Vanguard personal advisors help clients plan for the future, whether the client is still accumulating for retirement or retired. They help their clients lay out a plan for the future with an appropriate asset allocation in place.
Other highlights from this webcast
- How does an advisor work with a client?
- Can Vanguard help me think about how to approach Social Security?
Jonathan Cleborne: When you think about the differences for a portfolio for somebody who is further into retirement relative to how you’re thinking about somebody who’s preparing for retirement, how do you help somebody who’s in retirement get comfortable with these dynamics?
Kahlilah Dowe: Part of what we do in helping clients as they progress throughout their lives is getting them comfortable going from a place of “I’m accumulating assets, I’m saving, I’m investing when the market is going down,” to a place of “I need to sell assets from my portfolio, I need to focus more on preservation, and I’m not adding when the market is going down, and I may even have to sell assets.”
So part of it comes down to, and I think this goes back to the question around bonds, making sure you have the right asset allocation so you’re focusing on preserving what you’ve already accumulated, making sure that you have enough cash set aside in the portfolio so you’re not relying on the portfolio’s current market returns for living expenses.
But I think another part of what we do is just help clients see how we envision it playing out. Because I think that’s the challenge for investors. It’s difficult to look forward and see. I know I worked, and I got paid every two weeks. How do I envision myself getting income from the portfolio?
What we do is to lay out a plan for them to see—these are your income-oriented investments. This is how I expect to generate the income that you need from your portfolio. But it’s also helping them see that even though you’re retired, this is still a long-term portfolio. Right?
Jonathan Cleborne: Right.
Kahlilah Dowe: So we want to make sure we’re not focusing too much on the short term. If you retire at age 65, you may live for another 20, 30 years.
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Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline.
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