The document provides information on three key topics: 1. The three pillars of retirement - how much one saves, withdraws, and how well their portfolio performs. Saving adequately and avoiding excessive withdrawals are emphasized. 2. Harry Markowitz and his pioneering work developing Modern Portfolio Theory in the 1950s, which revolutionized investing through diversification and analyzing risk and return. 3. How artificial intelligence and new technologies can boost productivity and economic growth over the long run, though their impacts are often overestimated in the short term. Maintaining a level-headed perspective on new technologies is advised for investors.

1. THE 3 PILLARS OF
RETIREMENT
HOW AI AND TECH
IMPACT
PORTFOLIOS
SAVE THE DATE:
CONCERT EVENT 10/18/2023
IN THIS ISSUE
Quarterly Newsletter
Our insights on the markets, economy, and
financial planning
Q2 2023 NEWSLETTER VOL. 70
Much has been written about planning for and living successfully
in retirement. As I look back on my four-decade long career in
advising clients, I have found that here are three undeniable factors to
having a financially successful retirement. But first, some statistics
according to the U.S. Federal Reserve:
• The average retirement age in the United States is 62 for retirees
and expected retirement age for current workers is 64.
• The retirement age is lowest in Alaska and West Virginia, where
people retire at 61, on average.
• The retirement age is highest in South Dakota, Massachusetts
and Hawaii, where people retire at 66, on average.
• The United Arab Emirates has the lowest retirement average age
in the world at 49. Norway has the highest average retirement
age at 67.
The 3 Pillars of
Retirement
by Mike Booker, CFP®, ChFC®, CFS®
4400 Post Oak Pkwy, Suite 200, Houston, TX 77027 | 713-623-6600 | info@finsyn.com | finsyn.com
...continued on next page
HARRY MARKOWITZ

2. Q2 2023 VOL. 70
Financial Synergies Quarterly Newsletter | Q2 2023 2
• The Federal Reserve’s Survey of consumer finances tracks retirement Savings data for different age
groups. Retirement savings in the U. S. by age breaks down like this:
o $426,000 for those aged 65 to 74
o $357,000 for those aged 75 and older
o Median total household retirement savings across all workers is approximately $93,000 (Source:
Transamerica Center for Retirement Studies)
• In 2020, the average monthly Social Security benefit for retired workers was $1,544.
• Most disturbing, in a study of 6 different economies around the world, retirees can expect to outlive
their retirement savings by a decade.
The pillars:
1. How much you save prior to retirement:
This may seem obvious, but to many pre-retirees, it is not as big a priority as you might think. In 2021,
just 56% of workers were enrolled in a workplace retirement plan (Source: Annuity.org). Gen Z is
participating in company sponsored 401 (k) plans at a higher rate than Millennials, however, 16% vs
11.4%. This trend may bode well for the future.
2. How much you withdraw from your retirement savings for income:
Also an obvious factor and one that I see abused most often is the drawdown percentage. Over the
years, we have worked with numerous clients that have saved adequately, but spend more during
retirement than they planned for. Couple this excess spending in years with down markets and a
successful retirement can be put in jeopardy.
3. How well your portfolio performs:
According to Mark Hulbert, financial analyst and journalist, “The single biggest determinant, having
more importance than all other factors combined, is the performance of the stock and bond markets.
We nevertheless tend to ignore the powerful role they play because we are helpless to alter their future
course. So, we gravitate instead to sideshows in which we have more control, even if they make little
long-term difference.” When Mr. Hulbert speaks of sideshows, he is referring to market timing and other
market prognostications. Avoid the sideshows.
Whether you are saving for retirement or are a current retiree, it’s always a good time to re-evaluate these 3
pillars to monitor how your retirement plan stacks up against them. Need some help in your 3-pillar
evaluation? Contact us…it’s what we do!

