50 years after ERISA, too many members of the retirement planning community are still ignorant of the reasons & rationales behind the options for real-life retirement income planning.
Partly this is because ERISA was passed in 1974 5 years before the first 401k plan existed and 17 before (1991) H. Markowitz revealed his modern portfolio theory (MPT) didn’t address the asset/liability matching problem. Since then new groups of professionals CRC (1999) , RMA (2010) and RICP (2013) have attempted to address this. But there’s an inherent conflict of interest. If a practice is focused on clients who are spending down their assets before dying how does the business grow?
The default style therefore is to suggest clients follow a total return strategy instead of a more flexible and potential safer approach summed up as “Income is the Outcome”
50 years after ERISA, too many members of the retirement planning community are still ignorant of the reasons & rationales behind the options for real-life retirement income planning.
Partly this is because ERISA was passed in 1974 5 years before the first 401k plan existed and 17 before (1991) H. Markowitz revealed his modern portfolio theory (MPT) didn’t address the asset/liability matching problem. Since then new groups of professionals CRC (1999) , RMA (2010) and RICP (2013) have attempted to address this. But there’s an inherent conflict of interest. If a practice is focused on clients who are spending down their assets before dying how does the business grow?
The default style therefore is to suggest clients follow a total return strategy instead of a more flexible and potential safer approach summed up as “Income is the Outcome”