Description
In this workshop, we explore major problems with the Probability of Success score commonly used in retirement planning, both analytically (it doesn't mean what you think it means) and psychologically (it leads to client anxiety). We then examine what risk in retirement is really like and how a focus on finding the right balance between the risk of overspending and the risk of underspending in retirement can help advisors give clients better ongoing guidance, and improve both client outcomes and experiences.
Outline
I.Major problems with probability of success (20 min)
What retirees want
What can a retiree afford to spend?
Why is probability of success so scary?
II.Risk and reward in retirement spending (15 min)
The messaging behind success and failure
Risk = Hazard + Outrage
III.Scores vs Directions (15 min)
Spending and adjustments
Guardrails
Monitoring & updating plans
Learning Objectives
Learning Objectives:
-Identify types of client goals and the major questions that they bring to the retirement planning process.
-Explain how probability of success leads toward predicted underspending of retirement resources and higher client anxiety.
-Learn to communicate retirement risk using the concepts of overspending and underspending.
-Know how to implement and monitor adjustment-based retirement plans.