Financial advisors need to match their clients’ personality styles to the proper retirement strategies in order to be successful, according to retirement specialist Wade Pfau.

Pfau has broken retirement strategies into four categories that match different personality types, he told an audience at the 11th annual Inside Retirement conference sponsored by Financial Advisor magazine and the MoneyShow. The categories have subtle differences and some overlap, but they can help secure a successful retirement for people with different financial goals.

Pfau, a professor of retirement income at the American College of Financial Services, principal and director of McLean Asset Management in Tysons, Va., and author of several books on successful retirement planning, including the "Retirement Planning Guidebook," is an expert on retirement strategies and frequent advisor to financial planners. He also is founder of the firm RISA, which stands for Retirement Income Style Awareness, a consulting firm for financial professionals who want to help their clients meet their goals I retirement.

“There is not just one strategy for successful retirement distribution,” Pfau said. Financial advisors who can accommodate lots of retirement styles are the ones who will be successful, he said.

Strategies break down into roughly four categories: total return, time segmentation, flooring, and risk management, he said. Many people are not aware there are options for retirement planning, but instead accept whatever strategy they heard of first, Pfau said.

The total return strategy relies primarily on income from the stock market, and allows the retiree to make changes in investments whenever he or she wants.

The time segmentation or bucketing strategy is still based on investments, but has bonds designated for short term returns and stocks for long term returns. It assigns income to particular times and goals in the life of a retirement.

The flooring or income protection strategy builds a guaranteed income floor, possibly with annuities or insurance products, for core expenses. It may also have investments to provide money for more discretionary spending.

The risk wrap strategy is “a close cousin” to the flooring option, but relies more on a blend of investments for growth potential and other types of financial products for some protection.

“It is still the wild west in terms of retirement income strategies,” Pfau said. “A good advisor puts his client into the approach that fits the client’s personality and helps the client understand the tradeoffs of each approach.”

For instance, a person who wants flexibility and the chance to make investment changes will prefer a total return strategy. A person focused on avoiding risks will prefer an annuity or insurance products. However, the advisor needs to let the clients know that guaranteed products may not leave much for a legacy, while those who take the risk of continuing to invest may have more money left at the end of life for a legacy.

In answer to a question from the audience, Pfau said he had not done research on whether certain career types match up with retirement strategies, but certain characteristics can be extrapolated. For instance, he said he would anticipate an entrepreneur would be more comfortable in continuing to take on investment risk even in retirement, rather than opting for a safer annuity approach.

The current market environment is making bond investments competitive with other asset classes. But changes in the markets do not fundamentally affect retirement styles, which are more a function of well engrained personality types, he noted.