Why would you hire a doctor who was going to kill you 50% of the time? Why would you fly an airline whose planes crash 50% of the time? Why are you hiring a financial advisor who will give you a plan that will fail 50% of the time?
These seem like silly and yet obvious questions. We probably wouldn’t hire the doctor and probably would never fly the airline. Yet investors hire financial advisors everyday who will guarantee they will run out of money or make extreme adjustments in their retirement. How do I know this? Because every day I talk to folks who want me to create plans for them that pretty much assures this outcome.
Many financial planners, when working with retirees, still believe that there is some magical trading skill which will provide great performance. Performance so great, a retiree will be assured a reliable income stream for 30+ years. On paper this is a great concept – and if things worked like this – what a wonderful world it could be.
Again, this is what should be and then what there’s reality.
I don’t know about you, but when it comes to my income in retirement, having less than 50 / 50 odds would not necessarily equate to an enjoyable lifestyle. I’m fairly certain that it would lead to a whole lot of sleepless nights!
Studies and personal experience have shown that, aside money issues, retirement and life simply have a lot of unknowns. Income is a very crucial component to your retirement success. Take away income and your retirement is pretty crappy. So what we want to make sure to do is to try to tackle as much of those unknowns before we retire. The least surprises we have, the better.
It is not about trading. It is not about timing the market. It is not about stock selection. All that this does is increase your risk and increase the likelihood that you will not reach your retirement goals. It might make you sound cool with your golf buddies, but ask any one of them if they are going to pay for your groceries when your portfolio gets beat down.
The happiest retirees are those with the most reliable guaranteed income. It’s that easy. Why do retirees and financial advisors continue to make it so difficult.