Basic essentials to address in clients’ retirement

How can you boil down the big concept of retirement into smaller pieces?

In his 2016 Annual Meeting presentation, “4th generation retirement planning,” Guy E. Baker, MSFS, CLU, identified three questions that get to the heart of a client’s retirement outlook:

1.       Do you know your number?
2.       Do you know how much you have to save to reach your number?
3.       Do you have a process that can provide an optimum return and withstand the emotional rollercoaster investors constantly experience?

That number, of course, is the amount of money they need to enjoy their retirement years, and the 47-year MDRT member from Irvine, California continued to help advisors by breaking down clients’ retirement investing into these four elements:

1. People either speculate or they invest. Speculation is trying to find the right stock at the right time. Investing is buying the best stocks in a widely diversified portfolio and holding onto them regardless of what the market is doing.
2. Markets are random. No one knows the future, so you can never know if you are seeing a pattern or not.
3. Distribution is just as important as accumulation. Helping clients find the right distribution amount as they enter retirement is critical to their overall wealth.
4. There are only three things clients can do to really impact their long-term results:

• They must widely diversify. They need to hold as many different stocks as possible in different asset classes.
• They must rebalance regularly to maintain the integrity of their portfolio.
• They must be aware of the costs and minimize them as much as possible.

Hear more in the August episode of MDRT Presents:

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Written by Matt Pais, MDRT Content Specialist