There is no “one size fits all” when it comes to retirement planning, according to Wade D. Pfau, a financial advisor and academic.

Instead, the plan needs to consider four possible strategies and the clients’ attitudes towards each, he said today during the 2022 Advisor Growth Summit, presented by Financial Advisor magazine.

Pfau is a principal and director at McLean Asset Management, a financial services firm in Tysons, Va., and RISA LLC, an information technology company. An author of books and articles, he is the program director of the Retirement Income Certified Professional designation and a professor of retirement income at The American College of Financial Services in King of Prussia, Pa., as well as a co-director of the college’s Center for Retirement Income.

As a keynote speaker at the 2022 Advisor Growth Summit, Pfau laid out four strategies that can be employed in mapping a client’s retirement plan: total return investing for those who want to maintain their options for spending and can rely on an more aggressive diversified portfolio; a risk wrap strategy for those who want an income floor but can tolerate some volatility; a protected income strategy for those who want a downside floor; and time segmentation investing for those who want spending coordinated with the stages of retirement.

“What many consumers do not realize is there are multiple ways of approaching retirement,” he said.

To achieve a successful plan, it is crucial for an advisor to determine the client’s attitudes in order to know which strategy to use, especially if there is a gap between the accumulated assets and the expected expenses for retirement.

“There is no right answer” for which strategy is best, Pfau said. “It depends on how the client wants to fill the gap and how he or she feels about longevity, lifestyle, legacy and liquidity.”

Factors that weigh into a client’s retirement style include such things as whether he or she us more comfortability betting on the probability of something happening or whether the client wants safety first. The probability client will be more comfortable with a diversified portfolio, but the safety first client will feel more secure with a guaranteed income provided by such things as annuities or bonds, Pfau said.

Likewise, clients can be more concerned about maintaining their options in retirement, or more comfortable having committed plans, he said. Also, having true liquidity of assets—meaning money is available that is not tied to a particular life goal—is a primary concern to many and must be taken into consideration in any retirement plan, he added.

“What is your client’s overall attitude toward assets?” Pfau asked. The client can be focused on spending in early retirement to do the things he or she wants, which Pfau called frontloading; or the client can be more focused on having enough money left at the end of retirement, which he called backloading.

“Investing for retirement is different than investing for the accumulation stage of life,” Pfau said. He likened financial strategy to climbing a mountain, where the accumulation phase goal means getting to the top of the mountain, “but the goal of retirement is to get down the mountain.”