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The final handful of years leading up to retirement require a lot of decision-making for soon-to-be retirees, beginning with whether to enlist an investment advisor to help guide the way, and if so, who that advisor should be. Many people may make it to retirement without an advisor if the bulk of their investments were made through employer-sponsored savings vehicles like a 401(k), and they never really felt they needed an advisor. For those who did enlist a financial advisor, the focus was likely on helping their client accumulate wealth.Individuals who built a relationship with an investment advisor during their working years must now decide if they’re still a good fit for planning the next phase of their financial life- the distribution phase. Leaving a long-time advisor can be an emotional decision, even though as an investment advisor, he or she may not be the best choice to handle the responsibility at this crossroad.
According to Employee Benefit Research Institute’s 2016 Retirement Confidence Survey, millions of Baby Boomers approach retirement apprehensive about the fact that their financial position is about to change substantially. Their pecuniary focus turns from accumulating to distributing assets in order to optimize income, and the retiree must also prepare to begin dealing with other issues, including:
• Inflation
• Taxes
• Determining what assets to sell to augment their nest egg and establish an income stream that can last potentially 30 years or more
• Market volatility at a time in life when there is no time to recover from market losses, as they could in their 30s and even in their 40s.
Over the years, investors discuss many tough issues with their financial advisors—risk tolerance, for instance, and when to cut losses. But sometimes the hardest and most important issue to broach is the decision to move on to a different advisor when circumstances change.
Cutting ties with a financial advisor can be filled with emotion and doubt. But what the pre-retiree needs to remember is, they aren’t the first client to leave an advisor when their situation changes, and they won’t be the last. Creating a purposeful retirement plan should be the priority, and finding an advisor who focuses on retirement income may make the most sense.
It could help to talk to a financial advisor or two before making a decision. He or she can provide knowledgeable insight on how best to establish a lifetime income stream, strategies for potentially optimizing Social Security benefits, options for increasing tax-efficiency, a roadmap for wealth management and legacy planning, and provide additional information another investment advisor may not be equipped to offer. Many financial advisors provide no-obligation consultations and financial assessments, and many are fiduciaries that operate under a legal and ethical standard that obligates them to work in their clients’ best interest.
Erik Krom, President of Denver-based Clear Creek Advisors, focuses on helping pre-retirees preserve, protect, and grow complete wealth management strategies that integrate with legacy planning their clients have worked a lifetime to build.
“We focus on comprehensive wealth planning strategies as part of a well-constructed, long-term retirement plan,” Krom says. “We talk to each client about their willingness and ability to take on market risk, their income needs, their tax situation, and their legacy objectives in retirement.
“Some people are very comfortable with risk” Krom says. “But there are also a lot of people who aren’t comfortable with a lot of risk or could be made financially vulnerable if they take on too much risk, so they can avoid taking on a lot of risk. It can be very different from one client situation to the next.
“Historically, the market has rewarded long-term investors with returns that outpace inflation nicely, but in certain markets volatility is not conducive to creating retirement income. We think it is critical to understand how to effectively grow assets long term, but also how to combine income sources like dividends, interest, annuities, and portfolio liquidations to create a meaningful strategy for distributions.”
Understanding each client’s comfort level is important to Krom, so he works hard to make sure they recognize their client’s objectives, discuss their hurdle rate—the minimum amount a retiree needs to earn to accomplish their stated retirement goals—establish how much risk the client really is willing to take on, and identify any gaps that exist.
“If people say they are very conservative but they need 8 percent to achieve the retirement they envision, we’ve got to make them aware of their prospects,” Krom says. “We are fiduciaries, so we try to be very balanced in our approach.”
“We don’t want it to ever be about an expectation of a mutual fund that’s better than everybody else’s, or an annuity that nobody else has,” he says. “We like to make sure our clients understand that everything has a pro and a con, a good and a bad, and the real goal is the sum of the parts—so we talk about: investments, annuities, and other insurance products, all as part of a comprehensive plan. In our minds, the retirement transition process is one that forces each retiree to examine how well they’re prepared.”
Krom aims to help clients coordinate everything into a purposeful retirement plan, and not leave them with a junk drawer of products that they picked.
“I believe there’s a difference between ‘just money management’ or ‘just insurance sales,’ compared to comprehensive retirement planning,” he says. “We clarify the differences, and work to make sure our clients enter retirement feeling confident in their financial future.”
Clear Creek Advisors is a Wealth Management Planning firm. Investment Advisory Services offered through Clear Creek Advisors, LLC a State of Colorado registered Investment Advisor. Erik Krom is a licensed Insurance Agent, Colorado State Insurance License #318463. Investments involve risk. Any comments regarding guaranteed income streams refer only to fixed insurance products and are subject to the claims-paying ability of the insurer. They do not refer in any way to securities or investment advisory products.
This article has been written by a third party and is being provided for informational purposes only and does not constitute investment advice. Clear Creek Advisors does not provide any guarantee, express or implied, that the information presented is accurate or timely, and does not contain inadvertent technical or factual inaccuracies.
Contact Info:
Name: Erik Krom
Email: Send Email
Organization: Clear Creek Advisors
Phone: 720.642.8348
Website: http://www.ccaretirement.com
Source URL: http://councilofeliteadvisors.com/liftmedia
Release ID: 238187
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