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All Posts By Michael Lecours, CFP

Planning for Retirement is Simple.

When it comes to retirement planning, there are only two outcomes.  You will either outlive your savings or your savings will outlive you.  It’s that simple.  Unfortunately, it’s not easy.  Below are a few strategies to consider during your transition years.

50s and 60s: Plan for the Future

Around age 50, investors should begin to plan more specifically for their retirement. It’s important for investors to remember that even though they are approaching retirement, they should still maintain a strong holding of stocks.  An investor will retire and may not touch some of their assets for a few decades. Those funds should be invested a little more aggressively than the funds they will need early in retirement.

Retirement Transition: Writing the Next Chapter

As an investor enters retirement, they transition from acquiring assets and saving to spending.  The asset allocation should not have a sudden change.  Rather, a phased approach can offer a smooth transition into retirement. We work with clients to solve this dilemma by using a bucketing strategy.  In a sense, investors split their portfolio in four buckets, with each bucket designed to provide income for 7 to 8 years at a time, and focused on using an appropriate asset allocation for each bucket based on the timeframe.

Age 70+: Staying Prepared

It used to be that the average American male had reached his life expectancy by age 65. In fact, when Social Security first started, it was designed to help people that had lived longer than the life expectancy at the time (age 65). Now, with changing retirement trends, many people are still working at age 70 and beyond.  Not to mention living longer… a lot longer.

If an investor is healthy and there is longevity in the family history, it’s important to review the portfolio to make sure it is not being depleted early.  If the investor is unhealthy, or does not expect to live much longer, it’s important to check that beneficiaries are up to date or develop a strategy for gifting the account to a loved one.

Could another recession occur? What’s being done to prevent the next one?

Five years ago, the United States was rocked by yet another financial disaster – the collapse of Lehman Bros. This came on the heels of a tightening credit market, the housing crunch, struggling auto industry, and numerous large financial institutions that were on the brink of collapse.

Could it happen again? What’s been put in place to prevent another recession from occurring?

Some progress has been made, but not enough. The culprits are not unusual:

Red tape: Financial Regulation reform, known as the Dodd-Frank Financial Reform was designed to usher in a new era of regulation, prevent the Madoff schemes, limit the questionable investment products (mortgage backed securities), and ultimately stop corruption and abuses (which led in part to the recession of 2008 and 2009). It had the best of intentions!

In reality, this legislation has aggravated an already burdened financial system. There has been little or no reform, just more regulation and paperwork. Does it help the investor? Not yet. In fact, this legislation has provided few additional protections to investors.

Bureaucracy: The politics in government have gotten in the way of meaningful reform. Gridlock has slowed the process. The hot issue are health care reform and improving the economy NOT minimizing future recessions.

Uncoordinated Reform and Enforcement: There are numerous government agencies and stakeholders that are looking to better protect consumers. Unfortunately, it’s not always clear which organization is responsible for what area, which leads to overlapping regulations and confusion for investors. This isn’t just a US problem, it’s on a global scale!

Lack of Leadership: There is no organization that is looking at the whole picture. Each regulator has it’s piece, but who is looking at the big picture? Who is making sure that nothing is being missed? Is it ever possible?

Preventing another disaster is a very complicated issue that can’t be solved overnight. Reform to this magnitude can’t be judged as a failure just yet. It needs a thoughtful approach, not a knee-jerk reaction. An over-reaction could lead to over-regulation and that can be almost as dangerous as a lack of regulation. The right balance needs to be developed.

We are on the right path. A path that will ultimately help the investor, but the path is long and we’ve only just started. The headwinds we face will probably be overcome, we just don’t know when.

We will always have to worry about recessions. Hopefully, we will eventually have something in place that will protect investors from events that led to the recession of 2008 and 2009.


Why you should be skeptical of Europe’s economy, even though its recession is over.

This summer, headlines stated that the Euro Zone had emerged from its recession with .3% growth in GDP. It’s no cause for celebration, but an important signal that Europe is making progress in its recovery. Below are a few signs indicating Europe is improving:

  • Manufacturing growth has improved in five countries, including Italy and Ireland.
  • New orders and new exports have not been this high since May 2011
  • Euro zone manufacturing purchasing managers index reached a 26-month high (highest since June 2011).
  • Greece continues to lag relative to other European countries, but even it has hit a four year manufacturing high!
  • Air freight is at the highest level since 2011.

