Sound Income Group's David Scranton talks 'eternal income' and retirement planning

Ask any financial advisor, and they will tell you: A client with "eternal income" will be eternally grateful.

That’s the foundation for Sound Income Group founder David Scranton’s recent bestseller titled "Retirement Income Source: The Ultimate Guide to Eternal Income." In the book, Scranton highlights several of the lessons and strategies he encountered as a financial coach and advisor in his 35 plus year career, from common retirement misconceptions to the importance of generating real income in retirement.

Scranton said he chose income as the basis of the book because it has steadfastly remained his focus for almost his entire career. As an advisor in the late 1990s, he shifted from growth-oriented strategies to an income-generating philosophy, because he foresaw a potential market crash and wanted to keep his clients safe.

Since then, he’s dedicated his time to teaching fellow advisors about the benefits of the income model — how it protects clients from volatility, promotes their long-term growth and, ultimately supports a stress-free retirement. The total assets under management of Sound Income Group’s affiliated RIA are over $3 billion.

And while Scranton endeavors to bring income-generating strategies for clients near retirement back into vogue, he said they have not always been overlooked by financial advisors. For most clients approaching retirement, bonds and income-generating instruments were once advisor staples. That changed during the stock market boom of the 1980s and 1990s, which led to a generation of investors and advisors that heavily relied on growth-oriented strategies.

“Many advisors who thrived during that time have since become stuck in their ways, despite diminishing effectiveness,” Scranton said. “Changing a business model takes commitment, but more advisors are starting to shift to income-generating strategies, recognizing it’s what today’s over-50 investors need for a fulfilling retirement.”

The key to creating a safe income-producing portfolio for those in or close to retirement is customization,he said.

“Everyone has unique goals, needs, assets, and risk tolerance,” he said. “We assess these factors using a proprietary process to evaluate risk, then create a strategy to reduce it by avoiding reliance on withdrawal plans.”

His focus is generating income from interest and dividends, which preserves principal while pursuing safe growth through reinvestment. It’s income-first, not income-only, with active management allowing him to adjust for market opportunities or changes.

As for annuities, Scranton said they often get “a bad rap” because most advisors focus on growth stocks and mutual funds, not individual bonds or annuities, and they don’t promote what they don’t sell.

“Annuities are among the most varied and complex investment options, and that variety allows them to meet a wide range of needs. For income specialists, this is ideal for customization,” he said.

When it comes to creating a sustainable fixed income portfolio, it starts with selecting the right mix of bonds based on each client’s needs, goals, and risk tolerance, he said.

“Our top-tier portfolio managers maximize returns by adapting to changing interest rates and market conditions, ensuring clients receive the best possible interest-and-dividend income,” he said.

Finally, and perhaps most importantly, the income-generating portfolio must never overlook inflation, which is enemy number one for retirees, he said.

“The goal is to reduce your risk of running out of money, of which inflation is a major factor. We tackle it directly, leveraging strategies such as dividend-paying stocks and focused reinvestment to help hedge inflation safely, supporting future growth and income to outpace rising costs,” he said.