Welcome, Life is Long (Mostly), Continued Misunderstandings, Chaplin vs. Chaplinesque, On-Demand Webinars, Shoutout to StreetCred, New Hire


In the third quarter of this year, these advisors joined the RetireOne platform: Kevin O’Brien Jr., Matt Woryn, Austin Konecke, Jessica Simmons, David D’Albero II, Michelle Mabry, Vince Asaro, Jake Barnes, Mark Dougal, Kevin Rinow, Mark Newfield, Colton Hastings, Simcha Goldberg, Rich Meagher, Mike Miller, Jason Cowans, Dan Novak, Alison Mewbourne, and Jennifer Dragon.

Welcome to the platform!

Naked Mole Rat

We just released the results of our joint 2023 RIA Protected Accumulation + Retirement Income Survey Many thanks to our tremendous partners at Allianz (Sam Dittberner!!!) for co-sponsoring the study. Reading over the results I’m struck by a couple of different things: 1. RIAs don’t structure their businesses in predictably similar ways. I know. And 2. Longevity is freaking your clients out. I mean, we all want to live longer, right? And we’ll leave no stone unturned to solve it. Recently, a Duke University biologist shared a study in which he and his team were able to extend the lives of older mice by infusing them with the blood of younger mice. Vampiric implications aside (happy Halloween, everyone!), the drive to survive leads us to these incredibly novel solutions. Heck, another recent study found that injecting the naked mole rat’s ‘longevity gene’ into mice extended their lives as well. Turns out naked mole rats are remarkably resilient. So why all of this progress toward solving longevity if everyone is white-knucklin’ it to and through retirement? Read on!

Life is Long (Mostly)

One common thread in our 2023 RIA Protected Accumulation + Retirement Income Survey is anxiety: RIA anxiety regarding future economic returns, the viability of the 4 percent rule, and other financial headwinds, as well as the anxiety their clients are expressing about things like longevity.

Longevity. Man, what a thing to be anxious about. We live in a world where life expectancies are getting longer every generation. If the biological imperative is to survive, then wouldn’t it follow that we are inclined to want to live longer? So, why are we so anxious about it?

Looking at our survey results, a lot of the anxiety about longevity may stem from concerns about how people will support themselves during those elongated retirement horizons. According to the survey, 63 percent of advisors report client concerns over the sufficiency of employer-provided retirement benefits, while 85 percent are worried about whether or not Social Security will be enough to meet their needs. A whopping 97 percent report worries over inflation, and 93 percent report concerns over the cost of healthcare in retirement.

This is exacerbated by the fact that, according to the Alliance for Lifetime Income’s 2023 Protected Retirement Income and Planning Study, advisors tend to underestimate client life expectancies in their planning. David Blanchett recently analyzed this study and learned that the average age advisors used when planning the retirement of a 65 year-old married couple was 92, with a median of 94. According to Blanchett, “This is likely an aggressive assumption, given the relatively high incomes among households who engage a financial advisor and the corresponding higher life expectancies. More refined mortality tables would suggest there is approximately a 50 percent probability that one member of this joint household could live to age 95.”

Continued Misunderstandings

So clients are worried about outliving their savings, and advisors might not be planning long enough retirement horizons. That in and of itself is concerning, but it’s also worth noting that some of the most accessible and effective tools for hedging against longevity risk – annuities – are misunderstood by many RIAs.

While most respondents (56 percent) to our 2023 RIA PARI survey did report being likely or very likely to refer or recommend an advisory annuity to their clients, a fifth of respondents are still categorically unwilling to do so.

We followed up to learn why, and those reasons remain consistent with previous years: fees, liquidity, opacity, and complexity. This is a head scratcher. Modern advisory annuities (read: zero-commission solutions) have largely overcome these historical problems, so why do advisors continue to believe these things about ALL annuities? Maybe Charlie Chaplin can explain.

Chaplin vs. Chaplinesque

The dates aren’t confirmed, but the story goes that, sometime around 1915, Charlie Chaplin entered a Charlie Chaplin walk-alike contest and came in 20th. He’d entered the contest on a lark after hearing that Bob Hope had entered such a contest and won; he figured he’d be a shoo-in. After all, who walks more like Charlie Chaplin than the little tramp himself?

Nineteen other people, according to the judges. Bear in mind that Chaplin wasn’t wearing his trademark toothbrush ‘stache or licorice-black boots. And this isn’t the only time it happened. Chaplin entered another contest in 1975, but even then, he placed third.

These anecdotes highlight the power of perception and confirmation bias. Chaplin entered those contests under an assumed name, without his identifying marks. Presumably, had the judges known he was the real Charlie Chaplin, he would have won first prize (or been disqualified). But what judge would think to look for the real Charlie in a walk-alike contest? So they assumed everyone was an impersonator, and judged as such.

