Covid-19 made maximizing retirement income the single most important financial decision of a client’s lifetime.

Eyes widen when I share the rate of boomer retirements quadrupled in 2020, relative to 2019, unmooring 350% more “money in motion.” As we discussed last month, after investors get their answers about Social Security and rollovers, they want to know how to get the most income out of the assets they’ve accumulated over a lifetime.

Boomer Portfolios Are Incoherent
With no new paychecks, retiring boomers must rely on what they have, and what they can control. That means reducing investment costs, managing risks, minimizing taxes and maximizing Social Security benefits. To make matters worse, of the $1 trillion of assets under advisement we see across 100,000 advisor clients, Boomer portfolios are, to be kind, incoherent.

Investor “acumen” is littered with a series of buy high/sell low decisions. And now, there’s no going back. They know they can’t screw up their retirement income.

A Nest Full Of Shiny Objects
Here’s the brief history of boomers chasing the hot dot. In 1979, cash management accounts offered 18% interest rates. Money poured out of banks and into brokerages. Savers became investors. When rates fell, trillions of dollars moved into bond funds in the ‘80s, to keep their beloved double-digit yields. After the March 1987 bond market crash, they piled into stock funds only to get smacked again in the October ‘87 crash.

The ‘90s saw the rise of annuities and separately managed accounts (SMA), chasing “out-performance,” and attractive, unsustainable annuity benefits. The 2000 tech bubble followed where trees were certain to grow to the sky. And everyone became a day trader. Does this sound familiar? SMAs paved the way for UMAs and models. Both are valuable individual products, but they are difficult to coordinate if you want to be mindful of cost, risk and tax.

How Do You Optimize Multiple Accounts, Advisors And Custodians?
The serial purchase of individual products over decades, usually from different advisors, was accompanied by boomers thinking they should not only be diversified with what they own but where they own it. The portfolios we see have multiple accounts, advisors and custodians. How do you optimize that?

Boomers have chased the shiny object for monster returns and a cushy retirement…only to be disappointed. Now, it’s up to their advisor to bring harmony to this pile of products and chart a decumulation strategy they won’t outlive. And if you could increase retirement income and quantify the financial benefit through managing cost, risk and tax, do you think investors would be interested?

The 4% Rule Has Gone The Way Of The Buggy Whip
We have all known for a while that an all-hands-on-deck approach is needed. In 2013, Morningstar talked about the extra 22.6% more “certainty-equivalent income” a client could realize by making intelligent planning decisions along with household-wide asset allocation and location, and optimized withdrawal sequencing.

With due respect, the 4% rule has long ago gone the way of the buggy whip. The new normal for maximizing retirement income is known as a unified managed household (UMH).

The Answer Isn’t One Thing, It’s Everything
A UMH is what you get if you wave a magic wand. We are now at an inflection point where many vendors and enterprises are working together and have made the magic real. That is the biggest difference between a UMH and the cluttered mess in most Boomer portfolios. It’s a solution, not a product. And it’s available today.

We’ve already seen the solution take shape around a lattice of variables that investors and advisors can easily control through software. Wealth managers today have put together the following:

• Tools to identify cost savings and long-term tax efficiency across an entire household of coordinated accounts from asset allocation and location to tax harvesting, household-level rebalancing and the optimal sequence of withdrawals.

• Risk engines to spotlight opportunities and threats to long-term money goals

• Tech to plot the best Social Security strategy in the context of the investor’s financial life and as a basis to create enhanced income streams

• Easy-to-understand outputs that show the benefits in dollars and cents

The leading UMH platforms offer “all of the above.” This is new. Some of us in the industry have been busy connecting all these dots. The big players are done with wouldn’t-it-be-nice white papers. We’re rolling up our sleeves to help retiring boomers and their advisors “land the plane” at a time when they’ve never needed more help.

Jack Sharry is co-chair of MMI's Digital Advice Community, sits on the Next Chapter Advisory Council, is host of the WealthTech on Deck podcast, author of the book, Authentic and Ethical Persuasion, and is the executive vice president of LifeYield.