Money and Old Age–First Installment


  This is the first of four posts based on panels convened in Boston on May 3 by Big Brothers/Big Sisters of Massachusetts Bay. In conjunction with a fund-raising event, BBBS presented four discussion forums on how society, and individuals, should deal with the fact that we are living longer, while our business community has moved away from company-funded retirement plans and has placed the obligation to fund this lengthened retirement period on the employee.


  The first panel approached the question from the standpoint of the broker-dealer community. As with all the panels, participants were very senior executives, including the heads of investment at Citizens Bank, Mass Mutual, Commonwealth and Fidelity (Clearing and Custodial). Below, key take-aways:


 Sixty is the new fifty. People are working longer. Restructuring investment portfolios to move away from equities is not wise. Emphasis on immediate liquidity also is unwise as that impacts performance. People don’t need all their assets liquid at all times.

There is a trend to seeking a “pay check” in retirement, such as an annuity payment, as part of an overall plan.

We need to pay attention to tax efficiency and starting to plan earlier in life. The single largest lifetime expense is tax.

We need to rely more on technology to simulate future results over a longer period of time to give better advice to people planning retirement.

The average couple today, aged 65, will incur $280,000 in medical expenses during the balance of their lives.

There is a continuing gap in attracting young people to the advisory field at a time when advisors are badly needed by both current baby boomers and the millennial generation. Robo-advising tools and other AI tools will help make advisors more efficient, but there will be shortages. And racial and sexual diversity will be difficult to achieve but important.

Advisory fees will be under downward pressure, particularly through technological innovation. Will we move to flat fees or hourly charges, away from the current general practice of a percentage of AUM (assets under management)? Not clear and in any event not immediately.






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