Both parties need to be upfront when it comes to financial strategies

Expectations need to be set on both sides when you enter into a relationship with a financial professional, says Brad A. Dickman, CFP®, ChFC, Managing Partner at Stonebridge Wealth Strategies.

“As your financial professional, I might think I’m doing a great job by meeting with you two times a year,” Dickman says. “But in your mind, I should be reviewing your plan four times a year. You believe I’m falling short and are therefore disappointed in the level of service I’m providing. If I don’t know that, I can’t fix it and you’ll continue to be frustrated. This is why it’s so important to have consistent communication and to take steps to ensure that you and your professional are on the same page.”

Wealth management and retirement planning is a fluid process that requires regular monitoring to account for changes in your life, your job or your family. When you build a strong, trusting relationship with your financial professional, it becomes that much easier to keep up with these changes and account for them in your planning process.

Smart Business spoke with Dickman about keys to building a better relationship with your financial professional.

How do you know if a financial professional is right for your needs?

Find someone you like and trust who you can build a rapport with. Knowledge is also key. This person should be working on continuous education and taking steps to stay current with investment regulations. You want someone familiar with your investment strategy who can offer sound advice on the best way to help maximize the return on your investments.

What can you do to make it easier for your advisor to help you?

People will often enter into a new relationship with a financial professional in a very guarded state. It might be out of concern that this person is going to try to sell you something.

But most advisors and financial professionals are not in the business of trying to sell you a product or service. Their primary goal is to offer advice that fits your specific circumstance and then help you craft a strategy that meets your needs.

Be open about your current status, both the good and the bad. If you just got a great return on an investment or some other income boost, you obviously want to share that with your advisor. At the same time, if you have $50,000 in credit card debt, you’ll want to share that too. Otherwise, it’s going to be extremely difficult to build a strategy that enables you to meet your goals.

What if you have concerns about your advisor?

Own your situation. You may make a personal connection with your advisor, but at the end of the day, it’s a business relationship. You owe it to yourself to address and resolve any concerns that might be hurting your financial strategy. Often, problems start with a small misunderstanding. It’s something that either wasn’t understood in the beginning or something you forgot to ask about before preceding to the next step.

If you can stop a problem early, it becomes a small bump in the road and you continue forward. But if you let it fester because you don’t want to rock the boat, it can create bigger problems that could leave you in a tough spot.

If you believe it’s time to make a change, request an apples-to-apples comparison with another advisor who can look at your plan and identify any holes that might exist. Talk about the pros and cons of your current account versus what the new advisor can to offer. The key to success with any advisor, new or existing, is communication.

Financial Professionals of Stonebridge Wealth Strategies are registered representatives who offer securities products through AXA Advisors, LLC, a registered broker-dealer and member FINRA/SIPC, investment advisor representatives who offer financial planning and investment advisory products and services through AXA Advisors, LLC, an investment advisor registered with the SEC. Annuity and insurance products offered through AXA Network, LLC. AXA Network conducts business in CA as AXA Network Insurance Agency of California, LLC, in UT as AXA Network Insurance Agency of Utah, LLC, in PR as AXA Network of Puerto Rico, Inc. Stonebridge Wealth Strategies is not a registered investment advisor and is not owned or operated by AXA Advisors or AXA Network. AGE 120531 (11/16)(Exp 10/18).

Insights Wealth Management is brought to you by AXA Advisors, LLC

How to structure your company retirement plan for long-term success

Your small or midsized business is unique, with unique challenges and needs. So why would you incorporate an “off-the-shelf” or “401(k) in a box” retirement plan, and expect to get results?

If your retirement plan is structured right, you can use it to attract and retain top talent, maximize owner and key employee benefits, increase employees’ financial wellness and/or help employees save and invest wisely in order to have a timely, dignified retirement.

“But the majority of employers continue to work with a friend, colleague, the adviser who manages their individual assets or someone at a 1-800 number who works for a plan provider,” says Robert Yelenovsky, vice president and manager at Fragasso Financial Advisors.

Smart Business spoke with Yelenovsky about setting up a retirement program that contributes to a business’s long-term success.

Where do organizations make mistakes with their retirement plans?

They don’t work with a financial adviser or consultant with enough experience — someone held to a fiduciary standard with independence from service provider bias. Find an adviser whose exclusive or primary business model is focused on retirement plan services. If the adviser has two to three plan clients or cannot be held as a fiduciary to the plan, continue your search.

With new Department of Labor fiduciary rules and regulations, starting in April, some advisers who don’t focus in the retirement space will begin to defer or partner with those who do. This will benefit the adviser, employer and ultimately employees.

What structures are available?

