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Distributing Your Retirement Funds – An Often Overlooked Planning Factor

The “front end” of financial planning for retirement seems straightforward, the objective being to maximize returns on portfolio investments to generate assets needed to support a client’s desired retirement lifestyle.

However, an often overlooked and underrated aspect of retirement planning is the execution of strategies to most effectively distribute the funds. Distribution requires a disciplined process, because there are a multitude of factors to consider.

Planning for Retirement – Beyond the Finances

For virtually everyone, enjoying life in retirement is a major goal, often the dominant one among the various objectives in a solid financial plan.

Certainly, the role of a financial planner is to help assure that clients have the resources they will need for the type of retirement they desire.   However, I believe it goes well beyond the accumulation of funds.  A good planner should also help clients identify the various phases of their retirement vision, and then develop a plan to generate the resources to support them.

The Changing Landscape of Retirement Planning

Stereotypical retirement:  After 30-40 years of work, a rocking chair on the front porch -- the iconic picture of leisure.

Stereotypical retirement plan:  Accumulate as much money as possible – it’s all about finances.

I’m pleased to say that today’s typical retiree has little interest in the “rocking chair scenario,” and, to that end, we financial planners need to consider factors beyond straightforward accumulation of wealth.

 

 

How to Create A Socially Responsible Portfolio

At Thorley Wealth Management, the most common question asked of us by clients interested in building a socially responsible portfolio is straightforward:  “How do we do it?”

Socially Responsible Investors Have Many Options

Some may think that socially responsible investing is a “new age” practice, but that is not the case. It actually has its roots in the 1960s and 1970s, when social issues of many types were finding heightened importance in the public agenda.

Back then, a perception existed that eliminating some companies from one’s investment options based on social issues also limited the potential for financial returns.  To a degree, that perception persists today.

How to Be a Socially Responsible Investor

According to the popular website Wikipedia, “socially responsible investing (SRI), or social investment, also known as sustainable, socially conscious, “green” or ethical investing, is any investment strategy that seeks to consider both financial return and social good to bring about a social change.”

Socially responsible investors may seek to align their portfolios with companies or funds whose missions or corporate policies and practices are favorable to the environment.   On the flip side, investors may want to screen out companies or funds that they may find socially unacceptable, anything from poor environmental practices to human rights abuses.

How then does an individual go about becoming a socially responsible investor, as many Thorley Wealth Management clients have done?

Socially Responsible Investing

The professional investment community today is realizing that a large majority of our clients are interested in socially responsible investing, sometimes known as “sustainable” or “impact” investing.

In fact, a recent Morgan Stanley study revealed that more than 70 percent of investors had an interest in sustainable investing.  Yet a similar survey conducted by Cerulli Associates indicated that nearly two-thirds of investment advisors expressed no interest in it at all.

I believe this puts Thorley Wealth Management firmly – and happily -- in the minority camp, because I have long embraced socially responsible investing and I encourage clients to seriously consider it.

Just what is socially responsible or sustainable investing?

 

The Importance of Benchmarks

By definition, financial benchmarks provide a point of reference – a means of determining how an investment or account is doing versus other similar options.  The first rule in benchmark monitoring is to be sure you have an “apples to apples” comparison.  In other words, don’t compare a stock market performance against a bond market performance.

Analyzing Existing Holdings – Do They Fit the Plan?

In an ideal world, a client would begin working with an advisor with assets that are entirely in cash.   This would make it relatively easy to establish whatever investment accounts are recommended to create a portfolio designed to meet the client’s goals and objectives.

However, this is not an ideal world, and the hypothetical “all-cash scenario” is certainly unlikely.  Most often, people have done some investing and established several – or many – accounts of various types before working with a professional advisor.

Monitoring One’s Portfolio – a Key to Success

Clients generally and appropriately take time and great care when working with their advisor to select allocations to establish a portfolio.