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Wealth Management

A family office service model that covers the spectrum of planning solutions.

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Evidence-Based Investing

EBI seeks to filter through noise, hype and emotion in order to make investment decisions grounded in facts, logic and reason.

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A Clear Process

A truly dynamic planning process that adapts to changes in life circumstances.

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Viewpoints

Does the “Bucket Approach” Destroy Wealth?

The “bucket approach” to retirement planning has been routinely adopted by financial planners, ever since it was popularized by Harold Evensky. Clients keep several years of assets in safe, liquid investments, while investing the rest of their portfolio more aggressively. But new research shows that this approach actually destroys a portion of clients’ wealth.

This research comes from Javier Estrada, a professor of financial management at the IESE Business School in Barcelona, Spain. Before we get to Estrada’s research, let’s review how the success and failure of a financial plan is measured using Monte Carlo simulations.

The challenge of measuring failure rates of financial plans

Retiring without sufficient assets to maintain a minimally acceptable lifestyle (which each person defines in their unique way) is an unthinkable outcome. That’s why, when investors are planning for retirement, their most important question is: How much can I plan on withdrawing from my portfolio without having a significant chance of outliving my savings? > SEE MORE

Moderate Your Market Expectations

My colleague, Jared Kizer, who serves as chief investment officer for The BAM Alliance, recently examined the performance of the S&P 500 Index from March 2009 (the bear market ended on March 9, 2009) through October 2018, a period ending shortly before a spate of market volatility in December that saw the index record some dramatic declines.

Using a common statistical analysis referred to as “bootstrapping,” he shows how “otherworldly” the returns to that asset class were over the past decade. Importantly, he also shows that other “alternative universes” > SEE MORE

No Safety Flags In Investing

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In case the latest bout of stock market volatility, which we explored earlier in a pair of articles about putting market moves in perspective and the danger of market myopia, is tempting you to sell now and wait for safer times, remember that to benefit from market timing you have to be right twice, not once. I hope the following explanation helps you to decide on the right strategy.

If you go to the beach to ride the waves and you want to know if it’s safe, you simply look to the lifeguard stand. If the flag is green, it’s safe. If it’s red, the ride might be fun, but it’s also too dangerous to take a chance. For many investors today, the market looks too dangerous. So, they don’t want to buy, or they decide to sell.

Here’s the problem. While the surfer can wait a day or two for the ocean to calm down, there is never a green flag that will let you know that it’s safe to invest. You might think that is the case (as many investors did in > SEE MORE