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Personal Financial Planning Conference

January 21, 2016

Peter Weitsen and I just returned from the AICPA Advanced Personal Financial Planning Conference in Las Vegas.   1400 of our colleagues heard 3 days of cutting edge presentations from some of the top planning people in the country.  This blog shares some key points to give you an idea of what the current thinking is.

  • While the CPI measures inflation in the overall economy, each of us has their own inflation rate based on their needs, and when preparing for financial security you need to understand that individual inflation rates will be based on how you spend your money
  • A few years ago a major topic here was portfolio rebalancing, which I do not agree with for most situations.  The speakers that touched on it this year seemed to agree with my views
  • Unnoticed stealth costs can doom many financial plans to failure
  • The focus in retirement should be on cash flow, not asset valuations.  As I have frequently said, you spend cash flow not growth in assets. Incidentally while a large group of participants were investment managers, very little was said about the recent stock market drops.  The concern was on long range planning.  However, two of the keynote speakers spoke about the current political situation and the United States’ global position which was very informative
  • Investors that try to time the market and sell at the highs and buy at the lows frequently sell too soon and buy too early and usually perform worse than those that buy and hold.  FYI market timing is a discredited strategy
  • Retirement drawdowns must support the desired standard of living, and need an adequate base to maintain the withdrawal schedule. Moat portfolios are simply not large enough for this
  • Drops in the market need greater gains to offset them.  A 20% drop will need a 25% increase to get back to where you were. Your asset allocation planning needs to protect against wide market swings, as should a market immune fund to draw down from during difficult times
  • Many people create a plan with a fixed percentage withdrawal rate and large drops reduce the withdrawals while large gains increase them  often moving portfolios off the track of providing steady cash flow
  • Surveys indicating spending patterns and rates are biased toward the frugal.  Frugal people usually are most aware of what they do and maintain careful records, so they respond to surveys.  Spendthrifts usually spend too much, are not fully aware of what they do, and don’t care to tell about it
  • Most advisors sincerely believe in what they recommend sometimes ignoring contrary views or products limiting their clients choices
  • We know individual investors use emotions to guide their decisions.  Well so do professionals who should have a detachment but who get caught up in previous choices that may have performed poorly and tend to hold on with them longer than advisable not wanting to validate a bad choice
  • No matter your situation health care costs become more important as you age, so this issue cannot be push aside
  • The Monte Carlo simulation is a technique that calculates the probabilities of achieving financial goals and should be used to determine the likelihood a plan will be attained.  The more you know, the better.  The consequences of falling short are much worse than the benefits of exceeding your targets
  • Many reaching retirement want guaranteed cash flow without having to actively manage their portfolio.  For that reason they either buy what they are thoroughly familiar with or engage professional investment managers to try to exceed returns from their so-called “safe and easy” portfolio
  • Some people must have someone manage their affairs and in these cases asset preservation with reasonable cash flow should be the primary focus
  • It is much more difficult to manage what you don’t or cannot measure.  Know your numbers
  • Speakers disagreed on and presented persuasive arguments on the usual topic of passive versus actively managed mutual funds
  • Also covered were cases for emerging market and off shore investments
  • Ed Slott, the PBS IRA guru gave a hair raising presentation on IRA dangers and traps we can be aware of to help clients avoid.  Ed also emphasized that advisors and clients need to be in regular touch with each other to avoid precipitous actions by the client
  • Succession planning for family owned businesses was covered by a number of speakers. This is always a hot topic
  • Many sophisticated estate tax planning and charitable giving techniques were discussed, dissected, explored and will be shared with our clients that fall into these categories

There was much more.  The above is a sampling to share the range of issues on many advisors radar.  If you want additional information on any of these areas, please reach out to me.

A gratifying event at the conference was the presenting to my mentor, friend and co-editor of the CPA Journal Personal Financial Planning Column the AICPA Personal Financial Planning Distinguished Service Award.

Peter and I each spent an intense 20 hours attending the presentations and thoroughly enjoyed the interactions.  It is also the 25th year we have been attending this conference.  Readers are welcome, as always, to contact me with any of their personal financial planning questions.

2 Comments leave one →
  1. 6hawthorne permalink
    January 21, 2016 8:01 pm

    Hi Ed I am glad that you had a great time at the conference and thank for passing on the informationBob Nagler

  2. Carmen Aguiar permalink
    January 29, 2016 4:16 pm

    This is great information. Thanks for sharing.

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