories, and certainly demands a rethink of where to stash your savings.
Planting the Seeds for High Cash Flow, With 5 Years Until “Go-Go”
I was speaking with an industry friend and colleague the other day, and we got to riffing about music and retirement planning. A free and creative thinker, she said that when talking to clients about future retirement income, the sweet spot timing wise seems to be about five years before clients retire.
The Importance of Marginal Tax Rates in Retirement Planning
We published an article in late September, Pay Attention to Marginal Tax Rates and Not Tax Brackets, that highlighted how the analytic framework for providing retirement income planning advice can be improved. It focused on three decisions that investors sometimes need to make: (1) whether to convert funds this year from a tax-deferred account (TDA), like a 401(k), to a Roth account; (2) whether to contribute this year to a TDA or a Roth account; and (3) how to tax-efficiently withdraw funds in retirement, where withdraw is interpreted broadly to include Roth conversions. The author of that article is with me today to discuss how advisors should approach those decisions.
Tax-Efficient Retirement Distributions with Inheritance in Mind
Here is a discussion of taxes and legacy when estate tax is not a concern because asset levels are below the estate tax exemptions.
Going Up! Interest Rates Must Increase
Money supply has quintupled in the past year, and because of this money printing, inflation is here for the long run. Inflation will force increases in interest rates.
On the Solvency of Social Security
Social Security’s shortfall grew by a record 18% in the last year. That $3 trillion increase means that it is more likely beneficiaries will face reduced benefits in the future, and the longer we wait the harder it will be to solve the problem.
Pay Attention to Marginal Tax Rates and Not Tax Brackets
The analytic framework for providing retirement income planning advice must use marginal tax rates and not tax brackets.
Digital Trends Impacting Investors and Advisors
Investors and financial advisors alike want to understand the fascinating trends that are transforming the investment industry.
Don’t Be a Dip and Buy the Dip
Last year, after the March market correction, I warned baby boomers against buying the dip. Since the market rebounded 100%, that was bad advice. But I double down on that advice today for the same reason.
COVID-19 Strained Participant Financial Wellness - Can Employers Help Them Recover?
With COVID-19 still a top employer concern, protecting workers’ health and well-being naturally comes first. But the pandemic’s impact isn’t limited to only physical and mental health: financial wellness is also ailing. The crisis has exacerbated the problem, but it’s not exactly a sudden occurrence.
Why Risk Tolerance Questionnaires Don’t Work for Determining Retirement Strategies
Using a risk tolerance questionnaire to establish a retirement income strategy is akin to your doctor checking your pulse to measure your cholesterol. There is nothing wrong with checking your pulse, but it is an inappropriate test for the situation. We propose an alternative test – the RISA – to select the best deaccumulation approach.
Post-Retirement Resources for Clients
Having counseled numerous clients through the retirement process, I realized there was a missing piece – purpose! To be happy, retirees need something meaningful to wake up for every day. Here are some resources – paid and unpaid – to let them do that.
How to Cope When Everyone Around You Is Quitting: Teresa Ghilarducci
My friend who works in an emergency room as a physician assistant recently told me that she’s ready to collapse.
Prices Remain High. Costco Isn't the Answer: Teresa Ghilarducci
The most recent data on inflation shows prices rose last month by the smallest amount since January, but that doesn't mean consumers are in the clear.
ETF Industry Risks Losing Key Tax Edge as Democrat Whets Knife
Amid the deluge of headlines in the past few days about congressional proposals to boost taxes on companies and the wealthy is one that would affect regular investors -- and potentially alter the entire U.S. fund landscape.
Raise the Debt Ceiling, Republicans. You’ll Be Glad You Did.: Michael R. Strain
It’s unfortunate but true: Influential Republican politicians are playing another round of political chicken that could easily lead to a damaging brush with default on the national debt.
Pooled Employer Plans (PEPs) Can Be Dangerous
Pooled employer plans (PEPs) are the latest 401(k) rage, but they can be an asset or a liability. The difference is in their qualified default investment alternative (QDIA).
SALT Cap Confounds House Democrats Crafting Taxes for Biden Plan
House Democrats continue to search for a way to satisfy lawmakers who want to scrap the deduction limit on state and local taxes without losing progressives wary of a tax cut that would overwhelmingly benefit the wealthy.
Retiring Soon? Sold Your Home? Now Go Buy Some Stocks: Alexis Leondis
The real estate market may be cooling slightly, but those who have sold their homes recently or plan to will still be reaping big gains from Westchester, New York, to Oakland, California.
Should Your Robo Adviser Include Guaranteed Income Products?
While robos are beneficial as they often invest in low-cost funds and ETFs, ideally, they should also include quality SPIAs and DIAs to simplify investment planning and allow retirees to spend more.
Enhancing Retirement with Tax-Bracket Management
Here is an example that quantifies how strategic tax planning and delayed Social Security claiming can increase portfolio longevity in retirement.
What is China Doing to Its Stock Market and Why? A Hypothesis.
The U.S. stock market is thriving, while China’s deteriorates. China could intervene to limit stock market losses, but it is not. Is China purposely losing a battle to win a war?
AP Thought Leader Summit Session Summaries
On August 24 and 25, we held our second annual Thought Leader Summit. Here is a short summary of each session and a link to watch the replay for CE credits.
Dalio’s Hedge Fund Risks Being Dumped by Pension on Weak Returns
A California county’s $21 billion pension is considering whether to drop Ray Dalio’s hedge fund after it underperformed for most of the past 16 years.