Analytical Approach to De-Risking Your Portfolio

Most people don’t want to get too technical but those who do are able to make much better decisions. My best clients often take as much as a year to make a decision and as a result, they are all comfortable and happy with how things are working out. I don’t expect deep analysis from everyone but you need to know that I am willing to get in the weeds with anyone who wants to prove a strategy from every possible angle.

Opposite from me is the guy from Tucson who runs weekend annuity infomercials on TV. He answers softball questions from an adoring interviewer who pretends to be just as gullible as he wants all his clients to be. I’m never going to do that because I have a conscience that tells me you all should do better with your safe assets if at all possible.

Over the years I’ve met some fantastic people, not just prospects and clients but other professionals in various parts of the industry. One of those people is Kerry Pechter, a financial journalist and editor of the Retirement Income Journal. It’s a subscription-based newsletter that takes the reader behind the scenes of the financial industry, offering product reviews, academic research and analysis of current market trends. In short, it’s what you should hope your advisor is reading.

This week Kerry wrote an excellent article about Equity Risk Premium, which in simple terms is the additional amount of yield you expect to receive for taking risk in the stock market. Interest rates, stock valuations, inflation and several other factors all affect ERP. But almost no one thinks about it. Understanding this will give you a serious advantage when trying to make the right financial moves at the right time. It’s important now because we are in the midst of rapidly changing times. The end of 2019 was no different but everyone was so giddy after making a bunch of money in the stock market that most people disregarded any and all fundamentals.

I’ve never succeeded at getting technical with this newsletter so I won’t try to further explain something that’s already been done well enough. Kerry has given me permission to re-post any of his articles but I feel I’d be taking advantage of his generosity by sending it out to the entire list. For those who are interested, respond to the email and I’ll send you a copy of this article.

Additionally, Kerry Pechter has some pretty solid contacts of his own. Next Friday he is hosting a webinar with Wade Pfau of the American College, one of the foremost experts on retirement allocations. The subject of the webinar is “De-Risking Retirement Portfolios.” For those interested I will send a webinar invite so reach out to me via email and I’d be happy to have you join the call.

Call or email any time…

Bryan

Further readings:

The Fixed Indexed Annuity Guide

Are Fixed Indexed Annuities a Good Investment?

How Much Do Fixed Annuities Pay?

Last Updated on May 10, 2024 by Bryan Anderson