Clients think of retirement portfolios not just as a source of income during the later stages of their lives, said Blanchett, but also as a potential legacy for their heirs.
Stagnant markets and longer lives, Yeske said, don’t match the most serious threat to retirement success: client behavior.
“We’re talking about developing reasonable models for meeting income needs in retirement and increasing probabilities for success, but what we really need to manage is client behavior,” Yeske said. “By orders of magnitude, that’s what is blowing up retirement plans.”
For Milic, that means not allowing clients to dictate that their portfolio allocations meet their desire for an exorbitant withdrawal rate of 7 percent or 8 percent, but instead trying to fit their lifestyles within the confines of a portfolio.
“We need to be firm and unwavering on this topic, but we also need to communicate it in a more sensitive manner to our clients,” Milic said. “There are clients who will jump from advisor to advisor like a grasshopper, trying to find that magic bullet that will give them their target income.”