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How Sequence Risk Analysis Helps Retirees Sustain Their Nest Egg in Retirement

How Sequence Risk Analysis Helps Retirees Sustain Their Nest Egg in Retirement

Retirement planning is all about managing risk, right?

One of the biggest risks is sequence risk, which is the risk that market declines will happen at the beginning of retirement when withdrawals from a nest egg are needed to sustain income.

Early market declines can have a massive impact on the sustainability of a nest egg, particularly if they are paired with rising inflation.

Hmmm…..rising inflation? Isn’t it what the newspaper headlines have been screaming lately?

Even if you don’t agree if we’re in the mix of an inflationary period, your clients are reading those headlines.

Herein lies an opportunity to serve clients better.

Could it be good timing to illustrate sequence risk analysis with your clients?

It is if you use StratiFi because you can generate it in under 5 minutes!

It shows best and worst outcomes so your clients have a better understanding of the sequence of returns.

I pulled screenshots of a high-risk portfolio so you can see how the charts appear. It compares the current portfolio with the suggested portfolio. 

It shows that both portfolios have nearly the same outcome in the lucky scenario where there is a bull market followed by a bear market.

However, in the unlucky scenario where there is a bear market followed by a bull market, the high-risk portfolio suffers losses that deplete the portfolio to a level that cannot support client withdrawal needs resulting in financial ruin.

How can a sequence risk analysis help you help your clients?
Advisors have told us that when they explain the sequence of returns using illustrations like above, it builds trust instantly….and it helps them generate more referrals!
Makes sense, doesn’t it? By helping your clients understand the sequence of returns, they can make informed decisions about how to manage their money and plan for a secure retirement.
This makes them feel good about their experience with you and sharing it with others.
Want to learn more about Sequence Risk Analysis? Schedule a demo or contact us about upcoming webinars.
You can see firsthand how advisors using StratiFi leverage the Sequence Risk Analysis for convincing aggressive investors to hire them.
It’s a tiny secret how a new team from Robertson Stephens grew their AUM from $0 to $100 million in under 12 months using these tools. 😁

Karan Motreja Author

I help make life easier for financial advisors. With our PRISM Ratings Tool, your clients can finally understand the risks associated within their portfolio, giving you the ability to take concrete action to lower these risks, while giving your clients peace of mind.

Additional Advisor Resources

Bob Veres features StratiFi in ‘Inside Information’ February 2022 Edition

Bob asks, “Is it really possible that a portfolio risk assessment tool for wealth managers could be as sophisticated as the algorithms that institutional teams are using?”

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