WARNING: mINImIZING RISk cAN lEAd TO A GOOd NIGhT’S SlEEP & PEAcE OF mINdinvestment advisors specialize in market products, growth, and beating
the S&P. You have to really be ok with the risk and possibly losses. After
all, it is your money.
As you near retirement or if you’re in retirement, we want to look at guar-
antees to have a larger part of our portfolio. Growth advisors usually do
not specialize in fixed insurance products or guaranteed income planning,
which oftentimes can have a higher payout over your lifetime versus the
4% distribution rule. These products are more often used by advisors with
an insurance background to lay a foundation to your income planning or
financial plan. This is done to guarantee an income stream no matter what,
and it guards against worst-case scenarios that the best diversified plans
can’t. With that said, be sure your advisor is not just an insurance-only
advisor, or you can run into an overly conservative plan. Some investors
choose two advisors. A stock market advisor for risk, and a conservative
or guaranteed income planning insurance advisor for safety.
Over the years, the financial planning landscape has changed, and we
have made sure we have too. We offer our clients both market products
and insurance investments to keep the focus on their plans and their goals,
not on what we have to offer. Non-market fixed products or investments
are the foundation to a holistic plan. Without it, the next time the market
tumbles, will you be asking yourself was I really diversified? Was I really
prepared in the best possible way? Why didn’t my stock market advisor
tell me about this?
- MARket RIsk vs. sAFetY:
soMe MARket ADvIsoRs sell RIsk AnD oPtIMIsM,
soMe sell sAFetY
“But I’m diversified and the market always comes back!” Sound famil-
iar? When folks come into the office and tell me this, I know instantly
they’re working with a stockbroker. That thought process made sense
in the 80’s or 90’s, but not now. It certainly doesn’t make sense if you
are in your mid-50’s or older looking to build or hold on to your retire-
ment savings. In 2003 and 2007, most diversified plans and blended
portfolios of stocks, bonds, and mutual funds lost money. When your
investment advisor tells you that you’re in a conservative portfolio in
the stock market; that means you will lose less money than someone
in an aggressive portfolio. It does not mean that you won’t lose money.
If you’re risk averse or very conservative, you don’t want to lose your