There are many different ways to structure a retirement program. Employers can have the traditional qualified defined contribution plan, like a Simple IRA or 401(k). They can also add a non-qualified deferred compensation plan for select key employees, a defined benefit or cash balance plan, or even an Employee Stock Ownership Plan or ESOP. Which plan(s) they choose to offer will be determined by factors like corporate structure, number of employees and highly compensated employees, profitability, growth and owner exit plans, to name a few.

How much does flexibility matter?

Flexibility matters for most plan design strategies and needs to be discussed prior to making the final recommendations. You want consistency and a pattern of improved benefits to employees; you don’t want to offer a benefit, to later reduce or take it away.

Is it ever too late to change the structure? How can employers discover whether a change is worth it?

It’s never too late to change the structure or design, although specific times of the year may have regulatory constraints that cause the implementation to be pushed to the next year. The only way to determine the impact is to perform a cost benefit analysis and review multiple scenarios. These aren’t difficult and typically there is no cost to do them. However, you’ll need competent guidance to assist with and coordinate the many service providers needed to achieve the proper results.

What can be added as the company grows?

All plan options mentioned previously can be added, changed or terminated, based on the current or future needs of the organization, ownership and workforce demographic. Plan design should be evaluated annually, and a cost benefit analysis performed periodically — every four to five years according to best practices.

What else would you like to share?

Most small to midsized plans aren’t thoroughly vetted against the organization’s goals, challenges, strategic initiatives, profitability and employee demographics. The majority of advisers who are paid by the plans typically aren’t focusing on the retirement plan space, aren’t held as fiduciaries to the plan, and therefore don’t have the experience to understand how to use retirement plan strategies to contribute to the long-term success of the organization.

Ask yourself whether or not you can receive unbiased advice from a provider who has everything to lose if you want or need services they do not offer. Employers should interview and hire experienced advisers who are capable of helping them achieve their goals, are held as fiduciaries and provide independent and unbiased advice.

Insights Wealth Management is brought to you by Fragasso Financial Advisors

A diversified approach to investing can safeguard your retirement plans

Financial investment is a risk that offers no guarantee of success. Even the most experienced financial professionals miss from time to time and are forced to adjust their thinking in response to an unexpected development in the stock or bond markets, says Adam R. Lulow, a Retirement Benefits Specialist at The DMG Group.

“The truth is we don’t know what’s going to happen,” Lulow says. “We can make assumptions and we can put a plan in place, but the first thing we tell investors is that something is going to change with that plan.”

The fear of the unknown can drive some people to avoid making any investments, which can make it very difficult to accumulate enough money to fund your retirement.

“The most important thing is that you start saving,” Lulow says. “You can change your investments inside a plan. But if you don’t have enough money to retire, the only solution is to work longer.”

Smart Business spoke with Lulow about the importance of diversity when building out your retirement plans.

What are the most important things to keep in mind when trying to diversify your investment portfolio?

There are numerous risks and rewards when investing, and each asset class reacts to economic events differently. If you select from multiple asset classes, you can help minimize the risk and the volatility in your portfolio. If you own a stock, it is usually going to come with a much greater risk than a bond portfolio. But as the company does better, your stock price rises and you have a greater return on your investment.

Conversely, a bond is going to have lower downside risk, but also a lower growth ceiling. The reward of a bond is usually going to be much lower than the reward of a stock.

Ideally, you want a mix of both types of investments to spread out your risk and keep adding to your retirement savings. Early on, you can be more aggressive and look at stocks that offer the potential of a higher return. The risk is greater, but you have more time to make up any losses. As you get closer to retirement, bonds become more attractive since they are less prone to those steep declines.

Why is rebalancing your portfolio so important?

If you have a portfolio that is 60 percent stocks and 40 percent bonds and the market is going down, you may feel pressure to sell. What you should be doing is taking some of your cash or some of those bonds and buying the market while it’s down. The opposite is also true. As the market goes up, you may think now is the time to buy, when most likely, you’ve already missed the ideal time to buy. That is why being disciplined about rebalancing your portfolio on a regular basis is so important. It gives you a more reliable and objective plan with which to build your wealth.

If the market is up and your portfolio is 65 percent stocks, 35 percent cash or bonds, you may want to rebalance back to that 60 percent stock/40 percent bond mix. You take that 5 percent of growth in the stocks and move it into the bond or cash equivalent to lock in the gain. On the other side, if the market takes a drop and you’re now 55 percent stocks/45 percent bonds, you may want to take that 5 percent of the bonds or cash equivalents and move it over to stocks or mutual funds and buy when the market is low to take advantage of the potential market rebound.

What are some tips for selecting the right stocks to make an investment?

