As safe withdrawal rate research gains in popularity, it is both increasing used - and misused - by financial planners and the press. Although the research does have its limitations - which I discuss frequently in my presentations at various financial planning conferences throughout the year - and is built on many assumptions that deserve to be challenged, a rising number of safe withdrawal rate critics appear to criticize the approach based on inaccurate statements. So let's clear up a few points of confusion about safe withdrawal rate assumptions. Read More...
Although the research on safe withdrawal rates has been replicated many times by various researchers to substantiate a safe, sustainable spending level that can withstand at least anything that history has thrown at a retiree, one significant challenge has always lingered: a safe withdrawal rate recommendation is only as good as the time horizon it's associated with. In other words, while the research may support a 4.5% safe withdrawal rate, it's predicated on a 30-year time horizon. If the client planned to retire over a 35- or 40-year time horizon, the safe withdrawal rate would be different. Unfortunately, though, the client may not know that a 35-year time horizon is needed until it's year 31 and there are still a few years left to go! So what's the outlook for a safe withdrawal rate approach if the client outlives the original time horizon?Read More...
As readers of my newsletter know, in May I published research that challenges the safe withdrawal rate as potentially being TOO safe in some environments, where market valuation is not at unfavorable extremes. However, in some feedback I've received from readers, another important point is being made - in some cases, the safe withdrawal rate may also still be too aggressive!
Read More...
Retirement planning is often a cornerstone of a client's financial plan, with advisors estimating how much the client can safely spend in retirement. In practice, advisors typically begin with the client's target retirement date, and then adjust levers such as withdrawal rates, asset allocation, and spending flexibility to make the plan work. But when the retirement date is treated as fixed, an important part of the planning problem may be left unexamined: whether the timing of retirement itself is helping or hurting the plan from the outset.
In this guest post, Georgios Argyris, Research Director at bellavia.app, explains how even a small shift in retirement timing can change the market environment the retiree enters and, with it, the sustainability of the plan. The effect becomes clear when comparing otherwise identical retirees who begin withdrawals in different environments. Across the historical lifecycle cohorts examined, allowing for a two-year flexibility window produced a median gap of roughly two-thirds in final portfolio value between the best and worst timing choice within the window. Retiring at the originally planned date was optimal only about 15% of the time; in most cases where a different choice helped, delaying retirement produced a better outcome.
This result can be understood by separating retirement timing risk into two components: cohort risk, which reflects the overall return environment a retiree experiences, and pure sequence risk, which reflects the order of returns within that environment. Historical analysis suggests that roughly three-quarters of retirement outcome variability is driven by cohort risk, while only about one-quarter is attributable to return ordering within a cohort. This distinction matters because most traditional planning tools – including dynamic withdrawal strategies, guardrails, and allocation adjustments – operate only within a given cohort, therefore addressing only the smaller portion of risk. By contrast, adjusting the retirement date is one of the few levers that can shift a client into a different cohort altogether.
This framework also leads to a counterintuitive insight: clients who appear most prepared for retirement – often those with the largest portfolios after strong accumulation periods – may still face elevated timing risk. Strong bull markets can inflate retirement balances while leaving clients exposed to weaker forward returns. As a result, a large portfolio value at retirement might not, on its own, indicate that the timing is favorable. Advisors can partially assess this risk using valuation metrics such as the Shiller CAPE ratio, which has shown a relationship with subsequent decade-long returns and can help identify whether current conditions resemble historically unfavorable retirement environments.
Ultimately, the key point is that retirement timing may deserve a larger role in retirement planning than it is often given. Advisors may improve outcomes by first considering whether the retirement date itself should be adjusted, particularly when market conditions appear unfavorable. When timing flexibility is limited, reducing the initial withdrawal rate can provide a margin of safety, while dynamic spending strategies can help manage the remaining ordering risk. By recognizing retirement timing as a planning variable rather than simply a fixed assumption, advisors can better position clients to navigate uncertainty and support the sustainability of retirement income over time.
Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that a survey from Mergers and Acquisitions (M&A) consultancy DeVoe & Company finds that RIA leaders on the whole expect the already brisk pace of deal volume to increase in 2026, as (often private equity-backed) buyers find matches with sellers looking for external partners (who might be able to offer a premium valuation compared to internal successors). Notably, a strong majority of respondents who are looking to make an acquisition cited culture fit as the top characteristic they seek in a potential target (with talent coming in second), perhaps recognizing that successfully integrating an acquired firm is key to the success of a deal (e.g., in terms of client and employee retention). Nonetheless, internal successions do remain viable options for firms, according to the report, with the key to success being a willingness to start planning early to identify potential successors and to create a process and financing program that works for both parties.
