The Smartest Things Said at the NAPFA Conference


Last month, over 300 fee-only financial planners gathered for NAPFA’s annual conference to hear the latest thinking on behavioral finance, investment management, health care, and more.  Here are a few of the smartest things said at the conference.

Speaker: Nick Murray, Author of Behavioral Investment Counseling
  • Ten thousand people retire every day and will continue to do so for the next 12 years.
  • According to the Annuity Mortality Table published by the Society of Actuaries, the last surviving spouse of a 62-year-old non-smoking couple will pass at age 92.
  • The dominant determinate of long-term real life investment outcomes is not investment returns but investment behavior.
  • The average retirement age is 62. The parents of these retirees were born between 1928 and 1932. Humans inherit our behaviors from our parents. Consequently, it is natural for retirees to be afraid of the market because their parents were afraid of stocks after growing up during the worst market collapse in history.
  • Neither investors nor financial advisors can control the economy, markets, or future investment performance. The only thing we can control is our behavior. Successful investors maintain and stick to a plan. Unsuccessful investors react to market movements.
  • The S&P 500 index recently obtained the level of 1,900 for the first time. When a 62-year-old retiree was born in 1952 the S&P was at 24.
  • A financial advisor’s pledge should be to keep clients from turning temporary losses into permanent losses. The most common way investors can lose money over time is if they panic. Selling makes losses permanent.
  • The four word death sentence of investors: “It is different this time.” The four word solution, which always trumps the death sentence: “This too shall pass.”
  • Inflation, the villain in the retirement story, has 3% written on its chest. The retiree superhero has a shield with 10% and a spear with 12% written on them (long-term returns of large and small cap stocks, respectively). Stocks must always be a significant portion of the retiree’s portfolio.
Speaker: Jim Otar, Author of Unveiling the Retirement Myth
  • If your withdrawal rate is less than 3% when you retire, you are not likely to outlive your money.
  • If your withdrawal rate is over 3% when you retire, luck will be the most important factor determining the success of your retirement. Inflation rates and the sequence of returns (whether the market does well or poorly in the early stages of retirement) will determine whether your funds last.
  • If your withdrawal rate is over 4%, your portfolio is not likely to increase in value over time.
  • A formula for calculating the number of years your portfolio will last given a 5% withdrawal rate: 4 + (360 / Market PE Ratio). For example, the market currently has a PE Ratio of about 25, so a 5% withdrawal rate would enable your portfolio to last for 18.4 years [4 + (360 / 25)].
  • If you have less money four years into retirement, chances are high you will outlive your money if you maintain the same pace of spending.
Speaker: Alan Blaustein, Co-Founder of About.com and OpenSky
  • The Freedom of Information Act allows consumers to shop around for cost effective health care.
  • A lower joint replacement at Las Colinas in Irving, Texas, costs $160,832. The same procedure costs $42,633 at Baylor hospital. These hospitals are five miles apart.
  • Previously, 25% of doctors collected 75% of Medicare payments. Until recently, no one knew these doctors were significantly more expensive than their peers.
  • There is now a national marketplace for healthcare. It now makes sense to collect bids from hospitals across the country when requiring a major procedure.

About the author

Lon Jefferies, CFP®, MBA
Lon Jefferies, CFP®, MBA

Lon Jefferies is an investment advisor representative with Net Worth Advisory Group, a fee-only financial planning firm in Salt Lake City, Utah. He is a Certified Financial Planner (CFP®) and a member of the National Association of Personal Financial Advisors (NAPFA). He possesses an MBA and bachelor's degrees in Finance and Marketing from the University of Utah. Lon writes articles for local magazines such as Utah CEO, Business Connect and Utah Business Magazine, and he consistently contributes articles to online magazines such as FIGuide.com and FILife.com (by The Wall Street Journal). Additionally, Lon is an expert author at EzineArticles.com. Lon has been quoted nationally in publications such as the NY Times and Investment News.

Lon can be contacted at (801) 566-0740 or lon@networthadvice.com. Learn more about Net Worth Advisory Group at http://networthadvice.com and visit Lon's blog at http://www.utahfinancialadvisor.blogspot.com.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Copyright 2014 FiGuide.com   About Us   Contact Us   Our Advisors       Login