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Someday Rich: Planning for Sustainable Tomorrows Today

ISBN: 978-0-470-92000-8
320 pages
December 2011
Someday Rich: Planning for Sustainable Tomorrows Today (0470920009) cover image
To truly be successful, today’s financial advisor must strike the right balance between effectively engaging with his or her clients and finding meaningful ways to maintain their financial security. By framing your mission in this way, you can help your clients clarify their vision, build a plan to achieve it, and manage that plan so they stay on track.

Nobody understands this better than authors Timothy Noonan and Matt Smith—two seasoned financial professionals with over five decades of combined experience working in the asset management business. And now, in Someday Rich, they show financial advisors with clients who are rich, or have the opportunity to become rich, how to sustain a client’s desired lifestyle to, and through, retirement.

Engaging and informative, Someday Rich provides the context, description, and implementation suggestions for the Personal Asset Liability Model—a process that will allow you to determine a client’s funded status relative to their future spending needs as well as develop and monitor their investment plan accordingly. While the methods in the Personal Asset Liability Model may not have been practically accessible to past advisors with a large number of clients, this model now brings together the technical methods to answer important client questions in a way that is feasible and includes the communication strategies that can make the delivery of the advice model more effective.

Along the way, this reliable resource discusses the business of giving good advice and addresses how to incorporate these steps into a client engagement road map. Insights on various other issues associated with this discipline are also included, such as how to develop client trust and deliver personalized service when you have so many clients, and contingency risks—life, health, disability, and long-term care—that need to be considered in the financial planning process. And in later chapters, single-topic essays, contributed by experts in the financial planning field, cover issues ranging from target date funds and the investment aspects of longevity risk to modern portfolio decumulation.

Building more valuable relationships with your clients is a difficult endeavor. But with Someday Rich, you’ll discover what it takes to achieve this goal as you put them on a path to a sustainable financial future.

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Foreword ix

Preface xi

Acknowledgments xv

Introduction 1

CHAPTER 1 Time for a Real Conversation 11

CHAPTER 2 How We Got Here 27

CHAPTER 3 The Right Clients 43

CHAPTER 4 Connecting the Dots 61

CHAPTER 5 The Personal Asset Liability Model—Funded Status 79

CHAPTER 6 The Personal Asset Liability Model—Investment Plan 101

CHAPTER 7 Making a Good Business of Giving Good Advice 133

CHAPTER 8 Investor Archetypes 161

CHAPTER 9 Tripping Over the Finish Line 171

CHAPTER 10 On Shaping One’s Future 191
Albert Bandura

CHAPTER 11 Building a Simple and Powerful Solution for Retirement Saving—Russell’s Approach to Target Date Funds 203
Grant W. Gardner and Yuan-An Fan

CHAPTER 12 Investment Aspects of Longevity Risk 223
Don Ezra

CHAPTER 13 Mismeasurement of Risk in Financial Planning—A Lesson in Risk Decomposition 237
Richard K. Fullmer

CHAPTER 14 Modern Portfolio Decumulation—A New Strategy for Managing Retirement Income 249
Richard K. Fullmer

APPENDIX A Lessons Learned from Retirement Income Research 273

APPENDIX B The New Language of Retirement 277

About the Authors 283

Index 285

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Timothy Noonan is Managing Director of Capital Markets Insights for Russell Investments and a leader in the U.S. private wealth management industry. He is responsible for shaping client service strategies and delivering capital markets analysis to advisors in the U.S. and around the world. Noonan is currently Chairman of the Russell Strategic Advice Committee and has been the architect of Russell's Helping Advisors initiative, which since 2008 has offered advisors in the U.S., UK, and Australia insights to help advisors and their clients cope with retirement investing in a hostile economic climate.

Matt Smith is an independent consultant and author and coauthor, respectively, of two other Wiley Finance books, Managing Your Firm's 401(k) Plan: A Complete Road Map to Managing Today's Retirement Plans and The Retirement Plan Solution: The Reinvention of Defined Contribution. He was formerly senior vice president and defined contribution practice leader in the United States for Aon Consulting. Prior to Aon, Smith was managing director of retirement services for Russell Investments. He has been involved with the design, implementation, administration, consulting, and asset management of retirement plans for over twenty-eight years. Smith has written and spoken widely on topics involving retirement plans during his career.

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"Good financial advisors manage investors as much as they manage investments. They engage in real conversations with clients by asking, listening, empathizing and educating, before prescribing investment solutions. Timothy Noonan and Matt Smith guide advisors into real conversations with clients, replacing ignorance with knowledge, and fear with peace of mind."—Meir Statman, Glenn Klimek Professor of Finance, Santa Clara University; author of What Investors Really Want: Know What Drives Investor Behavior and Make Smarter Financial Decisions
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