The do's and don'ts of retirement planning

Rule No. 1: Stop being an asset manager and become a plan manager

May 4, 2015 @ 6:17 pm

By Darla Mercado

If you really want to develop best practices for your retiring clients, stop being an asset manager and become a plan manager.

That was the message from one of the speakers at a panel on decumulating assets at InvestmentNews' annual Retirement Income Summit in Chicago on Monday.

Phil G. Lubinski, founding partner of First Financial Strategies, said that to come up with a sustainable plan for retirement income, advisers have to go beyond the mentality that they can merely act as asset managers or that they can put all of the client's money into an annuity with an income rider.

Sustainable retirement income planning requires a more active role on the part of the adviser, he said.

“Advisers have to get out of this asset manager mentality and into [that of] a plan manager,” he said. “Manage the plan for the client.”


In practice, that also means keeping clients aware of their longer term goals. When markets are rocky, clients become distracted and forget that their priority is to have sustainable income – not to chase returns.

“Think of the portfolio as a forest, and [the client is] panicking because [he] thinks the [whole] forest is on fire,” Mr. Lubinski said. “In reality, only a portion of the forest is on fire, and the portion giving … income isn't even warm. The part that's on fire won't be needed for another 20 years; it will replenish.”

Behind the scenes, meanwhile, advisers are contending with volatility in the investment portfolio. Any risk that can't be controlled, such as longevity risk, can be shifted to an insurance company.

The model of outsourcing risks that can't be controlled, managing what's within the adviser's control and reminding clients of their long-term goals, all work together to keep the investor on track and in the market.

“We are constantly monitoring the future of the next segment [the next bucket of assets a client is expected to tap], what it's capable of doing,” Mr. Lubinski said. “It's the constant management of what's going on in the markets, what's going on in the client's needs and adjusting the glide path.”


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