Vital to this effort are innovations such as multi-account UMAs, household-level planning, portfolio and decumulation planning and implementation, and the practices that work in concert to achieve tax alpha.
The most potent of the latter is asset location. Vanguard, Morningstar, Envestnet, PNC, and EY studies all point to significantly improved outcomes when asset location is part of the portfolio management process.
3. Advice Platforms Will Become Retirement Command Centers
Hyper-personalization is a buzzword I hear a lot. Let’s move beyond the hype, deliver real and measurable value to investors, and give advisors tools to improve investor outcomes.
The move to comprehensive financial advice platforms is accelerating. These platforms combine technology and human skills—starting with listening—to respond to clients’ unique situations.
Some appeal to certain professions—Forme Financial, for example, for physicians—or to client segments, like JP Morgan’s WealthPlan. MoneyGuide Pro’s MyBlocks is evolving to include thoughtful planning and implementation over time.
Pre-retirees’ minds are swirling with worries: where to live, how to make money last, what to leave to the children, and what to do as health wanes. To allay those concerns, advisors must consider all household accounts and assets, save costs, manage risk coherently, and minimize taxes. And they need to be able to anticipate and answer questions their clients have, such as:
• When is the best time to take Social Security benefits?
• When and how to do Roth conversions?
• How to manage required minimum distributions (RMDs)?
• Which accounts to draw from, down to the tax lot level, to create income?
Every firm is building its platform and experience and looking for a competitive advantage to help advisors be more efficient and effective.
I was worried that we’d led investors up a mountain with financial planning and the serial purchase of products. I feared we’d leave them stranded at the summit when it was time to turn assets into income. So, I’m heartened by these accelerating trends and our potential for transforming the lives of investors and businesses of financial advisors.
Jack Sharry is co-chair of MMI's Digital Advice Community, a member of the Next Chapter Executive Leadership Advisory Board and co-chair of Next Chapter Leadership in Action. He hosts the WealthTech on Deck podcast, is the author of the book Authentic and Ethical Persuasion, and is executive vice president of LifeYield.