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Retirement Specialist or Financial Advisor?

Retirement planning is still a relatively new discipline within the wealth management industry.   Especially when it comes to asset decumulation, or the funding of your retirement from your savings and other assets.  Most financial advisors are generalists and are ill-equipped to lead retirees to optimal retirement outcomes.

Family Doctor or Cardiac Specialist

Family doctors are great.  You see them once a year for a general checkup covering a wide range of general health topics.   They have all the basic equipment necessary to perform your checkup and run your tests.  If your family doctor hears something odd in your heartbeat, they would then refer you to a cardiac specialist who possesses specialized training, experience, and equipment to diagnose the problem further and even perform heart surgery if needed.

Unfortunately, financial advisors don’t cooperate in such a fashion.  In fact, most financial advisors will try to convince you that they can handle whatever you need and that their service/solution is best.  Most financial advisors are generalists, trying to help clients with everything, including debt management, college savings, tax planning, estate planning, investment planning, and yes, even retirement planning.    

Generalist financial advisors with basic training and experience using generalist systems are not the best-suited individuals to advise clients through the far more complex challenges retirement presents.  The opportunity costs (or implicit costs) of working with the wrong advisor during this stage of life can be substantial.  

Retirement Specialists Have Needed Tools and Experience

Retirement specialists are financial advisors who have dedicated themselves to focusing only on retirement planning and the challenges of asset decumulation.  This dedication and focus enable a retirement specialist to develop a deep understanding of the challenges and risks a retiree faces and how best to guide them through their retirement.  Retirement planners can ditch the popular generalist planning software used by most (eMoney and Money Guide Pro) and can instead string together multiple coordinated specialized systems to extract the greatest amount of value for retirees along the following three dimensions:  

  • Tax-Efficient Withdrawal Coordination:  Strategically planning and coordinating your withdrawal strategy to minimize your lifetime taxes. A particular system can reverse engineer your mathematically optimal solution to come up with the top 101 scenarios.  These scenarios consider all the different possibilities, including the use of Roth IRA conversion strategies and more.  A retirement specialist can then sort through the mathematically optimal solutions to find the one that is right for you.  
  • Dynamic Withdrawal Rules:  Generalist financial planning software cannot model the impact of adding spending flexibility into a retirement plan.   Yet this tactic can add more value to your plan than all the tax efficiency work combined.  Applying a rules-based approach to portfolio withdrawals, a retirement specialist can actually increase your sustainable withdrawal rate while also lowering your risk at the same time.
  • Optimized Asset Usage:  Your investment portfolio is an asset, but it’s not your only asset, and some assets are better suited than others at tackling particular objectives within your retirement plan.  Asset types can be exchanged for one another to maximize your situation.  A specialist can help you determine the right mix and usage for your situation, given their knowledge of retirement risks and how best to manage them.  

Retirement Specialists Should Employ A Flat Fee Model

Retirement specialists should charge a conflict-of-interest-free flat fee for service instead of charging commissions or charging a percentage of your portfolio.   An advisor who earns commissions will only consider those products he sells as solutions and will obviously be very biased.  An advisor that charges based on the size of your portfolio will want to make the portfolio larger, which is in direct opposition to a retiree’s needs during decumulation and gives rise to a potential conflict of interest.  A proper retirement specialist will charge only a flat fee for service to ensure they remain completely unbiased.  A retirement specialist should not be biased based on a size of a portfolio, or a specific product/tool.  All a retirement specialist should care about is making the most of your retirement situation for you.  A retirement specialist will look beyond your investment portfolio and consider all your assets.  If insurance, an annuity, or a reverse mortgage is recommended, you can rest assured that it’s because it is the right tool for the job and not because a commission is being earned.  A retirement specialist will also be aggressive as possible withdrawing down your assets while respecting your risk profile and managing your risks, so you can maximize your quality of life while living.  You don’t have to worry about overly conservative withdrawal rates being recommended to keep a portfolio larger than needed to collect a higher fee.  

A flat fee model is critical when it comes to receiving unbiased advice from a retirement specialist.  You can learn more here: Why a Flat-Fee Advisor is Best for Retirees.

If you would like to talk to a flat-fee retirement specialist, we would welcome the opportunity to speak with you.  Simply reach out by clicking on the Contact button below.

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ABOUT THRIVE RETIREMENT SPECIALISTS

Thrive Retirement Specialists is a retirement planning specialist dedicated to delivering a more thoughtful and strategic approach to retirement planning for those nearing or in retirement. We are a fee-only Registered Investment Advisor (RIA) offering a single, flat-fee service entitled ThriveRetireTM that goes far beyond what has traditionally been known as retirement planning.  ThriveRetire™ is an engaging ongoing 8-step retirement planning process and investment management service that seeks to identify all risks, assets, tools, and tactics to develop an optimal retirement plan designed to support your ideal retirement lifestyle and goals to the fullest extent possible.  With every interaction, we seek to inform and serve, so our clients can safely trust their ThriveRetire™ plan and process, leaving each client with the confidence and peace of mind to live a vibrant and full life through retirement.

ABOUT ANTHONY WATSON, CFA, CFP®

Prior to founding Thrive Retirement Specialists, Tony spent eight years serving as the Chief Investment Officer of a firm where he provided advice and investment management services to over 600 individuals representing at the time over $1.5 billion of investments. Before this, Tony served as Vice President at J.P. Morgan Private Bank, where he advised high- and ultra-high net worth individuals on all matters of wealth, including investments, portfolio construction, portfolio management, and retirement planning.

Tony lives in Dearborn, Michigan, with his wife Dawn and daughters Emma and Anna.

EDUCATION:              

  • BBA in Finance, Walsh College
  • MBA, University of Michigan, Ross School of Business

CREDENTIALS:              

  • Chartered Financial Analyst (CFA)
  • Certified Financial Planner (CFP®)

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