Wade Pfau of Retirement Researcher - Retirement Income and RISA

Episode • Mar 18 • 57m

Today on the podcast, Rusty and Robyn are joined by Wade Pfau, Director of Retirement Research for McLean Asset Management, Founder of The Retirement Researcher and Co-Founder of the Retirement Income Style Awareness Tool. Wade D. Pfau, PhD, CFA, RICP® is the founder of Retirement Researcher, an educational resource for individuals and financial advisors on topics related to retirement income planning. He is a co-founder of the Retirement Income Style Awareness tool and a co-host of the Retire with Style podcast. He also serves as a principal and the director of retirement research for McLean Asset Management. He also serves as a Research Fellow with the Alliance for Lifetime Income and Retirement Income Institute. He is a professor of practice at the American College of Financial Services and past director of the Retirement Income Certified Professional® (RICP®) designation program. He holds a doctorate in economics from Princeton University and has published more than sixty research articles in a wide variety of academic and practitioner journals. His research has been discussed in outlets including the print editions of the Economist, New York Times, Wall Street Journal, Time, Kiplinger’s, and Money magazine. Wade served for four years as a co-editor of the Journal of Personal Finance. Wade has contributed to Forbes, Advisor Perspectives, and as an Expert Panelist for the Wall Street Journal. He has spoken at the national conferences of organizations such as the CFA Institute, the CFP Board, the FPA, NAPFA, and the Academy of Financial Services. He is also the author of four books in the Retirement Researcher’s Guide Series.

Key Takeaways

[03:17] - Wade’s professional background and more on his current positions
[04:51] - Learn more about McLean and The Retirement Researcher
[05:54] - What led Wade to create the RISA (Retirement Income Style Awareness) tool and what problem does it seek to solve for those planning for retirement?
[07:46] - How does RISA differ from risk-tolerance questionnaires and behavioral finance questionnaires?
[09:53] - How many people have taken the RISA test so far, how accurate does it seem to be and what sort of feedback has Wade gotten on it?
[11:14] - What are the different retirement income styles and how can advisors apply these in practice?
[14:40] - With this data, how are advisors integrating RISA into client conversations to help them tailor retirement strategies more effectively?
[17:05] - Have there been any unexpected patterns in how people approach retirement income?
[18:33] - What is one thing that Wade wishes more advisors understood about retirement income planning?
[20:15] - What are the biggest risks that retirees face today and how should they be preparing for them?
[22:27] - What is the 4% rule of retirement income and why did Wade challenge it?
[26:27] - What is a bucketing approach and how does Wade see it fitting into a broader retirement strategy?
[29:11] - Some people argue that bucketing is more of a behavioral tool than an optimal financial strategy. What’s Wade take on this view?
[31:03] - How should advisors think about the role of annuities in retirement portfolios today?
[35:10] - How can advisors better educate their clients on annuities potential benefits?
[37:03] - What types of annuities are most valuable for retirees and which ones should they be cautious about?
[41:17] - With interest rates higher than they have been in years, but also given stock market valuations are quite high, are annuities a more attractive option than they have been in the past decade?
[42:50] - What are the key factors advisors should evaluate when they are choosing an annuity vendor or product for their clients?
[47:03] - Resources and reading material for advisors hoping to learn more about retirement income
[47:50] - Learn more about Wade’s Podcast, Retire With Style

Quotes

[05:57] - “When you ask someone basic questions about retirement there’s so much argumentation and conflicting advice, should you be 100% stocks in retirement or should you only use annuities in retirement? I was seeing for a long time that there're different schools of thought…for retirement, and they’re [all] different viable approaches. How do people select them? [My colleague and I wondered if we] could develop an assessment tool to determine what sort of factors are at work here…[RISA was born out of this].” ~ Wade Pfau

[08:23] - “So, with the research we did on the RISA we could really see more clearly two key risks and concerns people have for retirement relate to…how concerned am I about outliving my money and also how concerned am I that I won’t have reserves available to deal with spending shocks like a long-term care event…So, what we saw was that the risk tolerance score, whether I’m comfortable with short-term market volatility, had no relationship to whether I’m worried about outliving my assets or worried about having reserves to deal with unexpected spending.” ~ Wade Pfau

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McLean Asset Management is a third party strategist available on Orion Communities. Orion Communities is a product of Orion Advisor Technology, LLC (“OAT”). Orion Portfolio Solutions, LLC (“OPS”), a registered investment advisor, makes third-party strategists available through Orion Communities and is also a strategist on the platform. OAT and OPS are affiliated companies through their parent company Orion Advisor Solutions, Inc (“Orion”). Orion and McLean Asset Management are not affiliated companies.

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