Also in industry news this week:
- The Securities and Exchange Commission (SEC) has issued a risk alert warning about missteps the regulator has identified regarding its marketing rule, particularly when it comes to making clear disclosures surrounding testimonials, endorsements, and third-party ratings and rankings
- The SEC has signaled that it will allow a wide range of asset managers to offer dual-share-class funds, presenting potential fund-expense and tax-saving opportunities for advisors (and potentially raising questions for firms relying on mutual fund commission income)
From there, we have several articles on investment planning:
- Morningstar's latest safe withdrawal rate figures ticked higher for those retiring in 2026, with spending flexibility allowing for even higher starting withdrawal rates
- While retirement income strategies that rely on spending flexibility are often attractive for clients, explaining potential spending reductions in terms of both the potential dollar amount and the duration of reduced portfolio withdrawals could give clients a better understanding of the tradeoffs involved and avoid negative surprises down the line
- Why the concept of sequence of returns isn't just about protecting against market declines early in retirement, but can also be an opportunity to (significantly) boost retirement withdrawals if a positive return sequence occurs
We also have a number of articles on practice management:
- Why understanding a firm's capacity could be a more effective forward-looking metric than other measures of productivity
- Given that a move 'upmarket' can introduce additional complexity and strain firm capacity, assessing firm infrastructure and fee models before making this move could lead to a more sustainable approach
- Why evaluating and potentially revising a firm's internal processes could be more effective than defaulting to hiring a new employee when reaching capacity limitations
We wrap up with three final articles, all about cash flow management:
- The value of evaluating the time/money tradeoffs involved when considering whether to take advantage of 'free' offers
- How advisors can help clients recognize and address "lifestyle creep" to ensure their spending is aligned with their priorities (perhaps retire earlier than they might expect)
- The value of conducting a subscription 'audit' to save time and mental bandwidth in a world of proliferating services charging recurring fees
Enjoy the 'light' reading!
Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that a recent report from The Ensemble Practice finds that advisory firms are in a period of "prosperous stagnation" with strong profitability (with the firms surveyed showing a record average operating profit margin of 39.2% in 2024) but organic growth falling short of targets (an average of 3.1% below the average firm growth goal of 10.0%). The report suggests that while many firms have streamlined operations and experienced tailwinds from strong equity markets the past couple years, bringing on new clients has been a challenge for some (highlighting that fast-growing firms tend to allocate larger shares of their budgets to marketing, expenditures which could crimp profitability in the short run but lead to greater opportunities in the long run).
Also in industry news this week:
- Artificial Intelligence (AI), anti-money laundering, and cybersecurity top the list of concerns amongst RIA compliance officers, according to a recent survey, as firms adjust to a rapidly evolving technological and regulatory environment
- An Executive Order signed this week intends to clear the way for 401(k)s to be able to offer private equity, cryptocurrencies, and other alternative assets in their investment lineups
From there, we have several articles on retirement planning:
- The potential value of incorporating "income risk" (which can be a particular concern for clients nearing retirement, as well as those just staring out) when considering client portfolio allocations
- Four ways to beat "sequence of return risk", including incorporating flexible spending rules, holding "buffer" assets, and more
- Why a "rising equity glidepath" in retirement can improve client outcomes and how advisors can effectively communicate this (perhaps counterintuitive) strategy to clients
We also have a number of articles on practice management:
- Why establishing a strong firm culture is not just a matter of having an established mission and values, but is also a matter of understanding the employee experience and getting buy-in from all team members
- How an effective firm-wide retreat can both bring the team closer together and give the business a clearer sense of direction for the coming months
- How establishing a "Culture Committee" helped one firm improve employee morale and retention after a particularly stressful period
We wrap up with three final articles, all about college planning:
- Eight to-dos for clients and their children heading to college this fall, from ensuring proper insurance coverage to getting key legal documents in place
- How the Common Data Set document can help families find colleges where their student might receive a generous merit aid award
- How a student's post-college success is determined by factors that go well beyond the prestige of the school they attend
Enjoy the 'light' reading!
Enjoy the current installment of "Weekend Reading For Financial Planners" - this week's edition kicks off with the news that a recent survey indicates that 70% of affluent financial advisory clients who believe their advisor is always obligated to act as a fiduciary indicated they are satisfied with their relationship and aren't seeking out a new advisor, while only 41% of clients who believe their advisor may put their own interests first indicated they are satisfied with their relationship. Which suggests that, amidst ongoing debate over fiduciary-related regulations, an advisor's status as a fiduciary could both lead to greater client trust (both in their individual advisor relationship and perhaps in the financial advice industry as a whole) and, ultimately, higher client retention rates.
