When Planning For Safety Consider The Alternatives

“It’s not what you make that counts!”

Exhorts friend and mentor Ed Slott in an interview we recently conducted. “It’s what you keep – after taxes!” Ed Slott has a top-rated show on public broadcasting called ‘Retire Safe and Secure.’ Ed’s message about retention is in sync with the current preference among retail investors for capital preservation over accumulation.

In a recent op-ed published in Bloomberg, Jim Bianco notes that so-called Moms and Pops on Main Street haven’t connected with Wall Street’s clever acronyms of FOMO (fear of missing out) or TINA (there is no alternative).

Despite the impressive strong performance registered by stock market indices this year, retail equity fund outflows are at record levels seen at least since 1992. The data shows that retail investors are mainly opting out of stocks and into bonds to preserve their capital.

Bianco writes that the modern wealth manager influences or directs these asset flows, and that the public is getting what it wants via 60/40 equity/bond portfolios. As a CFP® practitioner, I am hopeful that the public is making this choice after assessing a plan with alternatives. A solid financial plan includes assumptions, the pros and cons of a recommended course of action, and, importantly, other ways to achieve the end goal. In the 1940s, Leo McGivern of the New York Daily News wrote, “Last year over one million quarter-inch drills were sold – not because people wanted quarter-inch drills but because they wanted quarter-inch holes.”