Retirement income planning is one of the primary reasons people engage in financial planning. In most cases, retirement income planning is a two-step process: a long period of gradual asset accumulation leading up to retirement, followed by a long (hopefully) period of distribution during retirement.

There are numerous strategies that can be implemented and products that can be purchased in order to accumulate retirement assets as effectively as possible. In almost all cases, however, it is impossible to know what long-term rate of return will be realized and, therefore, the amount of savings necessary to accumulate adequate resources to retire comfortably.

Projecting asset growth based on fixed return assumptions is a common approach to determining the amount that should be saved in order to reach a retirement savings goal, and how much can be withdrawn during retirement. However, since long-term rates of return are the result of a series of shorter-term (monthly, quarterly, annual, etc.) variable returns, the sequence of returns realized plays a significant role in determining how much is accumulated at retirement and the sustainability of a given level of distributions.

For example, a period of negative returns just prior to retirement can push one’s planned retirement date well into the future. Likewise, a period of weak returns during the first part of retirement can have a significant impact on the sustainability of the desired distributions. These scenarios are not captured using fixed return assumptions.

In order to account for the impact of variable and unknown returns both pre- and post-retirement, we are now using software that projects the likelihood of a financially successful retirement by modeling a range of potential outcomes. By simulating thousands of return sequences using expected returns, volatilities and asset class correlations, we are able to more accurately calculate the probability of success for various savings and distribution scenarios (chart 1 below). The software also integrates social security benefits, health care costs and inflation expectations into the calculations. This allows us to explore a wide range of possible outcomes with our clients and describes the results in terms of probability of success (chart 2 below).

The results bring a new perspective to retirement income planning and help illustrate the likely impact of changes in savings rates and asset allocation strategies.

Chart 1




Chart 2



A Question of Value

In 2016, we  surveyed a number of our clients on a variety of topics. One of the “questions” related to understanding the level of our clients’ perceived value in working with us was: “I receive good value for the fees I pay” – a question that seemed pretty straightforward as we were selecting from the alternatives our consulting firm provided.

However, upon further consideration, we have come to realize that the concept of perceived value is easy to define, but difficult to measure. In order to do so, we also need to know which benefits are being considered and how their value is being measured.

We constantly strive to provide the most value possible to our clients. Our strategy is simple: provide better, more comprehensive services to our clients at more competitive rates than other firms offer.

While the fees we charge are referred to as investment advisory fees in the majority of cases, they almost always cover all of our advisory and financial planning services. These include not only investment management, but many other areas such as long-term wealth accumulation planning, retirement income and distribution planning, insurance planning, estate planning and the coordination, integration and implementation of planning strategies – all of which we believe add significant value beyond investment management even though quantifying the potential economic impact is difficult.

From the perspective of cost, our investment advisory fees are low by industry standards. In fact, others in the industry often advise us to raise our fees. Below is a graph illustrating our fee schedule relative to other similar firms using data from the 2015 Schwab RIA Benchmarking Study for advisers with assets under management between $100 million and $250 million.


A simple definition of value is: a measure of the benefit gained from goods or services. We strive to be valuable to our clients by providing comprehensive, customized and integrated financial planning that covers a broad spectrum of topics. While it is a standard practice within our industry to use a single “investment advisory fee” as a means of charging for financial planning, we hope you agree that it understates the scope of the work we do (click diagram).