3. Q2 2023 VOL. 70
Financial Synergies Quarterly Newsletter | Q2 2023 3
The Architect of Modern Investing
by Adam Lawrence, CPA
Harry Markowitz, the pioneer and father of Modern Portfolio Theory, passed away on June 22 at the age of
95. He revolutionized the world of finance by challenging the prevailing status quo of investing with his
groundbreaking dissertation, “Portfolio Selection,” in 1952. His ideas were controversial at the time but are
now widely accepted as the cornerstones of portfolio management.
Before Markowitz, the zeitgeist of the day held that the best securities were the ones with the highest
anticipated returns, pure and simple. However, Markowitz observed that investors do not typically behave
this way, nor should they.
Modern Portfolio Theory
Markowitz broke from conventional thinking and posited that investing in any security is a delicate trade-off
between risk and return, and that one must consider both when creating an optimal portfolio. The key
aspect to consider is not just how a security moves by itself, rather, how it moves in relation to the other
assets in a portfolio, and the combined impact on the whole portfolio.
The central tenet of his work challenged the notion that risk-averse investors could only invest in assets that
had low rates of return and low risk, on an individual basis. Instead, he proved that if adding a particular
security to a portfolio does not substantially raise its overall volatility, the investor’s risk tolerance would still
be maintained.
He used statistics to show that a portfolio can be optimized by adding securities that are negatively
correlated, or that move in opposite directions at the same time. This paved the way for the development of
diversification, which revolutionized investing for individuals and institutions alike. By investing in securities
across asset classes, regions, and industries, investors could lower their overall risk exposure without
necessarily sacrificing returns.
Markowitz brought to life the rigorous mathematics that awarded him the 1990 Nobel Prize in Economics
and left a legacy that will influence investors for generations to come. He unknowingly laid the foundation
for the development of index funds that now hold over $11 trillion worldwide. Markowitz showed that
minimizing investment costs and overall risk simultaneously is the most effective way to optimize risk-
adjusted returns.
Harry Markowitz’s work has influenced the ability for countless clients to achieve their life goals by putting
money to work and staying invested over the years.
Whether you are looking to retire the way you always wanted, help your children get into their dream schools,
or pass on assets to your loved ones, Markowitz’s tools of Modern Portfolio Theory enable the team at
Financial Synergies to change lives, and his legacy lives on as we work each day to hopefully make a
difference in yours.

4. Q2 2023 VOL. 70
The world has been abuzz over artificial intelligence and the possible benefits and threats. These range from the
practical such as better tools for knowledge workers and ways for students to avoid writing papers, to the
philosophical including what it means to be sentient and the impact on human civilization.
In between, there are more mundane questions around the economy and markets, especially for technology-related
sectors. Given the promises and hyperbole around AI, what can long-term investors do to maintain perspective and
stay properly invested?
The two decades since the internet bubble have witnessed numerous hype cycles over new technologies. In just the
past few years, these have included the metaverse, virtual reality, blockchain technology, self-driving cars, space
exploration, and many more. Each of these has been accompanied by narratives on how they will transform society.
The computer scientist Roy Amara famously said that people tend to overestimate the impact of technology in the
short run and underestimate the effect in the long run. Although many new technologies do eventually play an
important role in business and everyday life, investors can often get ahead of themselves in the meantime.
Tech stocks have benefited from falling interest rates and enthusiasm for AI
Financial Synergies Quarterly Newsletter | Q2 2023 4
...continued on next page
How Artificial Intelligence and
Tech Impact Portfolios
by Mike Minter, CFP®, CFS®

