This month’s issue is filled with many excellent articles, not the least of which is Eric Rasmussen’s cover story on Beacon Pointe Advisors. Eric describes how the fast-growing Newport Beach, Calif.-based firm used its institutional consulting roots to create one of the nation’s fastest-growing RIAs and build what is rapidly becoming a national firm.

But there are two articles in particular that I’d like to call your attention to because they address issues that are likely to impact your business dramatically. The first piece on page 33, authored by Russ Hill, chairman of Halbert Hargrove, deals with how increasing longevity is going to impact RIA firms, including his own.

Hill, who is a co-founder of Stanford University’s Center For Longevity, believes that advisors will be required to offer a much broader range of services that provide clients with more choices about their finances and spending when possible. This means that advisors who want to thrive and offer a serious value proposition in an age of longevity and, yes, robo-advisors, are going to have to increase their client engagement dramatically.

Hill and contributing writer Ric Edelman, an investor in Singularity University, have agreed to participate in a general session on longevity at our Inside Retirement conference in Dallas next May. Interestingly, both these serious thinkers think advisors are going to need to offer career planning services in a future where living past 100 is no longer an anomaly.

The second piece is by Wade Pfau and Wade Dokken, who re-examine Bill Bengen’s famous 4% rule on page 39, and their analysis is sobering. Intuitively, most advisors know that clients retiring in 2015 face a dual challenge of investing for 30 years or perhaps much longer at a time when equities are expensive and bonds are selling at almost unprecedented levels.

In one eye-opening chart, Wade and Wade produce the 4% rule’s success rate for a 60% stock/40% bond portfolio in 20 different developed nations from 1900 through 2013. While Americans and Danes over that period would have enjoyed a 95% success rate, only citizens of Canada and New Zealand would have fared better. Europeans would have experienced much higher failure rates.

While America is the best place in the world to invest for the long term, it is also clear that in an increasingly interconnected world, correlations among different markets are rising. Mass-affluent Americans in the second half of the 20th century led a charmed existence, and expecting this to be replicated in the first half of the 21st century is dangerous.

My takeaway from the article was that if you can control your own retirement date, then don’t do it.

Evan Simonoff
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