The Perfect Financial Planner for me

What is the perfect financial planner for a Baby Boomer? I thought I might put some thoughts down and let my subscribers comment on it. Together we might come up with the perfect financial planner for us all.

We might also get the wealth management industry to sit up and take notice. We will be telling them what to sell us without all that expensive market research!

It often seems to me that with about 85% of our retirement nest eggs invested in Mutual Funds there are no other options. But that is not the case. There are many options and what to chose depends on the amount we have but also what is happening in the markets and in the asset classes. If we have saved enough all might be well. But even if we think we have saved enough an extended bear market can wreck our retirement plans unless our nest egg is actively managed.

I know I keep saying it but I do not want to wait until I have lost 40% of my nest egg to take action. And I do not want to be told by my financial planner to sit back and wait for my nest egg to recover the losses because in retirement it may not.

Off the top of my head here is my list for the Perfect Financial Planner for someone who is in retirement. It is in no particular order. It could do with some refinement and maybe I’ve missed some things but I think it is a good start. I wonder if there is a financial planner out there that is my perfect financial planner?

  • They must have at least five years experience as a financial planner.
  • They should be under 40 years old so they should be around longer than me.
  • They must be independent and running their own business.
  • They should be a fee for service financial planner.
  • They must have an active Web site and/or blog and I should be able to visit it and see:
    • An Overview of their Investment Philosophy.
    • An Overview of their Investment Strategy.
    • There should be a section devoted exclusively to Baby Boomers in retirement.
    • It should have plenty of articles, posts, videos and free or paid reports available to me either as a member or a guest of the site.
  • Their Philosophy should include:
  • At our first meeting they should:
    • Tell me all about themselves.
    • Show me how their personal investments are performing so I can see they practice what they preach.
    • Explain to me their investment philosophy and strategy for Baby Boomers in retirement.
    • Show me they understand I cannot afford to lose money when in retirement and that their primary goal is to ensure I do not. They should be familiar with Craig L Israelsen’s article, “The Math of Recovery in Retirement Portfolios“,
    • They should have a clear understanding of the “Time Value of Fluctuations” as stated in Jim Otar’s article.
    • Should NOT ask me to fill out a risk profile- ever.
    • Should never recommend I use Reverse Dollar Cost Averaging in retirement.
    • Should not use Calculators that use industry averages for calculations.
    • Should not use Calculators that use Monte Carlo Simulations unless they meet the requirements mentioned in Jim Otar’s article “Monte Carlo Simulations : Are They worth the Gamble?”
    • Clearly state they are not a believer in “Buy and Hope” investing.
  • They should explain how they put a portfolio together and:
    • Show me they do NOT use 3-6-9 averages for future returns.
    • Make no assumptions for Inflation or Market returns, use real historical results.
    • Clearly identify all Fees and charges for the Funds and other investments and their own charges and include them in the retirement income calculations.
    • Show me what income I can draw based on the portfolio for the immediate future.
    • Include “What if” worse case scenarios using the recent 2000-2003 stock market crash.
    • The “What if” should include how they intend to protect my nest egg and avoid large losses.
  • They should have a computerised system they manage themselves (Not some remote WRAP account somewhere) that:
    • Manages my portfolio and updates it daily.
    • Allows them to set alerts and/or stop loss points which they actively manage.
    • I can access remotely from anywhere I happen to be and monitor my investment and leave messages if I need to.
    • It should be able to keep track of all fees and charges on all investments and produce reports on these on demand.
    • They should have a written or computer activated catastrophe plan in the event of a major market crash.
    • They should show me how they maintain their computer data and their backups to ensure my data is save and secure.
    • The computer system should be able to monitor and assess my nest egg’s ability to last as long as I do.
    • Where it might not last the computer should provide some alternative investments like annuity ladders especially if the market is down for an extended period.
    • It should be able to take profits when appropriate and invest them is safe low risk assets.
    • It should be able to buy risk based assets like equities when the market is down significantly.
    • It should be able to graph how my nest egg would have performed year to date going back to 2000. The graph should take into account inflation, fees and charges and my pension (taxes too if applicable).
    • Any Funds invested in should have a simple written statement of what the funds investment policy is and where the money is invested. It should be clearly stated the funds are not invested in collateralized debts or mortgage products or any future manifestation of these sophisticated derivatives.
    • Any money invested in Funds managed by a third party should have the same rule applied. It is not good enough to say “I didn’t know a third party fund manager was investing in these derivatives”.
  • They should communicate with me regularly through emails about my account and what they are doing to actively manage it.
  • We should meet at least once of twice a year for a complete review.
  • They should have access to asset classes other than the Mutual and Index Funds and these should include gold, commodities and real estate, even art.
  • They should be able to use Puts and Reverse Index Funds and any other methods to minimize losses to my nest egg in volatile markets.
  • They should be able to minimize taxes.
  • They should consult with me when re-balancing my portfolio and produce a written report showing clearly the funds being replaced along with itemised costs for both the old and the new funds so I can compare them.
  • They should work to optimize the fees and charges to get them as low as possible.
  • They should include a plan to have up to 5 years in term deposits, Bonds and CDs in an income ladder. This is to ensure I can draw a pension without having to redeem money from funds in order to live.
  • They should be able to invest in inflation adjusted or protected bonds or other safe assets.
  • They should be able to invest in inflation adjusted annuities if my nest egg look like it will not last.
  • If I have “spare” cash above what is needed for retirement they should have options for investing this in riskier assets for greater returns. But at all times any investment should be hedged or protected in some way.

For the moment I have run out of things to list down but this should be enough to start with.

4 Responses to “The Perfect Financial Planner for me”

  1. […] unknown wrote an interesting post today onHere’s a quick excerptIt often seems to me that with about 85% of our retirement nest eggs invested in Mutual Funds there are no other options. But that is not the case. There are many options and what to chose depends on the amount we have but also what is … […]

  2. mmarten says:

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  4. […] consider doing more business with him. But make your own judgement. Check out my post on, “My Perfect Financial Planner” and use it as a […]

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