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Income-bucket strategies can help clients deal with low interest rates and protect against market downturns, said financial advisors on a panel Wednesday during the opening day of the Sixth Annual Financial Advisor Retirement Symposium in Las Vegas sponsored by Financial Advisor and Private Wealth magazines and attended by more than 600 people.

“We really haven’t changed our style” of portfolio management with low rates, said  Greg Sullivan, CEO of Sullivan Bruyette Speros & Blayney who spoke on a panel discussion about retirement strategies for retirement income.

Sullivan said his firm’s portfolios yield about 2.5% overall and generally follow the 4 percent to 5 percent withdrawal rate model for retired clients, so they will routinely sell some assets to raise funds for income. After determining cash needs, Sullivan builds a five- to eight-year bond ladder to fund cash withdrawals, using mostly bond funds with the appropriate durations.

“The process works,” he told advisors attending the panel discussion. “We’ve been using it since 1981.”

Clients generally don’t like the fixed income allocation, but with equities fully valued, “at some point they’ll be happy to have it,” Sullivan added.

Marilyn Dimitroff, principal at Planning Alternatives, follows a similar strategy. She said her firm has 25 months worth of withdrawals in a cash-distribution account, with about half in cash and the rest in high-quality short-term funds.

“We use a moving average [of the stock market] to replenish the cash fund,” Dimitroff said, adding they top off the cash bucket when the portfolio is above the moving average and sit tight when the market falls.

“We’re just making sure we’re not selling when the market is down,” she said.

Client expectations sometimes have to be reset in line with a fully valued stock market and low rates, the panelists said.

Another issue discussed on the panel was how to deal with unsustainable withdrawals by clients. Sullivan said some investors think they’re richer than they really are, while Dimitroff noted that more than a few clients are caught up with supporting their adult children.

Regarding the latter problem, she said it helps to show clients that if they run out of money they’re going to be dependent on those very same children they now support. And that generally helps snap them to attention and be more responsible.

“I tell them, ‘I’ll be the bad guy. Tell [the kids] your financial advisor told you that you can’t afford to support them anymore,’” Dimitroff said.

Sullivan said he shows spendthrift clients—no matter how much money they have—that they can actually run out of money if they’re not careful. Specifically, he runs what-if scenarios on his computer to show how their assets can be depleted.

“When you show their wealth deteriorating over 10 years, that wakes them up,” Sullivan said.