Advisors and mutual fund companies hawking low-volatility funds and other investment vehicles that play upon the public’s misplaced fears about volatility in the equity markets are performing a major disservice, Nick Murray told attendees at this year’s Financial Advisor Retirement Symposium.

“We [as an industry] are pandering to volatility and doing everything in our power to convince the public that volatility and risk are the same when they are two very different things,” Murray said.

With an assist from the financial services business, the public believes that volatility is a synonym for “down a lot in a hurry.” In reality, Murray said, it is the underlying cause of the equity risk premium.

The “only reason” the long-term trend line for equities is superior to all other financial assets is that it is prone to run above and below that trend line, often for extended time periods, Murray said. Between 1980 and 2014, the average intra-year decline in the S&P 500 was 14.2%. Investors experienced 20% declines in 1990 and 1998 and a loss of more than 30% in 1987. Worse still were the more prolonged losses of 46% between 2000 and 2002 and 57% between 2007 and 2009.

“Why would anyone want anything to do with this asset?” Murray asked, answering his question by noting that the S&P 500 began 1980 at 106 and ended 2014 at 2,059. “You own equities because they go down temporarily and up permanently.” This is particularly compelling for retirees seeking to maintain their purchasing power over several decades, Murray said.

More than 600 people attended the conference from April 1-2 at The Venetian hotel in Las Vegas.

Other speakers at the conference addressed a variety of issues. Linda Lubitz Boone, founder and president of The Lubitz Financial Group in Miami, reviewed a long list of criteria that advisors can discuss with clients to help them decide whether to move to a new city in the United States, to move overseas or to stay in their current home.

From the start, she dispelled the myth that most people want to move when they retire. Based on an AARP survey and other studies she reviewed, Lubitz Boone said, more than 90% of people want to stay in their current home.

Robert Arnott, chairman of Research Affiliates, said target-date funds are now fast approaching $1 trillion in assets, with the help of massive 401(k) contributions, but participants who think the funds will meet their retirement income needs could be sorely disappointed.  

Research Affiliates estimates that U.S. stocks’ real return over the next 10 years will be just 1%, and the aggregate U.S. bond index will return nothing. Those types of skimpy yields “crumble with inflation,” leaving savers short of their retirement needs, Arnott said.

Dr. Katy Votava, president of, a nationwide independent consulting firm specializing in the economics of health care, stressed that advisors should put health-care cost planning on their annual agenda for all clients who are age 40 and up. First, advisors should discuss routine-cost planning—such as insurance premiums, c-pays, deductibles and out-of-pocket costs—that can be included in annual cash-flow projections for clients.

The next part of the talk should be about long-term-care risk. “I think long-term care is not an easy conversation to have,” Votava said. “It’s not fun to talk about. But if you start doing it early and often, I think it’s like talking to your kids about sex. If you wait too long, they think they know everything. It’s too late, maybe there’s already trouble.”

Bill Chetney, CEO of Global Retirement Partners, talked about the need for more retail advisors to help people with 401(k) planning. Chetney said more than 75 million have 401(k) plans, but most have no advisor to help. “I think if [plan participants] sat down and talked to someone and talked consistently through years and decades, I think we could very easily solve [the retirement income] problem.”