Retirement Advisor: A Teachable Moment (Podcast)

Apr. 01, 2020 7:00 AM ET5 Comments4 Likes
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SA For FAs
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Summary

  • There’s no time like a downturn to revisit “sequence of returns” risk, which holds that investment performance is dependent on returns the market generates at the point of retirement.
  • Many investors are uncomfortable addressing a phenomenon that requires them to hold lower-returning assets like bonds or cash as a hedge against a bad returns sequence.
  • Another reason for this tutorial: Some investors place excessive confidence in Monte Carlo simulations saying they have a high probability of portfolio success, without understanding this is a static view.

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There’s no time like a downturn to revisit “sequence of returns” risk, which holds that investment performance is dependent on returns the market generates at the point of retirement.

This podcast (6:56) suggests there are unpredictable occasions like the present market crisis, where anything less than a 100 percent assurance that retirees’ expenses are covered, would be calamitous.

This article was written by

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6.07K Followers
GIL WEINREICH - Author of "The Mentor," a unique parable for financial advisors and those who aspire to become one. I have worked in the FA arena since 1997, and during that time, the New York State Society of CPAs twice awarded its prestigious Excellence in Financial Journalism award to me for a monthly column I wrote on business ethics. Previously, I reported on international news for Voice of America (where I was awarded a newsroom writing award) and prior to that worked as an editorial assistant at U.S. News and World Report. I live with my wife and children amidst the verdant and vibrant hills and dales of Jerusalem.
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