SA For FAs

Paula Hogan of Hogan Financial eschews standard industry practices focused on portfolio averages in favor of asset-liability matching aimed at ensuring client financial safety in retirement. In this podcast interview (17:28) leading advisor Paul Hogan offers insight into the workings of her own RIA practice, its demographics and the unique processes she has put into place to keep her older clients safe, as well as the challenges common to her younger clients.Learn more about your ad choices. Visit megaphone.fm/adchoices

Germany’s finance minister has announced that Berlin could make 50 billion euros available for stimulus spending, following an announcement by the Bundesbank concerning recession risks. This podcast (6:06) argues that such an un-German move speaks profoundly to the near universal inhalation of the debt narcotic. When the next crisis occurs, debt will likely be deeply implicated. Advisors should therefore consider an allocation to gold, which is apt to strengthen in a financial crisis, as the only time-tested safeguard against high and rising inflation.Learn more about your ad choices. Visit megaphone.fm/adchoices

BlackRock posted an interview with behavioralist Dan Ariely whose team is seeking to better represent the value of money so people can think more rationally about their financial decisions. This podcast (5:23) argues that, unless we return to a barter economy, no one will ever consume a latte and think: I just consumed 1% of a day of retirement. But perhaps we can tap into a source of motivation that really does work for most people.Learn more about your ad choices. Visit megaphone.fm/adchoices

Falling knife or V-shaped recovery? What’s next? These are the sort of questions analysts are preoccupying themselves with, but they’re the wrong questions because their answers are inaccessible to us. This podcast (4:48) suggests that there is something advisors should be doing now, which is not based on dangerous speculation but rather on principles of portfolio management: Namely, it is time to rebalance. Learn more about your ad choices. Visit megaphone.fm/adchoices

Retirement researcher Steve Vernon wrote a three-part series in Forbes arguing that, with the exception of three small categories, it is a mistake to claim Social Security benefits early. This podcast (7:01) proposes that, conceivably, a fourth large category of pre-retirees in their 50s or early 60s, who have saved a decent amount, could be better off financially if early claiming removes them from hyper-stressful circumstances at a time of life where people often develop expensive health problems.Learn more about your ad choices. Visit megaphone.fm/adchoices

The current flight from stocks to bonds represents a misunderstanding of risk, and is a poor way to invest, shredding investors’ pre-determined risk budgets. This podcast (5:14) conceptualizes risk as something that is always present. The matter could be compared to an earthquake, which is scary when it occurs, but which was no less a threat every second you dwelled atop the San Andreas Fault before the actual tremors.Learn more about your ad choices. Visit megaphone.fm/adchoices

Morgan Housel, in his latest blogpost for Collaborative Fund, posits that a young person lacks the funds with which to invest precisely when he can most benefit from compounding. This podcast (5:58) suggests four advisor implications of this current social reality: first, that all is not lost for investors who lack the cash flow at a young age; second, that contemporary economics requires vigilance regarding negative compounding; third, that people need to take maximum advantage of positive economic conditions and prepare for a poor economy ahead of time; and fourth, that accessing the miracle of compounding is facilitated by establishing a reasonable standard of living.Learn more about your ad choices. Visit megaphone.fm/adchoices

For retirees who want to bequeath their portfolios, principal intact, a 4 percent withdrawal rate may be too high today, given today’s risk-free rate, adding one extra challenge on top of all the other difficulties of retirement withdrawals. This podcast (5:12) suggests that, with so many unknown variables, including date of death and future returns, an advisor’s best bet may be to structure the portfolio to allow for growth, safety and the ability to use the money without fear of depletion.Learn more about your ad choices. Visit megaphone.fm/adchoices

I recently learned of an investor who experienced a catastrophic portfolio wipe-out in the past several months. This podcast (6:03) relates some four lessons that advisors can learn, or re-learn, internalize and use to help clients regarding the distinction between gambling and investing; between diversified vs. concentrated risk; the difficulty of analyzing investments; and the hazards of data. We conclude that advisors can act as a restraint on investors who, left alone, can and do end up harming themselves.Learn more about your ad choices. Visit megaphone.fm/adchoices

A scholarly paper suggests that reframing a daunting task into smaller bite-size pieces is a great way to begin a large undertaking, though not the optimal way to complete it. This podcast (6:49) offers four ways advisors can engage investors on the daunting task of retirement investing, something surveys show Americans do very little of. The basic conclusion is that instead of resigning oneself to inactivity, we can force our lives to head in a positive direction.Learn more about your ad choices. Visit megaphone.fm/adchoices

