Like most of you, I remember the playground where I grew up and choosing sides for teams.  Standing in line, hoping to get picked (or not picked) by a certain team captain was always a little stressful, especially if you were chosen by the team you knew had no chance of winning!  The biggest problem was that I always preferred doing the choosing.  The reason is simple: I know what I’m getting when I’m the team captain making the decisions.

As I’ve traveled the country speaking with advisors about financial planning, I’ve come across a mindset that is consistent throughout the industry.  Rather than letting clients choose the risk in their portfolios, the advisor does it for them.  This practice becomes more apparent when the subject of annuities enters the conversation.

Much like the playground, the financial planner doesn’t let you, the client, choose the amount of risk you want in your portfolio; rather the planner, like a team captain, chooses for you.  Often, advisors don’t listen very well.  The reason is that they are predisposed to use certain types of assets that feel comfortable to them, but may not be in your best interest.  Some advisors are so fixated on products they forget that the priority is people first.  They need to listen well, by using a client-friendly planning process, ending with a plan in which products are best deployed for your benefit.  These priorities are brought to you by the letter “P”: People, Process, Plan, and Product, in that order.  Advisors need to listen to you to determine the amount of risk you want in your portfolio and create a plan using assets that adhere to your risk tolerance.  You should choose your own risk.  After all, you’re the one who has to live with it.

The reason so many advisors around the country utilize the ABC Planning Model is to help investors like you be your own team captain and choose the amount of risk you want in your portfolio.  In the ABC Model, you choose the amount of cash assets, the amount in protected money savings, and the amount at risk in stock or bond type of investments.

I suggest that if an advisor asked you what percentage of market risk you would want in your portfolio, neither you nor any other boomer or senior would say 100%.  Yet, if an advisor puts a large percentage of your assets in variable annuities (VAs) for “safe-money planning” and the rest into mutual funds or other market assets, they’ve done just that.  What might you say?  Would you want to risk 70%? 50%? 30%?  Who knows?  Only you do!  And certainly you don’t, if no one asks you.  Why wouldn’t the advisor ask you?  See what you answer and then develop a plan based on your wants and needs, not what the advisor wants.

When an advisor uses the ABC Planning Model, they place fixed index annuities (FIAs) and VAs in the correct category of risk. In fact, they let you determine where they belong.  The FIA is the middle ground between low CD rates and the volatility of the market.  The VA is a market risk asset and subject to the volatility of the market.  People saving for retirement could make better choices if an advisor would simply ask questions to properly position their solutions.

Lastly, an advisor building his/her practice solely on the basis of commission, and not thinking of you and your needs first, is obviously a person to avoid.  Commission-driven advisors are this industry’s bane. They are usually the guys asking you to make a huge financial decision n 90 minutes!  Sounds like the TV show Deal or No Deal.  Yet, if looking at your total portfolio, listening to your concerns and dreams and the percentage of risk you want, they decide that one product fits better than another to meet your needs, then they’ve done their job.

Advisors must simply do what’s right for you regardless of their pocketbook.  Make sure an advisor “ABCs” your portfolio to determine your exposure to risk and develops a plan accordingly.  Do it in a planning process that determines your goals, needs and wants, and you’ll have a very successful retirement with tremendous financial rewards.  Choose the right team captain, one who understands the ABC Planning Model and the ABC Planning Process.  If not, you may end up working the rest of your “golden years” at the “Golden Arches” with some of your old teammates!

Check out the ABC Planning Model at and call an ABC-trained advisor today for a complimentary ABC Profile Review.

The Retirement Pros
March 2013