Also in industry news this week:
- A recent survey indicates that younger "DIY" investors are more likely to be interested in working with a human advisor than their older counterparts, suggesting an opportunity for advisors to tap into this demographic (perhaps by setting minimum planning fees that ensure these clients can be served profitably today while they grow their assets over time)
- While a full repeal of the estate tax has the support of key Republicans in Congress, a (more limited) extension of the current exemption level could end up being part of major tax legislation expected this year, given the budgetary tradeoffs involved
From there, we have several articles on retirement planning:
- Research into how "sequence of return risk" tends to decline over time, particularly for clients who make it through their first five years of retirement with investment gains in their portfolio
- How using a "bucket" approach to building a retirement portfolio can help manage sequence risk and give clients greater confidence that their retirement spending needs will be met
- Why rebalancing is a key element of ensuring sustainable retirement income, whether an advisor uses a 'total return' or 'bucketing' approach to portfolio management
We also have a number of articles on advisor marketing:
- How advisors can use images, audio, and text found online in their own content without running afoul of copyright laws
- Why video content can be particularly effective in helping advisors connect with their ideal target clients and best practices for creating videos that will attract viewers
- A six-step process to creating and distributing blog content to maximize its reach
We wrap up with three final articles, all about getting better sleep:
- A recent study provides an additional data point connecting low-quality sleep to potential negative health effects
- How to arrange a bedroom to promote better sleep throughout the night, from bed positioning to managing the amount of light that enters the room
- Seven common assumptions about sleep and why they might be counterproductive to a good night's rest
Enjoy the 'light' reading!
Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that CFP Board CEO Kevin Keller this week announced his plans to retire and step down from his position at the end of April next year. During his nearly two-decade tenure, Keller oversaw a near-doubling of the number of CFP professionals, the establishment of a new 501(c)(6) professional organization to promote the benefits of financial advice and planning careers, and updates to the CFP Board's investigation and disciplinary processes, among many other changes.
Also in industry news this week:
- Financial Planning Association CEO Patrick Mahoney died this week after a battle with cancer, leaving behind a legacy that includes rejuvenating the relationship between FPA National and its chapters
- A group of advisory trade groups and broker-dealers have sent a letter to Congressional committees requesting that the IRC Section 199A deduction (more commonly known as the Qualified Business Income, or QBI, deduction) be extended and expanded to remove the "specified service trades or business" designation that limits the deduction for financial advisors (and clients in certain professions) with income over designated thresholds
From there, we have several articles on retirement planning:
- How advisors can incorporate a client's Social Security benefits into their broader retirement income strategy to match client preferences for lifetime income and/or legacy interests
- Why a TIPS-based strategy could be an attractive way to meet clients' 'core' spending needs while protecting against future increases in inflation
- Why RMDs can potentially affect safe withdrawal rates and how advisors can help clients minimize any potential negative effects
We also have a number of articles on advisor technology:
- How using a "core and satellite" approach can help advisory firms build their tech stacks in a cost-effective manner
- The potential value for firms in auditing how they use their CRM software, as well as ways they can maximize its effectiveness
- One expert makes his selections for the 'ultimate' advisory firm tech stack, covering a broad range of AdvisorTech categories
We wrap up with three final articles, all about maximizing vacation days:
- Why "unlimited PTO" policies can sometimes backfire and how firms can ensure that their PTO policies reflect their goals and allow employees to take sufficient time away from the office
- How linking PTO days to holidays and weekends can turn 15 days off into more than 50 days of vacation
- Why research into vacations and happiness suggests that incorporating novelty into (longer) vacations can make them more enjoyable
Enjoy the 'light' reading!
(Michael's Note: It is with a heavy heart this week that we pay our respects and bid farewell to Patrick Mahoney, the CEO of the Financial Planning Association, who passed away this week after a long battle with cancer. Patrick and his leadership was a breath of fresh air for the FPA, as he worked proactively to repair the national organization's relationships with both its internal chapters and external allies, refocus the organization's staff on supporting its chapters and its core (CFP certificant) member, and stabilize its membership after prior years of declines. It is a tragic loss for the FPA that Patrick's ongoing work was cut short, and he will be greatly missed. Farewell, Patrick.)
Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that at a time when brokerage firms' cash sweep programs come under increased scrutiny (and as the Federal Reserve has cut interest rates), Charles Schwab (the largest RIA custodian) continues to slash sweep rates for client cash (down to 0.05%), well below the rates available on other cash-like products, leaving advisors on the platform with the task of determining whether to move (at least some) client cash to higher-paying offerings (whether from Schwab or using emerging cash management platforms) to help clients earn more on their cash holdings and to ensure they are fulfilling their fiduciary responsibilities.
