Adviser SelectionInvestments

Five Things Your Financial Advice May Be Missing (#4)

By October 7, 2013June 30th, 2021No Comments
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Today we continue covering what I believe are the 5 key components of financial advice missing from many pre-retirement financial plans. So far, we have covered:

#1: A Clear Understanding of What the Advice is Costing You
#2: Enough Understandable Information to Answer Questions
#3: Strategies Beyond Investment Selection

Today we consider:

#4 – Specific Strategies For Your Phase of Life

Do you continue to go to your childhood doctor (maybe you do, I won’t judge)? Do many teachers teach both 1st graders and 11th graders? Why not? Because people’s needs change and the knowledge needed to help them succeed is different.

You could say the same principle applies to financial advice. Strategies that are older than your kids may no longer work, or worse, could work against you. Especially as you face different realities near retirement, what you may have been doing should be re-evaluated, including popular approaches like:

  • “Buy and hold” your investments. At retirement, you no longer have a long time to recover if you experience large losses in the market. It becomes important to make smaller adjustments more frequently, preferably using objective methods rather than involving emotional reactions or biases.
  • The “4% Withdrawal” rule of thumb for income creation. It makes for a nice sound bite, but in the 20 years since this “rule” came out, it has been proven that the withdrawal percentage should change based on several assumptions. Setting your withdrawal rate only once at the beginning of retirement would be like aiming your car when you first get in, putting the car on cruise control, and hoping you do not hit anything!

Remember, even small improvements in your monthly cash flow can change how you spend your time in the future!

So what should you do now?

  • Reconsider relying on the same strategies you used to accumulate money.
  • Consider the complexity and importance of creating income for life, and decide what resources you need on your side to give you enough peace of mind.

Stay tuned next week for the big finale – #5, and thanks for passing this along!

Elliott Weir, CFP

Elliott Weir, CFP

I work with recently widowed women looking for a different kind of relationship with a financial adviser. No products sold, no costs hidden, and no pressure for hasty decisions - all for a clearly disclosed fixed fee. For those women wanting the patient guidance of an experienced professional paid only to help them, III Financial offers a distinctive alternative to typical insurance agents, investment managers, and wealth managers.

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