November 13, 2013


Planning  |  Investing  |  Book Recommendations  |  DFA

ReadingRoomMeasuring Temperature with a Ruler.  This whitepaper, from David Loeper (the man who is almost singlehandedly responsible for the much-welcomed growth in “goals-based” investment planning and wealth management), explores the difference between managing returns and managing wealth.

Estimating the True Cost of Retirement. Morningstar’s David Blanchett  looks at how household spending typically changes over the course of retirement, and demonstrates that retirement income replacement rates may be lower than suggested by conventional wisdom.

Modern Portfolio Reality: The Failures of Modern Portfolio Theory. Another outstanding whitepaper from Dave Loeper demonstrating the folly of “risk tolerance” as a basis for portfolio management.

The Price Your Clients Pay for Using Sustainable Withdrawal Rates.  In this Advisor Perspectives article, Dave Loeper demonstrates the advantages of a flexible, plan-based retirement withdrawal rate versus the ubiquitous “4% Rule”.  A related video can be seen here.

The 4% Rule is Not Safe in a Low-Yield World.  Finke, Pfau and Blanchett propose that “the success of the 4% rule in the U.S. may be an historical anomaly, and clients may wish to consider their retirement income strategies more broadly than relying solely on systematic withdrawals from a volatile portfolio.”

Alpha, Beta, and now Gamma.  This article discusses, in rather technical terms, the value of good advice (what the authors refer to as “Gamma”).