For the original article, please visit Advisor Magazine’s Issue 102 digital version.
Many people nearing retirement age do not understand basic retirement planning concepts, potentially preventing them from enjoying the lifestyle they desire during their golden years.
A December 2020 study by research firm MoneyRates found most Americans are poorly equipped to conduct their own financial retirement planning. The Investor Aptitude Survey found two-thirds of respondents have not projected whether their savings will be enough to last through their retirement. Only 55 percent had created a monthly budget for retirement spending, while 25 percent thought their retirement savings would last less than five years.
While the MoneyRates survey stated many people know little about planning, creating a retirement plan tailored to each individual’s needs is actually not that challenging, according to Benjamin Quilty, Certified Financial Planner™ and CEO of Pinnacle Investments, LLC in Syracuse, New York.
“It does require time to gather the necessary data,” Quilty said. “The first step is always just listening to the client talk about their goals, and occasionally asking questions to help them clarify those goals.”
Quilty said he has certain strategies he follows for portfolio management that are largely based on the risk tolerance of each individual client. He noted that his clients fall somewhere in the middle of the spectrum, between aggressive and highly conservative. His portfolio management techniques include several distinguishing factors that allow each client to feel comfortable.
“At the end of the day, buying quality, having patience, diversifying, and implementing the investment plan through proven portfolio managers sets clients up to be financially successful in the long run,” said Quilty. “In most cases, the underlying portfolios are designed by experienced managers I believe in, who have long track records of success throughout many different market environments.”
Quilty said his approach can be summed up simply as, “Control what you can control.” He said his firm creates portfolios that are structured to weather significant market volatility. A well-diversified portfolio is based on a client’s risk tolerance, time horizon, and the quality of underlying investments – but does not attempt to time the market.
One key to the financial planning process is understanding the variables clients encounter outside the investment world that can change a financial plan. Those may include death, disability, and long-term care issues for a client or their spouse.
“We have great what-if conversations to make sure those are discussed and planned for,” Quilty said. “You can develop an effective strategy for clients which incorporates their Social Security benefits, however, to achieve that goal, you have to invest their savings and retirement dollars appropriately. It all comes down to setting realistic expectations. The retirement strategy may mean people will have to continue working longer than they anticipated”, he continued. “With modern medicine continuing to improve, people will live longer than they expect, which means more retirement dollars will be needed.”
Another significant factor affecting retirement planning is the current low interest rate environment, which has been ongoing for more than 10 years. Lower interest limits the opportunities available to clients for safe, conservative investments.
Inflation is another growing concern. While inflation has been low for many years, he said, expectations are growing that inflation rates may rise, particularly in response to various monetary and fiscal stimulus measures taken in response to the Covid-19 pandemic.
“That’s the dilemma facing advisors today,” Quilty noted. “There are several economic variables that we may have to deal with that make retirement planning a little more difficult. This makes it even more important to construct portfolios that are invested appropriately, and for clients to understand the risk and return of the strategy. That is how we approach retirement planning.”
Financial education is a huge part of that process. He said the firm educates clients throughout the data-gathering and planning process and continues communicating regularly thereafter.
As 2020 progressed, Quilty said, the firm focused on being more proactive, efficient, and transparent. He said the year brought economic shocks not seen since the 2008-2009 financial crisis. He and his team stayed in regular contact with clients, whether to simply say “Hello” or to discuss their portfolios. He said the level of communication was basically the same as before 2020; it simply shifted to different communication modes, such as phone or videoconferencing calls rather than in-person visits.
“We were ready to help clients find peace of mind, since they were looking for someone to lean on and hold their hand during these uncertain times,” he said. “There are many individuals and families that still appreciate the handholding of a financial professional, and they are willing to pay a reasonable fee or commission for that advice. During the market times we’ve experienced recently, hand-holding goes a long way.”
Despite those challenges, the firm had its best year on record in 2020. Quilty said Pinnacle Investments could not have maintained that growth without a solid team and the support of its parent organization, Pinnacle Holding Company.
The firm is making critical investments – such as moving to a new office in Syracuse – to build on several consecutive years of growth.
“Our goals for 2021 include continued growth primarily by adding advisors to our team nationwide,” he said. “We are a dual-registered firm, meaning we are a broker-dealer and a registered investment advisor. We support financial professionals regardless of whether they are independent or looking to join us as an employee. We understand how advisors want to run their businesses, and we let them do that successfully.”