5. Q2 2023 VOL. 70
Financial Synergies Quarterly Newsletter | Q2 2023 5
When it comes to AI, this is partly because the term naturally ignites the imagination. However, even if the promises are
vast, today’s generative AI and large language models are the culmination of statistical and computer science
techniques that can be accurately described with the more sober-sounding term “applied statistics,” without
understating their importance. Just as with any other new development, investors should strive to maintain levelheaded
views on how new technologies can benefit companies and individuals.
For example, while products such as OpenAI’s ChatGPT, Google’s Bard, and others have only recently burst onto the
scene, the methods underlying these tools have been decades in the making. The latest cutting-edge AI models, known
as transformers, were described by Google researchers in 2017. Previous state-of-the-art techniques, which have names
such as RNNs and LSTMs, were invented in the 1980s and 1990s. The exponential growth in computing power,
especially the wide availability of graphics processing units (GPUs), and perhaps more importantly an abundance of
natural language data (i.e., the internet), is what have allowed the field to leap from academic research to practical
application.
From an economic perspective, the promise of any new technology is a boost to productivity. Whether it’s new
machines, software, or just a better way of doing things, technology is what allows us to accomplish more with less.
After all, the simplest way to think about the economy is that growth occurs when there are more workers (labor), more
machines (capital), or improved technology (e.g., better trained workers and/or better machines). Productivity, or the
ability for the same number of workers to produce more, is what improves quality of life generation after generation.
Productivity is the key to sustainable economic growth
...continued on next page
New technologies often lead to societal questions around “creative destruction,” a term coined by the economist Joseph
Schumpeter. This is especially true when they disrupt established methods, ideas, and businesses, creating a source of
resistance as jobs are lost and existing skills become outdated. At the same time, technological progress has created
countless new industries, benefiting workers with the proper skills and training, as well as the consumers of these new
products and services. Whether this progress is positive or negative is a classic debate that is revived each time a
seemingly transformational technology disrupts the status quo.
Regardless of one’s views on AI and technology, it’s undeniable that productivity growth has slowed in recent decades.
The average year-over-year productivity growth rate since 1948 is 2.1%, but only 1.5% over the last few years.

6. Q2 2023 VOL. 70
Financial Synergies Quarterly Newsletter | Q2 2023
Prior to the pandemic, one of the biggest macroeconomic concerns cited by many economists was known as “secular
stagnation,” or the idea that the economy would grow at a tepid pace due to poor demographic trends, aging
infrastructure, and slowing productivity. This isn’t just a concern in the U.S. – many parts of the world, including Japan
and throughout Europe, have aging populations and poor productivity.
While the differences in growth rates may seem small, they have big implications when compounded over years and
decades. If the economy grows at a steady 3% annual rate, it can double in size every 23 years. In contrast, a growth
rate of 2% requires 35 years while 1% growth takes nearly 70 years. Clearly, small differences in growth can have huge
differences on economic outcomes. So, regardless of whether the hype around AI pans out, technologies that can boost
long run productivity are important for maintaining the quality-of-life improvements that we have grown to expect over
the past century.
Market returns have been concentrated in tech-related sectors this year
6
From a market perspective, enthusiasm for AI has boosted tech-related sectors and benefited diversified investors.
While the S&P 500 has gained 12% this year, the information technology and communication services sectors have
climbed 35% and 33%, respectively. Macroeconomic factors such as a possible Fed pause, improving inflation, and
steady economic growth have boosted these sectors as well. These returns have more than offset the poor
performances of sectors such as energy and financials, and have overshadowed problems in the banking and
commercial real estate industries.
One concern with this dynamic is that a small number of stocks have generated most of the returns this year. This is
often referred to as narrow market leadership or limited market breadth. Indeed, the largest 50 stocks in the S&P 500
have generated an outsized proportion of the returns this year, far outpacing a broader equal-weighted index.
Unfortunately, this has been the trend over the past decade as mega caps have played an ever-growing role in market
performance. This is due to economies of scale related to large technology companies which have pushed many
market caps to the trillion-dollar level and beyond.
While there is a debate around whether this is good or bad for markets, the reality is that this is not something we can
control. What we can control is whether we are diversified across all of these sectors. Those that have appropriate
portfolio exposures have benefited from these trends, just as they benefited from strong energy returns last year, while
also staying prudent as valuations rise to higher and higher levels. These dynamics are further evidence that it is
difficult to predict what will outperform in any given year, and thus it remains important to be properly diversified.