What we are still waiting to see:

  • This growth has not translated into new jobs… yet. Unemployment is still around 11% for all of Europe. (Austria has the lowest rate, 4.7% and Spain has the highest rate, 26.9%)
  • National public debt in Europe has hit new highs this year.
  • Germany and France are largely responsible for the improved economic situation, which masks the recovery efforts of the weaker economies (or lack of recovery).

We do not expect to see the economy come roaring back any time soon. The end of the recession is an important milestone to reach, but just a milestone. We feel that Europe’s economy will slowly improve for many months and struggle to overcome obstacles to meaningful growth.


Any benefits to exploring space? The answer surprised me.

Over the weekend, I visited the space shuttle on display in NYC.

I was surprised to learn all the technology developed for space exploration that has found ways into our everyday lives.  Here are just a few:

  • Cell phone camera
  • Clean energy technologies
  • Scratch-resistant lenses
  • Water filtration & purification
  • CAT Scans
  • Invisible braces
  • Memory foam (pillows)
  • Ear thermometer
  • Smoke detector

Maybe someday there will be a huge benefit (life on another planet, colonizing Mars), but until then, these “small” technological advancement can bring value to people today. It can make our lives better, safer, or healthier.

Links to read more:

here and here

Why lobster is cheap this summer

I’ve caught a few headlines online and blurbs on the radio about the unusually low price of lobster at this time of year. At first, I figured some environmental condition was the cause. Turns out I was partly wrong. After a little research, I learned about this fascinating lobster story that involves many different factors from changing consumer demands, to successful sustainable practices (maybe too successful) in the Gulf, to underutilized cod packaging plants in Canada, and even involves the collapsed Icelandic banking system.

Even if you’re not interested in lobster, this is a fascinating story about how interconnected the international markets really are.

Read the story

Should I invest now?

I’ve been getting this question a lot this summer: “Should I invest in the market now, or is this the top of the market?”

Here’s my response:

If you watch the news, there’s always a reason not to invest. Think back to the election and the fiscal cliff.  Who would be crazy enough to invest at the end of 2012 when the fiscal cliff was right in front of us?  Then again, The market has gone up and up this whole year with only a few speed bumps.

If you run the numbers, the research suggests that you’re better off moving the money into the markets despite what you hear from the media. Don’t try to time when to buy or sell. But that may be too hard to stomach for many investors.

And then there is the middle ground – invest in the markets on a regular basis over a certain period of time – called dollar cost averaging.  Instead of investing 100% of your portfolio right away, you could invest 25% of it for four months.  That may reduce the risk of buying a security only to see it drop shortly after you purchase it. This allows you to ease back into the markets, instead of jumping in.  Keep in mind, this method does not ensure a profit and does not protect against loss in a declining market, so investors should consider their willingness to continue purchases during a declining or fluctuating market.

Top takeaways from 10 articles on asset allocation.

I’ve been doing a lot of reading on Asset Allocation this morning and here are a few key takeaways that I think might be helpful to investors:

  • Static allocations assume the relationships between the various asset classes stay the same.  Dynamic allocations assume that the relationships are constantly changing.  Look back over the past five years and you can see how the relationships are in constant state of fluctuation.
  • Dynamic asset allocation can be accomplished with frequent reviews, opportunistic components, and flexible strategies.  It’s more active than static, and requires more effort and time.
  • Leveraging a portfolio (borrowing money to buy more of a certain asset class) to create risk parity across each asset class can reduce the overall risk of the portfolio while providing acceptable returns. This can be complicated to do on your own and comes with its own set of risks and higher costs (cost to borrow money).
  • Marcus Schlumerich, author of The Efficient Frontier in Modern Portfolio Theory, got it right when he stated that “a portfolio is efficient if no other portfolio has the same expected return with lower volatility.”
  • A growing trend in asset allocation goes beyond the standard 60/40 split between stocks and bonds.  New research suggests a broader and deeper use of asset classes can help to reduce risk.
  • Due diligence is becoming increasingly important as new asset classes in the alternative space emerge.
  • Asset classes are cyclical and respond based on economic environments. Changing economic environments cannot be predicted. Portfolios need to be designed with that in mind.

It’s nice to see new research supporting strategies that  have already been implemented in our client portfolios. If you’re interested in putting the Asset Allocation approach to work in your own investment portfolio, please feel free to contact us.