It’s important for advisors to understand how much retirement actually costs, says David Blanchett, CFP, head of Retirement Research at Morningstar Investment Management.
At CFA’s 2015 Annual Wealth Conference, Blanchett explains that the longevity risk is actually a bigger risk for advisors, not clients, since advisors are held accountable when planning. He discusses how he estimates retirement expenses for clients.
For more, check out associate managing editor Suzanne Sharma’s live tweets below.
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Live tweets from CFA’s 2015 Annual Wealth Conference
What’s the true cost of retirement? The 4% rule no longer applies. 3% is the new 4% @advisorca @CFAToronto
Average realized change in expenditures for retirees isn’t 0%; it’s negative, says David Blanchett @advisorca @CFAToronto
The average retiree spends less later in retirement @advisorca @CFAToronto
Longevity is a bigger risk for advisors than for clients. You have to figure out how to plan clients’ expenditures: Blanchett @advisorca @CFAToronto
The richest 10% will live about five years longer, on average @advisorca @CFAToronto
61% of retirees are more scared of outliving their money, than of dying @advisorca @CFAToronto
Annuities are a risk management vehicle, not an investment vehicle like many think, says Blanchett @advisorca @CFAToronto
Financial capital is only one part of a portfolio. There’s also human capital and housing wealth @advisorca @CFAToronto
Clients aren’t average, so you can’t use standard numbers to create their plans @advisorca @CFAToronto
The key is to plan for each client based on wealth accumulation and personal circumstances. “No portfolio is an island,” says Blanchett @advisorca