David Stone on “Ask the Experts”

At 8.5%, inflation is higher than it’s been in 40 years or more. Understandably, investors reaching retirement age are getting a little nervous.

Exhibit A: Michael Madden of Wealth Solutions Report recently published an article in response to this inflation-adjacent question from an anonymous financial advisor:

“I have a question for Ask the Experts:  My older clients are increasingly asking about whether they should stay in cash accounts in anticipation of higher interest rates around the corner. How can I best approach these conversations?”

In the article, he poses the question to a panel of experts: Zachary Parker, Senior VP of Retirement & Income Planning at Advisor Group; John Majors, Wealth Advisor at SageView Advisory Group; and our own David Stone, CEO and co-founder of RetireOne.

Both Parker and Majors point out that the answer to the question depends on the client’s liquidity needs. If they have more cash than they need in the short-term, then are they holding excess cash because they are afraid of losing money in the market? Here’s an excerpt from David’s segment of the piece:

It’s important to understand the message inside of the question. Your clients may be worried about declining bond prices, or a market correction due to rising rates…or both.

There’s a great deal of uncertainty in the world today with the pandemic, and the specter of a potential global conflict. Staying in cash certainly keeps retirement assets safe from market risk in this environment, but it will expose them to inflation risk, which has been in sharp focus of late.

He also talks about some specific annuity solutions that could help clients who want to stick with cash, and Parker and Majors give some great advice around trying to determine what the client is actually after, what solutions might help, and so forth.

Read the article ->