Doctors and business owners are high targets for many advisors but often their financial picture is a scattered mess that over-promises and under-delivers. Simplify your retirement process and feel confident you have the right advisor.

1. When Should You Fire Your
Financial Advisor?

2. I was recently reading an article about when clients
should fire their financial advisor. The article highlighted
the expected responses about poor performance or poor
response time to questions or needs. Not once did the
article touch on the number one question our clients
want answered which is… “When can I retire?”
You don't want to fall into retirement with a prayer that
your money will last. You want to retire when you want
to and how you want to armed with the confidence that
your style of living can go with you. Does performance or
volatility play into this? Of course. But there are two
sides to retirement planning and they are both equally
important.

3. “Retire when you want to and how you want to”

4. Have a Retirement Plan...and Update it!
A big sales pitch in firms is to offer you a complimentary
retirement plan which will be presented to you in a fancy
leather-bound folder. An excellent snapshot of where you are
today and where you want to be. Unfortunately, the plan wears
out quicker than the leather binding it together as your financial
picture is changing daily.
If your financial advisor isn't reviewing your retirement plan and
updating it with you on an annual basis then bring down the axe
on that relationship. Plans that are five years old or more are
nothing more than a paper weight.

6. Execute the Plan!
Here is the tricky part for clients in interpreting how good
their advisor is at executing their retirement plan. It is
normal to experience some form of market volatility on a
regular basis that could hamper your retirement dreams.
Our firm prefers to use tactical strategies for clients
approaching retirement because of their past history in
providing some downside protection during severe bear
markets. You can learn more about our tactical
strategies here.

7. A bad year can force you into a position to
take on more risk than you want because
you must make up for losses.
“ “

8. How much risk are you taking?
Asset allocation strategies can work as well as you approach
retirement because your advisor can adjust the investment
holdings to reduce the volatility of the portfolio. The easiest
way to understand your expected returns is to think back to
the trusty bell curve.
Your advisor is giving you some type of performance report
that likely has a standard deviation number. Ideally I would like
to look at the one-year standard deviation because then I can
make adjustments for recent trends if necessary.

9. Take this bell curve as an
example:
The one standard deviation
is 5.89% so 68% of the time
you should expect your
performance to be +/-
5.89%.
Two standard deviations is
13.02% so 98% of the time
your performance will be
+/- 13.02%.

11. If you look at these numbers and say, "Gosh I want to
be able to make 30% in a great year for the market"
then you're going to be disappointed because your
portfolio isn't built to give you 30% returns. If you
look at these numbers and say, "Gosh I would have a
heart attack if my portfolio went down more than
10%" then your portfolio needs to be tightened up
into a smaller range.

12. So how does understanding this help your advisor
execute your plan? Your retirement plan will have certain
assumptions as to what kind of returns you need to
reach your retirement goals and sleep comfortably. If you
have amassed a huge savings and are a thrifty spender
then you likely don't need 12% annualized returns to
reach your goals. You may only need 4-5%. So if your
plan needs 4-5% annualized return then your advisor
should not have you in an allocation that is trying to get
12%. A bad year (which is more possible with a riskier
allocation) can force you into a position to take on more
risk than you want because you must make up for losses.

13. These are important conversations to have with your
advisor. I once was told by an advisor who had been in
the business for many years that clients don't
understand this language. My response was "That's our
fault, and it's a mistake we should stop making."
Changing from the mindset of saving all you can for
retirement to spending your life savings is scary enough.
Flipping that emotional switch and not having the right
team around you to explain the market or answer your
financial questions is more than anyone should have to
handle.

14. Questions?
Give us a call or email:
Matt Ahrens
Associate Financial Advisor
mahrens@integrity-advisory.com
913-897-2074
www.integrity-advisory.com