Fee-Only Financial Advisor Rhode Island – Eliot Rose Wealth Management

The Future of Retirement Planning – My Top 3 Predictions

Last updated 01/08/2024 • By Jason Siperstein, CFA, CFP®, RMA®

Retirement Plan

The financial planning profession is in its infancy. It began in a Chicago airport in 1969 when a group of bankers gathered to discuss how people could better manage their financial lives.

This meeting eventually led to the creation of the Certified Financial Planner™ (CFP ®) designation, and ultimately established financial planning as a distinct profession.

But as far as we’ve come, we still have a long way to go!

My Top 3 Predictions

1. Financial Plans Become A LOT Better

Most financial plans today are based on something called, “probability of success.” A “successful” plan is defined by having at least one dollar in your portfolio upon death. On the other hand, a plan that “fails” is one that runs out of money while you are still alive.

These types of plans are static. They assume that you maintain the same spending level regardless of your investment portfolio. This is computationally easy to calculate. However, it is not realistic. Few people would continue to spend without adjustment as their portfolio declines in value.

In the future, I predict that all plans will be dynamic. A dynamic plan accounts for income adjustments. If the market goes down, you probably spend less. If market goes up, you probably spend more. This more closely follows human behavior and leads to vastly better outcomes for retirees.

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OUR TAKE: Dynamic planning requires A LOT more computing power. However, there is emerging technology today that is making this a possibility. I am fortunate enough to sit on the advisory board of one such company and leverage it for our clients – Income Lab

2. Generalists become Specialists

As you probably know, most financial planners today are generalists. They don’t necessarily have a specialty or focus. The vast majority act like family doctors. As the industry grows, we will have (and need) lots of specialists just as we have neurosurgeons and cardiologists.

Quick Plug: At Eliot Rose, we specialize in retirement planning. We serve individuals that are retired or within one year of retirement.

Some advisors out there have really interesting and specific specialties. For instance, Integrated Planning based out of Indiana focuses exclusively on optometrists – how neat! Planning Across the Spectrum the Spectrum based out of Connecticut focuses on helping those on the autism spectrum pursue financial independence.

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OUR TAKE: Specialization is an emerging movement and I predict that it is just the beginning.

3. All Advisors Take the “Hippocratic Oath”

We know that when we visit the doctor, they are treating us to the best of their ability. If they prescribe a medication, they usually tell us the side effects and if there is a generic. If we have specific needs, they consult or refer us to other physicians. All doctors are required and expected to act in these ways.

Most people would assume that all financial advisors are held to the equivalent standard. However, this is not the case.

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OUR TAKE: This is a serious problem and why I went to the State House and Washington DC to advocate for what I think is so clearly right.

Some “advisors” do not need to act in your best interest ever. Some advisors only need to act in your best interest some of the time. And you might not know which standard your advisor is held accountable to even if you ask! It is confusing beyond belief – sometimes even for me, as an advisor myself.

Now, I don’t want to end on a sour note. Many advisors (like us!) are required to act in your best interest all the time. And for those that aren’t required, they may still act in your best interest out of individual principle.

All in all, I predict this higher standard will be a requirement in the future.

By Jason Siperstein, CFA, CFP®, RMA®

Jason Siperstein is a fee-only financial planner that specializes in retirement planning. He is based in Rhode Island and serves clients locally and across the country. Jason is called on by local and national news to share his insights.

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