Investment Management in Retirement

Why a retirement portfolio is different

While you’re working, a paycheck covers the bills and the portfolio can ride out a bad year. In retirement, you may be selling investments to cover living expenses. Selling during a downturn can do lasting damage, because the shares sold at low prices aren’t there for the recovery.

That’s why investment management in retirement is about more than picking good investments. It’s about matching the money to the jobs it has to do.

Six things that shape your portfolio

Every recommendation we make is built on these six, not on whatever model happens to be on the shelf.

1. Your investment goals

What is this money for? Income you’ll live on, a cushion you hope never to touch, and a legacy for your family each call for a different approach.

2. Your return objectives

How much growth your plan needs, not how much you’d like. A plan that only works with aggressive returns asks the portfolio to take risks you may not need to take.

3. Your risk tolerance

How much movement you can live with along the way. A portfolio you can stay with through a bad year is worth more than one you’d abandon.

4. Your time horizon

When you’ll need the money. Dollars you’ll spend in the next few years and dollars meant for decades from now shouldn’t be invested the same way.

5. Your cash requirements

What you’ll draw, and when. Knowing your withdrawals ahead of time lets us plan where the cash will come from, instead of selling whatever happens to be down.

6. Your tax situation

Which accounts you hold: taxable accounts, tax-deferred accounts like a traditional IRA, and tax-free accounts like a Roth. Where an investment sits can matter as much as what it is.

Three goals, three different portfolios

Your strategy is designed around your long-term goal. In broad terms, each goal asks something different of the portfolio.

What discretionary management means

With discretionary management, you give your adviser written authority to buy and sell in your account without approving each trade. The strategy is agreed with you first, and the day-to-day decisions follow it.

We manage accounts on a discretionary basis, and as part of our standard services we typically review client accounts monthly. Our Form CRS describes how accounts are monitored. We don’t limit the types of investments we recommend.

Discretion doesn’t leave you out of the loop. Your client portal shows up-to-the-minute information on all your accounts, and we meet face to face every quarter for reviews and tax planning sessions.

Rebalancing keeps the plan on course

Markets move the mix. After a strong run for stocks, a portfolio meant to be balanced can drift toward more risk than you signed up for. Rebalancing brings it back to its target by trimming what has grown and adding to what has lagged.

Diversification and rebalancing don’t guarantee a profit or protect against loss in a declining market. What they do is keep the portfolio in line with the plan you agreed to.

How investment management fits your plan

In our 8 Elements, investment management draws on Income Optimization, the Asset Builder, the Legacy Enhancer, and the Tax Planner. A portfolio decision changes your tax picture and your income plan, so we look at them together. An investment policy statement for your plan finds the right balance of risk and reward, so you aren’t taking on more risk than you need.

When we act as your investment adviser, we have a fiduciary duty to act in your best interest. The SEC describes that duty as a duty of care and a duty of loyalty.