Retirement Financial Planning Comprehensive Perspective
Retirement Financial Planning Comprehensive Perspective
The Evolution of Financial Planning: From Stockbrokers to Comprehensive Advisors
There’s more than one way to go about many things, but when it comes to finding your ideal financial planning partner, this author has a few preferences. Let’s delve into the evolution of advice in financial services.
From Stockbrokers to Internet Age
Back in the days before the internet, buying stocks or bonds meant relying on a stockbroker. The stockbroker acted as a liaison between investors and the stock market, earning a commission on the sale of stocks. It was a transactional relationship, similar to shopping for clothes at a department store.
Picture this: You browse through racks of clothes, selecting what you want. At the register, the clerk may suggest certain clothes that match your picks. Similarly, stockbrokers helped investors trade in the stock market and occasionally offered advice on which stocks to consider.
Then came the internet age, where consumers gained direct access to the stock market from the comfort of their homes. The need for stockbrokers diminished, as investors could now place trades on their own. However, the era of self-directed investing also introduced a plethora of advice columns, ushering in the era of “do-it-yourself” (DIY) investing.
The Rise of DIY Investing
Many individuals successfully embraced the DIY approach and became their own financial advisors, accumulating substantial assets. DIY investors often face minimal challenges, especially when the stock market is performing well due to accommodative government policies. However, retirement planning can become more complex during challenging economic times.
For instance, if you entered retirement around the year 2000, you would have faced different circumstances than if you retired in 2010. The first decade of the new millennium witnessed two major disruptions, while the second decade experienced a 6% market decline in 2018.
It’s this shift in circumstances that leads most people who have saved for retirement to seek the best way to utilize their savings. They need an income and distribution plan. Luckily, this is where comprehensive financial planning experts come in.
The Role of Comprehensive Advisors
Becoming your own financial advisor became necessary with the introduction of qualified retirement plans like the 401(k) in 1978. Previously, employers offered pension programs, ensuring retirement security for their employees.
Pension managers oversaw defined benefit pension plans by analyzing long-term economic trends. However, with the creation of the Federal Reserve in 1913, the government started artificially manipulating the economy, making it harder to predict economic cycles accurately. Pension managers faced challenges in managing retirement outcomes due to these external factors.
This led to the introduction of the 401(k) and a shift in thinking. Workers became responsible for managing their own financial outcomes in retirement. The risk of poor outcomes increased, but employers were no longer obligated to manage retirement finances.
Today, financial planning roles like mine are holistic. Unlike stockbrokers, who focus on particular investments, comprehensive financial advisors consider long-term care, estate planning, insurance, tax planning, and other aspects. This comprehensive approach aims to prevent unintended consequences and provide a well-rounded financial plan.
The Importance of Comprehensive Financial Planning
If you find yourself struggling to create a distribution plan for your retirement, or if your current advisor isn’t discussing investments, insurance, Medicare, Social Security, long-term care, estate planning, and tax planning with you, it may be time to seek a second opinion. Comprehensive financial planning ensures a more thorough and well-rounded approach to your financial future.
Remember, this article provides insights and information, but should not be the sole basis for making financial decisions. Always consult with qualified professionals to tailor your financial plan to your specific needs and circumstances.
Insurance products are offered through the insurance business Clients Excel. Clients Excel is also an Investment Advisory practice that offers products and services through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by Clients Excel are not subject to Investment Advisor requirements. The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Our firm is not affiliated with the U.S. government or any governmental agency. 1885630 -07/23
