Five Questions for the Retirement Advisor

What challenges do you face when modeling clients' retirement incomes and cash flows, and how do you resolve them?

The biggest one is clients that have unrealistic expectations on what they can withdraw from their savings/investments to live on. Like believing that since stocks have returned an average of 10 percent a year over long periods, they should be able to withdraw that from their portfolio.

I tell clients: "Studies show you can take 4 percent out per year and probably never run out of money Plus, have a rising stream of income to keep pace with inflation."

For some that may mean tightening their belts a little or waiting to retire to have enough to last over their lifetime. If they cannot accept that, their expectations are unrealistic and maybe we cannot help them.

What mix of products and solutions do you use most often and why?

We design balanced portfolios, period – 40 percent bonds/cash, 60 percent equities, including alternatives. We add a little more equities, if they're younger, a little less if older. That allocation tempers the downturns, and gives adequate upside. It's an all-weather approach, because we never know what the forecast is going to be.