There are large cap stocks, which are going to be your large, well-established blue chip companies in the United States, and then small and midsized companies. Those well-established companies could lead to more stability, while the small and mids take a little more risk. But it’s a good way to diversify. Everyone is going to be different, which is why it’s a good idea to contact a financial professional who can help you make a more informed decision.

Investments in stocks, bonds, mutual funds, and variable annuities are not FDIC-insured and are subject to fluctuation in value and market risk, including loss of principal. Adam R. Lulow is a registered representative who offers securities through AXA Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC, and an agent who offers the annuity and life insurance products of AXA Equitable Life Insurance Company (AXA Equitable) (NY, NY) and those of affiliated and unaffiliated carriers through AXA Network, LLC.  AXA Advisors, AXA Equitable and AXA Network are affiliated companies and do not provide tax or legal advice. The DMG Group is not owned or operated by AXA Advisors or its affiliates. AGE-118019 (8/16)(Exp. 8/18)

Insights Wealth Management is brought to you by AXA Advisors, LLC

A diversified approach to investing can safeguard your retirement plans

Financial investment is a risk that offers no guarantee of success. Even the most experienced financial professionals miss from time to time and are forced to adjust their thinking in response to an unexpected development in the stock or bond markets, says Adam R. Lulow, a Retirement Benefits Specialist at The DMG Group.

“The truth is we don’t know what’s going to happen,” Lulow says. “We can make assumptions and we can put a plan in place, but the first thing we tell investors is that something is going to change with that plan.”

The fear of the unknown can drive some people to avoid making any investments, which can make it very difficult to accumulate enough money to fund your retirement.

“The most important thing is that you start saving,” Lulow says. “You can change your investments inside a plan. But if you don’t have enough money to retire, the only solution is to work longer.”

Smart Business spoke with Lulow about the importance of diversity when building out your retirement plans.

What are the most important things to keep in mind when trying to diversify your investment portfolio?

There are numerous risks and rewards when investing and each asset class reacts to economic events differently. If you select from multiple asset classes, you can help minimize the risk and the volatility in your portfolio. If you own a stock, it is usually going to come with a much greater risk than a bond portfolio. But as the company does better, your stock price rises and you have a greater return on your investment.

Conversely, a bond is going to have lower downside risk, but also a lower growth ceiling. The reward of a bond is usually going to be much lower than the reward of a stock.

Ideally, you want a mix of both types of investments to spread out your risk and keep adding to your retirement savings. Early on, you can be more aggressive and look at stocks that offer the potential of a higher return. The risk is greater, but you have more time to make up any losses. As you get closer to retirement, bonds become more attractive since they are less prone to those steep declines.

Why is rebalancing your portfolio so important?

If you have a portfolio that is 60 percent stocks and 40 percent bonds and the market is going down, you may feel pressure to sell. What you should be doing is taking some of your cash or some of those bonds and buying the market while it’s down. The opposite is also true. As the market goes up, you may think now is the time to buy when most likely, you’ve already missed the ideal time to buy. That is why being disciplined about rebalancing your portfolio on a regular basis is so important. It gives you a more reliable and objective plan with which to build your wealth.

If the market is up and your portfolio is 65 percent stocks, 35 percent cash or bonds, you may want to rebalance back to that 60 percent stock/40 percent bond mix. You take that 5 percent of growth in the stocks and move it into the bond or cash equivalent to lock in the gain. On the other side, if the market takes a drop and you’re now 55 percent stocks/45 percent bonds, you may want to take that 5 percent of the bonds or cash equivalents and move it over to stocks or mutual funds and buy when the market is low to take advantage of the potential market rebound.

What are some tips for selecting the right stocks to make an investment?

There are large cap stocks, which are going to be your large, well-established blue chip companies in the United States, and then small and midsized companies. Those well-established companies could lead to more stability, while the small and mids take a little more risk. But it’s a good way to diversify. Everyone is going to be different, which is why it’s a good idea to contact a financial professional who can help you make a more informed decision.

Insights Wealth Management is brought to you by AXA Advisors, LLC

Investments in stocks, bonds, mutual funds, and variable annuities are not FDIC-insured and are subject to fluctuation in value and market risk, including loss of principal. Adam R. Lulow is a registered representative who offers securities through AXA Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC, and an agent who offers the annuity and life insurance products of AXA Equitable Life Insurance Company (AXA Equitable) (NY, NY) and those of affiliated and unaffiliated carriers through AXA Network, LLC.  AXA Advisors, AXA Equitable and AXA Network are affiliated companies and do not provide tax or legal advice. The DMG Group is not owned or operated by AXA Advisors or its affiliates. AGE-118019 (8/16)(Exp. 8/18)

How the DOL fiduciary rule transforms retirement management

This past spring, the Department of Labor (DOL) released a rule to address conflicts of interest when it comes to retirement advice, which will have far-reaching effects on the fiduciary landscape.

