Page 14 - Investment Advisor April/May 2023

RETIREMENT/ANNUITIES PLANNING

By John Manganaro

Solving the Retirement-Income Puzzle:

Wade Pfau Speaks Out on a New Approach

Years of work have created the tools necessary to provide retirement-
income planning at scale, according to the industry veteran.

o mark his departure from full-
time academic work, Wade Pfau,
Tthe long-time professor at the
American College of Financial Services
and widely respected retirement income
guru, took a moment to reflect on this
personal and professional milestone —
and to share some expectations for what
comes next.
Recently, Pfau announced his decision
to focus on the development and deploy-
ment of the Retirement Income Style
Awareness program, which he launched
in 2021 alongside fellow retirement
income researcher Alex Murguia. The
RISA program is built on the academic a holistic way that effective solutions professionally qualified to give financial
work of Pfau and Murguia, and it oper- are created. advice. As a researcher, that was just an
ates under the hypothesis that there are While he was quick to emphasize intriguing thing, and it underscored how
multiple retirement income “styles” to be that the RISA framework represents a complex and challenging the income
found among large groups of investors. “good starting point” for income plan- planning topic could be.
Even more important than the iden- ning discussions, Pfau said he hopes the There is a lot of work left to do, but
tification of these styles is the well-sup- approach could soon become a go-to we have made progress over the past
ported hypothesis that an individual’s tool for financial planners helping their decade when it comes to defining key
awareness of their preferred style will clients enact the transition from accu- terms and concepts that are involved in
lead to a more satisfying retirement mulation to sustainable spending. income planning. People have also come
and better financial outcomes. As Pfau to understand that the inherent com-
explained, getting people to understand Can you tell us a little bit about plexity of retirement income planning
and embrace their personal retirement how much the topic of “retirement stems from multiple sources of interre-
income style helps them stay the course income” has evolved in your time as lated uncertainty. We don’t know what
and avoid making wealth mistakes based a researcher? is going to happen in the markets, and
on fear or other emotions. Yes, and the short answer is that it has we don’t know what our own futures
During the interview, Pfau said he changed tremendously. When I first will bring, and so there is just so much
was both gratified and excited to be at started looking at the topics of retirement uncertainty to deal with.
a point in his career where the topic of and financial planning more than a Thinking about this is what really
retirement income is now solvable at decade ago, there was just a huge amount inspired the RISA framework to begin
scale. As Pfau explained, the complexity of basic disagreement that existed. with. We don’t have one single answer
of retirement income planning from a You could ask simple questions about or superior approach to income plan-
research and practical perspective stems the best way to help a given individual ning. What we need is a workable,
from multiple sources of interrelated navigate their retirement, and you would flexible framework that really helps
uncertainty, and it is only by carefully get completely different answers about people think about and navigate a very Adobe Stock
identifying and tackling the problem in what to do, all from people who were complex situation.

12 INVESTMENT ADVISOR APRIL/MAY 2023 | ThinkAdvisor.com