Also in industry news this week:
- A recent survey indicates that members of Generation X are struggling more with retirement planning compared to older Baby Boomers and younger Millennials, potentially offering opportunities for financial advisors to help Gen Xers create a plan to 'catch up' when it comes to both their retirement savings and their financial confidence
- According to a recent study, 37% of financial advisors are planning to retire within the next decade, opening up potential opportunities for the 48% of advisors who indicated interest in acquiring a practice
From there, we have several articles on retirement planning:
- Research into a variety of flexible retirement income strategies demonstrates the tradeoffs between current safe withdrawal rates, cash flow volatility, lifetime spending, and legacy interests
- An analysis suggests that those taking Social Security benefits early to invest them have a high breakeven rate to clear compared to those who delay benefits until Full Retirement Age or beyond
- Why taking a systematized approach to determining a client's retirement income style preferences can help advisors offer a more personalized client experience
We also have a number of articles on advisor marketing:
- How relatively smaller RIAs are pursuing organic growth at a time when M&A activity is receiving significant attention, from expanding the platforms (and audiences) they reach to refining their service models
- Eight tips to help advisors get more "earned media" opportunities and demonstrate their expertise and credibility to prospective clients
- Best practices for client events, including creating a sense of community and offering opportunities to gather feedback and preferences from clients
We wrap up with three final articles, all about managing stress:
- How to keep up with the news without getting overly stressed, from deciding how deep to go into particular issues to setting time boundaries for news consumption
- How regular self-reflection can help identify potential stressors and begin the process of moving past them
- Why separating one's thoughts from one's sense of self can help avoid the stress that can arise from 'overthinking'
Enjoy the 'light' reading!
Each week in Weekend Reading For Financial Planners, we seek to bring you synopses and commentaries on 12 articles covering news for financial advisors including topics covering technical planning, practice management, advisor marketing, career development, and more. And as 2024 draws to a close, we wanted to highlight 24 of the most popular and insightful articles that were featured throughout the year (that you might have missed!).
We start with several articles on retirement planning:
- Why considering a client's retirement time horizon and spending flexibility could lead to more accurate (and often higher) safe withdrawal rates than the simpler "4% rule"
- Four unique risks retirees face when drawing down their assets, from sequence of returns risk to tax risk, and how financial advisors can help clients mitigate them
- Practical considerations for advisors when engaging in (partial) Roth conversions, from assessing the "effective marginal rate" paid on the conversion to deciding when during the year to complete the conversion(s)
From there, we have several articles on tax planning:
- How financial advisors can help clients avoid (increasingly punitive) estimated tax penalties, such as determining the amount they owe and leveraging strategies to pay the taxes efficiently
- 12 tax planning principles for early retirees, from balancing the 0% long-term capital gains with partial Roth conversions, to being aware of how different income levels can affect various subsidies and tax credits
- Why the tax benefits of investing in 401(k)s compared to taxable brokerage accounts might not be as significant as might be assumed in certain circumstances
We also have a number of articles on cash flow planning:
- Five ways that can help financial advisors give hesitant clients 'permission' to spend more in retirement
- Why the relationship between spending and happiness is not linear, and what this phenomenon means for client spending and life satisfaction
- How to decide how much to spend on a vacation, from planning out a year's worth of trips in advance to being aware of "luxury creep'"
Next, we have a few articles on estate planning:
- Five ways that clients can simplify their estate to ensure that their goals are met and that they don't create additional stress for their survivors
- How creating a "digital death-cleaning" plan can give a client peace of mind that their digital affairs will be in order after their deaths and ease the burden on their survivors in the process
- While providing a "living inheritance" can be a tax-efficient way to give money to loved ones, it comes with a range of potential considerations, from the sustainability of the giver's financial plan to the potential intra-family conflict it could cause
We continue with three articles on insurance planning:
- How advisors can help clients choose between traditional long-term care insurance policies and hybrid policies that combine long-term care coverage with life insurance
- Five mistakes individuals make when it comes to Medicare, from underestimating expenses to missing important deadlines, and how advisors can help prevent them
- How financial advisors can help clients evaluate the health insurance options available in early retirement, from staying on their previous employer's plan through COBRA to obtaining a (potentially subsidized) plan on their state health insurance exchange
From there, we have several articles on financial advisor marketing:
- Financial advisory industry veteran Joe Duran offers a four-part framework for advisors to achieve greater organic growth in the years ahead
- How advisors can effectively ask for client referrals without coming off as too 'salesy'
- How advisors can boost the relevancy and effectiveness of the "Calls To Action" (CTAs) on their website
We wrap up with three final articles, all about practice management:
- A seven-step process for building an efficient, thriving advisory practice, which starts with the firm owner crafting a vision for what they want their client base and personal lifestyle to look like
- A step-by-step guide to the process of buying or selling an RIA, from the due diligence undertaken by both the buyer and seller to the legal documents that can protect both parties
- A survey indicating that being proactive with planning strategies and communication could be more important than portfolio performance for financial advisors when it comes to client retention
Thanks for letting us be a part of your reading list each week and we'll look forward to highlighting more insightful articles in 2025!