So it goes with annuities. If an advisor has deeply-held beliefs about annuities having high fees, poor liquidity, and so forth, they’re not necessarily going to refresh that knowledge without a very good reason, and they’re more likely to dismiss (or simply not pay attention to) information that challenges those beliefs.

Chaplin sans 'stache Fact is, when I say “Charlie Chaplin,” you probably think bowler hat, tidy black mustache, cane, and black lace-up boots. Absent those, could you identify him in a lineup? Seems like annuities suffer from the same problem…Among at least some advisors. In our case, almost a third of RIA respondents are unaware that advisory annuities even exist. Another 37 percent are unaware that RIAs do not need to hold an insurance license to implement fee-only annuity solutions into their practices (with the help of an OID, of course).

Going back to the analysis conducted by David Blanchett, he found that advisors who reported having a high degree of annuity knowledge tended to have a higher opinion of annuities overall, while the reverse was true for advisors who reported having a low degree of annuity knowledge. According to Blanchett, “There is additional evidence in the study that advisors who aren’t knowledgeable about annuities may not understand how they can benefit clients, especially retirees looking for protected lifetime income.”

Furthermore, a lack of knowledge regarding annuities also appears to correlate with advisor perception of client interest in them. That’s confirmation bias at work.

Into the Unknown

It’s worth noting that confirmation, at its heart, is a way to minimize psychological stress. It’s a logical fallacy people fall prey to when they want to learn they’re right about something or avoid learning they’re wrong. It’s also worth noting that, at this moment in history, people are trying to minimize their stress in any way they can, for good reason.

We’ve been dealing with a lot of uncertainty over the last several years. We’ve had a global pandemic, war in Eastern Europe, widespread political unrest, and ongoing market volatility. In our survey, we asked advisors about their long-term expectations for US fixed income and equity returns, and the responses were generally pessimistic. Nearly half of respondents expect US equity returns to be two to four percentage points below historical averages over the next 15 years, and 70 percent were equally pessimistic about fixed income.

We live in a world that’s changing rapidly, and that’s making long-term planning difficult. The tech sector continues to make seismic changes to how business operate, many industries are still struggling in the wake of COVID-19, and we’re seeing strikes and labor movements on a scale we haven’t witnessed in decades.

Business is changing and, when business changes, Wall Street follows suit. Who knows what retirement portfolios will even look like 10 or 20 years down the road? And retirement horizons will likely continue to get longer.

Maybe we should reframe the retirement problem around longevity this way: how can we extend the lives retirement portfolios to match the lives of our clients? What innovations are there for matching the exponential technologies that are extending our lives and creating such mind-bending efficiencies?

To completely abuse a metaphor, how do we inject client portfolios with the naked mole rat longevity gene? Annuities are a good start. In fact, we learned that 59 percent of our RIA PARIS respondents allocate a portion of client decumulation strategies to income annuities. Their average allocation? 20 percent.

On-Demand Webinars from Q1

  1. Webinar: M&A and Succession – How Sellers AND Buyers Stand Out in a Crowded Market
    Perigon Wealth CEO Arthur Ambarik joins experts Linda Willis and Susan Danzig to discuss how to maximize business valuation as a seller of an RIA, and how to ensure attractiveness to potential targets of acquisition as a buyer.
  2. CE Webinar: The Behavioral Economics of Retirement with Michael Finke, PhD
    The American College of Financial Services professor joins Protective’s Lauren Drapeau to share his behavioral research regarding the risks of allowing emotions to influence financial decisions…And how to avoid them.
  3. Webinar: What’s a Buffer? A Floor? A Cap? RILAs Explained
    Jackson’s Kyle Burke Joins RetireOne’s Mark Forman to explain how Jackson’s Market Link Pro Advisory II registered index linked annuity (RILA) offers market participation with a measure of protection against the downside.
  4. Webinar: Another Boring Presentation about Protecting Accumulation (and Income)
    RetireOne’s Matt Grillo teams up with Midland Advisory’s Cooper Sinclair to bring us this boring webinar about insurance…Specifically, how to protect client portfolios from losses, and provide a 7.55 percent income guarantee (at 65) with Midland National Capital Income fixed index annuity.

Shout Out to StreetCred

In September our PR team at StreetCred celebrated their 3rd anniversary. We’ve been with them since the early innings and have learned a great deal about PR as a contact sport. Many thanks to Will, Emma, Jimmy, Jason and team, and best wishes for continued success! Looking for the best PR firm in the biz (in my opinion)? Contact them.

New Hire

Louisville (well, Oldham County) native, and recent Bellarmine grad Emma Sapin joined our Service and Operations team in July. Welcome aboard, Emma (and go Knights)!

As always, if you like this content, be sure to follow RetireOne on LinkedIn, and Twitter for more.

Best Wishes,

Stone Signature
David Stone
Founder and CEO