According to recent Principal Financial Group survey, 67% advisors have altered their practice in the past year to focus more on helping clients manage their income in retirement. Thats certainly true for Mike Boosel, an advisor with 22 years of experience.
Boosel is a director and senior investment consultant in Bairds Atlanta wealth management office, and since 2009, hes been teaching classes on retirement planning at Georgia State University. With the decline of traditional pensions and longer life expectancies, he says that people really want good advice.
Baby boomers are starting to retire and interest rates are low, so theres a need for help with retirement income, he said. Ive spent the past five to six years remaking my practice, structuring a process to focus on retirement income planning. Now I spend more time in that area and less time on selecting investments.
Class attendees typically are in their late 50s and early 60s, Boosel said, on the cusp of retirement and concerned about finding sufficient retirement income. When I teach the class, he explained, Im careful to avoid any conflicts of interest. I dont mention Baird or any specific products or services. I do tell people, however, that Ill be available to answer their questions after the class.
Generally, around 20 people are in these classes. Boosel said that about half of them come to talk with him afterwards; those who are interested receive a comprehensive financial planning questionnaire to fill out. Ive added over 100 new clients since I started this, he noted.
Once questionnaires are filled out, they go to Bairds financial planning department, which prepares a plan. The process often will begin with the client saying something like, When I retire Id like $80,000 in annual income, after tax, and 3% annual cost-of-living adjustments, Boosel said. Well look at the clients information and see if thats reasonable. In some cases, well suggest working an extra couple of years, perhaps, or spending less money in retirement.
The entire process may take about a month, according to Boosel. Considerable back and forth is usually needed to complete a customized plan. Then Boosel arranges a two-hour meeting in his office, during working hours, to go over the plan. He charges fees based on assets under management, but no fee for the actual plan.
Once clients are on board, Boosel uses a total return strategy to deliver retirement income. I emphasize asset allocation, diversification, and rebalancing, he said. Within asset allocation, Im reducing traditional fixed income vehicles and adding alternatives such as REITs, MLPs, and floating rate funds. If current income from the portfolio is not enough to meet the clients need, well distribute some of the cash from rebalancing. After Boosel explains the concept to clients, most are very comfortable with the idea of taking profits to maintain their desired retirement lifestyle.