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Top Advisors Weigh In: What FAs Tell Retirees Worried About Their Future

By Nick Godt April 15, 2020

FA-IQ reached out to top Financial Times-listed brokers to ask:

What is the biggest question you’re getting from clients amid the current market volatility, and how do you respond?

Murray Carter of CSG Capital Partners at Janney Montgomery Scott. Washington, D.C.-based Carter has been in the industry for 31 years and has around $950 million in client assets.

The biggest question from clients at this time comes from those who are about to retire. They all want to know how this affects their retirement plans. First of all, we tell them that we do account for bad markets when doing our planning. Historical results tell us that a bad few months, or a bad year or two, do not derail retirement spending plans. History shows that the real risk to retirees is an extended period (a decade or so) of low inflation-adjusted returns.

Murray Carter

Secondly, we tell them that, no matter how severe or long-lasting the economic effects of the virus are, they will ultimately be temporary. It is not a lasting systemic threat to the global economy like the financial crisis. There will likely be a strong rebound in the second half of the year.

Lastly, in times like this it is helpful to think about one’s portfolio in buckets. Clients in this demographic have significant bond holdings that have appreciated. This dollar amount is enough to sustain multiple years of spending in most cases. So, while the stock portion of their portfolio is down significantly, they still have a relatively large amount of money that is insulated from volatility, and that they can access until stocks recover."

William Newman of The Atrium Financial Group at Northwestern Mutual. Albany, N.Y.-based Newman has been in the industry for 38 years and has $519 million in client assets.

William Newman

“We have been preparing our clients for something like this for months. All of our retired clients have a two-year cash buffer, so they do not need to sell equities in times like these. The most common questions we get now are ‘Should we be doing something different?’ and ‘When can I buy in?’

We are telling our clients that their asset allocation is based on their individual risk tolerance that we review quarterly and that they do not need to do anything differently. If they have cash to invest, we are dollar cost averaging it in over six months.”

This is part of an ongoing series wherein we ask Top Financial Times 400, 300, and 401 Advisors to answer pressing questions about the industry, their practice or their clients. Brokers and advisors make it to the respective Financial Times lists based on scores in six criteria: AUM, AUM growth rate, years in existence, advanced industry credentials, online accessibility and compliance records.

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Tags:  Investment strategies , Retirement planning , Portfolio management , Behavioral finance , Northwestern Mutual , Janney Montgomery Scott

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