2017 Nick Murray – Holistic Retirement Planning

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Thoughts On The Golden Age Of Holistic Retirement Planning ©

SUMMARY: Helping people to plan and invest for – and then to live out – a retirement of dignity and independence is one of the nobler pursuits and finer achievements of our profession, and we are in its golden age. The opportunities for us to perform this service – and to do well by doing good – are greater today than they have ever been, or may ever be. Moreover, it is well-nigh inconceivable that our mass affluent countrymen can achieve and sustain their retirement goals without us; all their temperamental hard-wiring militates against it. Thus our value proposition as planners and behavioral counselors is at an unprecedented zenith.

THE BASIC MATH. Ten thousand people retiring every day in the U.S. Perhaps forty million currently between their fiftieth birthdays and their retirement dates – the peak retirement planning and accumulation period. The baby boomers, currently between 53 and 71 years of age, rapidly becoming the greatest legatees the world has ever known.

In the country at large: over $90 trillion of household net worth, nearly $56 trillion of that in private financial assets, according to the Federal Reserve. Boston Consulting Group estimates that there were toward the end of 2016 more than eight million households with one million dollars or more in financial assets, excluding homes and luxury goods. They estimated that another 3.1 million such households will be created by 2020 – which is to say that America will for the next few years be minting 1,700 new financial millionaires every day.

This is the demographic and financial background against which the retirement drama is being played out. It suggests that there has never been a better time to be a holistic financial planner – serving the mass affluent in general and the millions of them now crowding toward the threshold of retirement in particular – than today and for the foreseeable future. Reflect on this.

THE CHALLENGES THEY FACE. The financial challenges to a successful retirement are essentially threefold. They are obvious, but bear repeating in the context of this talk, for one very compelling reason: with few exceptions, people are not intuitively capable of surmounting these challenges without the empathetic but tough-loving guidance of a holistic retirement planner/advisor. These challenges are:

1.  making a robust retirement accumulation plan and funding it with investments which would, at trendline long-term returns, result in a capital sum sufficient to support their necessary retirement income;
2. rigorously continuing that accumulation plan to its successful conclusion, despite financial/lifestyle distractions along the way, and despite the fads and fears of the markets;
3.  creating and maintaining an asset allocation at retirement that will support (again at trendline returns) a lifelong withdrawal program capable of offseting the inevitable increases in retirement living costs.


1. The Franklin dictum: “By failing to prepare, you are preparing to fail.” With a plan, there is some significant possibility of a successful retirement; without one there is essentially none. Yet Bank of America Merrill Lynch recently found that 81% of Americans do not even know how much money they will need to fund their retirement, much less how to invest it. Financial advisors are sometimes too lost in the mechanics of planning to appreciate the great value to clients of any coherent plan they can offer.
2. All successful retirement investors act continuously on their plan; many or most unsuccessful retirement investors fail by continually reacting to the markets. Again, advisors often undervalue their capacity to intervene in this dichotomy to the great benefit of their clients.
3. A three-decade retirement, of the sort that mass affluent couples are likely to have, is as much (or more) a problem of maintaining purchasing power as it is of “safeguarding” principal. An overemphasis on “safe” debt investments to the exclusion of equities that historically have increased both dividends and capital values at a premium to inflation may cause retirees to exhaust their capital over time. The advisor can add tremendous value simply by helping clients focus on their financial needs rather than their emotional wants.

THE CHALLENGES WE FACE. Our essential challenge, of course, is always that of human nature: the unwillingness of people to face reality as we present it to them nor persist in the solutions we craft for them. Successful planners accept that many are called and few are chosen; they succeed by persisting in their quest for the few.

But at this particular time, many advisors, instead of reveling in the demographic/financial wave now exalting their potential value, seem to be in something of a defensive crouch. They have been beset by lingering uncertainty about a government “fiduciary rule,” real and imagined threats from so-called robo advisors, fee compression and other compensation issues.

Moreover, many advisors remain haunted, in their retirement planning, by the sequence of returns issue in the aftermath of the two greatest bear markets – in relatively quick succession – since the 1929-32 event.

Our problem, as always, is one of perspective. We can recognize and advocate for the immense potential value of our work – and how overwhelmingly that value exceeds its cost. Or we can allow ourselves to be vanquished by some combination of human nature and current events. The choice is always ours.

© 2017 Nick Murray. All rights reserved.