Investment consultancy Dalbar suggests that it is a mistake for advisors to assume that investors have a static risk tolerance. To the contrary, it changes constantly – on the basis of both market conditions and the client’s constantly shifting personal status. In this podcast interview (14:07), Dalbar’s Louis Harvey suggests that advisors need to constantly assess and re-assess their risk tolerance, and engage in behavioral coaching accompanying a tolerable asset allocation.Learn more about your ad choices. Visit megaphone.fm/adchoices

Britain’s Prince Harry has announced that he and his wife Meghan plan to limit to two the number of children they bring into the world, citing environmental considerations. That of course is their personal decision, but interestingly, for commoners, having multiple children has historically been what is referred to today by financial advisors as a retirement plan. This podcast (5:26) relates that a Prince Harry-style social experiment has upended Chinese society on a massive scale, where children remain an important part of retirement security.Learn more about your ad choices. Visit megaphone.fm/adchoices

An investigation by ProPublic Illinois has found that that dozens of students are qualifying for federal, state and university needs-based aid, despite not being needy, through a sneaky maneuver. This podcast (5:46) suggests that this abuse is reminiscent of folks who transfer assets to heirs in order to qualify for Medicaid. In a way, last week’s Fed rate cut has the feel of making an expensive item, stocks, more affordable to the already rich. From these musings come two takeaways for advisors.Learn more about your ad choices. Visit megaphone.fm/adchoices

In a Morningstar podcast interview, Jonathan Clements of the HumbleDollar website, and formerly of the Wall Street Journal, expressed a dystopic view of what has become of American retirement. He maintains that 60 percent of Americans are not financially in good shape for retirement; and even among the 40 percent who are, some, like his late father, don’t have good retirement experiences. This podcast (6:30) argues this situation cries out for amelioration by America’s financial advisors, through actions to increase solvency of the 60 percent and via pilot retirements for the 40 percent in good financial shape.Learn more about your ad choices. Visit megaphone.fm/adchoices

BlackRock’s Martin Small notes what is not noted enough, that time in the market and asset allocation matter most in investing.This podcast (6:33) relates some examples of adulated investors who turned out to be in the main great marketers, and draws attention to a hard-to-market investment with which many investors have actually succeeded. The moral of the story is for advisors to focus firmly on keeping their clients invested for long-term success. Learn more about your ad choices. Visit megaphone.fm/adchoices

The Alliance for lifetime Income has released a new survey reflecting Americans’ retirement anxieties. This podcast (6:10) argues that financial advisors should reach out to pre-retirees with an offer to help determine how much they can spend in retirement without outliving their financial resources. They must also understand, and underscore, that life expectancy is as volatile as stock market returns (something I illustrate with a personal example).Learn more about your ad choices. Visit megaphone.fm/adchoices

Victor Haghani, founder of Elm Partners and previously a co-founder of the Long-Term Capital Management hedge fund, advocates “active index investing.” In this podcast interview (14:20), Haghani argues that marrying the low cost and efficiency of a passive indexes to a rules-based asset-allocation discipline can provide investors with the growth they need at a fraction of the cost of active investing.Learn more about your ad choices. Visit megaphone.fm/adchoices

Now that gold appears to be enjoying a sustained rally, we’re starting to hear voices go one step further and advocate gold miners. This podcast (6:15) argues that gold has value as a cash equivalent, something today’s market seems to be proving as gold rises and the dollar weakens. The yellow metal can therefore stabilize a portfolio, which is the very opposite of owning gold miners, one of the most volatile sectors that exists.Learn more about your ad choices. Visit megaphone.fm/adchoices

The House of Representatives last week approved a plan that would shore up multiemployer pensions serving 1.3 million blue-collar Americans, and permitting investing borrowed taxpayer money in the stock market. According to the Heritage Foundation, 96% of those enrolled in multiemployer plans are in pensions that are less than 60% funded, implying a tidal wave of insolvencies could be looming.This podcast (7:56) argues that advisors would do well to do the opposite of the current irresponsible spirit of the times. In contrast to legislation that would license investing in stocks to bail out an underfunded pension, advisors should build sound pensions that would undergird clients’ riskier ventures in stocks, secure in the knowledge that their basic needs are being met.Learn more about your ad choices. Visit megaphone.fm/adchoices

A celebrated behavioral economist tells ThinkAdvisor’s Jane Wollman Rusoff that “to be willing to sacrifice something about the quality of life now for later, you need to really trust the [advisor].” This podcast (5:42) argues that, with the exception of the military, people don’t make difficult personal sacrifices based on their trust of another person. To achieve something close to that level of influence would require an advisor to personally demonstrate his commitment to the ideals he espouses.Learn more about your ad choices. Visit megaphone.fm/adchoices