Helping Your Clients Afford a More Expensive Retirement

Apr 26, 2017 1:35:00 PM / by Darwin Bayston, CFA

helping_clients_afford_expensive_retirementThe sustained low interest rate environment brought on by the financial crisis of the late-2000s has forced financial planners to revisit some of the broad assumptions we’ve made in the past for projecting portfolio returns. A new article in the Journal of Financial Planning, “Planning for a More Expensive Retirement,” takes this anecdotal reality to an empirical level by studying the implications of continued low returns on retirement plans.


The authors discovered that “a low-return environment would have a negative impact on client spending throughout their life cycle” and that — as a result – advisors “may need to modify expected returns in planning” that will provide their clients with more realistic projections for their retirement funds.


Interest Rates

In fact, the Wall Street Journal recently reported that the historic drop in interest rates since the financial crisis cost U.S. savers almost $1 trillion in lost income from savings accounts, CDs and bonds from the start of 2008 through 2015. With these low rates squeezing retirees, some have opted for higher-risk investment strategies to make sure they obtain the returns needed, which of course raises the level of risk built into those portfolios.

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Tags: Financial Advisors, life settlement

Darwin Bayston, CFA

Written by Darwin Bayston, CFA

Darwin Bayston is President and CEO of the Life Insurance Settlement Association (LISA). His charge is to extend the outreach of the Association to all participants of the life settlement industry from consumers to capital providers, including producers, brokers, providers and service providers who are part of the life settlement market. He was previously Managing Director of Life Settlement Consulting & Management (LSCM), founded in 2004 and specialized in life settlement policy and portfolio valuations, and life expectancy analysis. He has published several articles and participated as speaker at a number of life settlement conferences. Previous to that he operated an investment advisory firm. From 1980 to 1993, he served in several capacities, including President and CEO the CFA Institute (and its predecessor organizations). While at CFA, he founded the continuing education program, was editor of the CFA Digest and supervised research projects funded by the Research Foundation of the ICFA. He began his career as an investment analyst with a Midwest life insurance company. Mr. Bayston has been Chairman of the Martha Jefferson Hospital Foundation ($100 million), a member of the Hospital’s Finance Committee and a past member of the Board of the Institute for Quantitative Research and Finance (Q Group).