“It’s been in the works for years, and it wasn’t a surprise when it came out. The only surprise was that it was watered down, because there was a level of panic that was setting in over the past year. A lot of models haven’t adjusted,” says Daniel J. Dingus, president and executive director of portfolio management at Fragasso Financial Advisors.

Previously, advisers and brokers managed individual investor’s retirement accounts under different standards. Brokers followed a “suitability” standard for retirement accounts; they were required to offer a suitable product, not the best product.

Under the new rule, all money managers will be mandated to abide by a higher “fiduciary” standard, which means putting clients’ best interests before their own profits at all times. This attempts to keep brokers from steering investors to products where the broker receives a higher commission.

All fees, even commissions, will have to be disclosed, and a contract that states the adviser is acting in the client’s best interest will have to be submitted.

The rule is slated to go into effect April 10, 2017. There was an attempt to stop it, but Dingus believes it will go forward as planned.

Smart Business spoke with Dingus about the DOL fiduciary rule and the impact it will have on investors.

Do investors know the difference between a broker and an adviser?

The distinction has never been clear to the general public, which doesn’t really know who is what. It’s typically not based on credentials — but by how you act. However, investors are starting to ask about this, and as the rule gets closer to implementation it may open eyes even further.

Right now this only impacts retirement accounts, not personal accounts. The DOL was determined to rule on retirement accounts first, but at some point this may apply to all accounts.

How do you expect the fiduciary landscape to change?

Every day there are more advisers than brokers, and that trend will continue, as brokers go the way of the horse and buggy.

Firms that have always promoted brokerage products will have to learn what it takes to be a fiduciary. There’s a learning curve because they’ve never adhered to the true spirit of that standard — and been held liable to it. If you offer illiquid, proprietary or commission-based products and believe you’re acting in the client’s best interests, you will be hard pressed to prove that to a judge.

With firms taking on more risk — and they are definitely nervous about the legal consequences — there’s likely to be industry consolidation. That won’t just be with the brokers themselves but also with the providers. For example, Mass Mutual acquired part of MetLife earlier this year.

The rule will probably drive fees down a little bit, now that there’s a focus on fees, which is good for everybody. Because the brokerage world is going to be marginalized, mutual funds that have a litany of share classes will likely keep the cheaper ones, versus the more expensive ones.

What should investors be doing differently going forward?

You’ll need to ask yourself if you want to continue in a brokerage relationship, now that you understand the differences. However, for a minority of investors, brokerage products still make sense because of what’s available.

If investors aren’t being taken care of once the rule goes into effect, attorneys will certainly step in and educate people.

Business owners who sponsor retirement plans through their company also need to understand how the fiduciary responsibility works with their plan design, because, like individual investors, they typically don’t understand the difference between a broker and an adviser. If their provider or broker won’t take on the fiduciary responsibility, the trustee or board of directors is solely responsible. This is particularly important in the nonprofit sector, where they often spend their time on the foundation and endowment, ignoring the 401(k) plan.

Insights Wealth Management is brought to you by Fragasso Financial Advisors

How to find the right mix of assets in your investment portfolio

Diversification in your investment strategy is all about managing risk, says Brandon Strong, Managing Partner at Stonebridge Wealth Strategies.

“When you’re building a portfolio, you need to understand how each investment fits in with your overall goal,” Strong says. “You need to understand the correlation of different asset classes and how they diversify a portfolio. Diversification is about managing risk. It’s not a strategy to make more money.”

The complexities of diversification can easily lead investors to have a false sense of security about their wealth building strategy. The long-term effect of this disconnect is it becomes more difficult to meet long-term goals such as putting your kids through college, planning your retirement and passing on your wealth to your heirs.

“You have to pay attention to what you own as an investment, why you own it and how it all fits together,” Strong says.

Smart Business spoke with Strong about the best approach to diversifying your investment portfolio.

How does the use of multiple asset classes help you diversify your investment portfolio?
An asset class in its simplest form could be equity, or any stock that you might own. It could be fixed income, which could refer to an entire bond market. From there, you can break those two categories down even further.

For stocks, you can look at it in terms of international versus U.S. asset classes and then small, medium and large companies that you’re investing in. Each one of those asset classes reacts in its own way to different economic data.

When you blend them into a portfolio, you are often helping to address your overall risk because you have assets that react differently to what is happening in the economy. On the bond side, you could break it down to U.S. government bonds, corporate bonds, municipal bonds, foreign government bonds and a variety of other categories beyond these segments.

What people often forget to add to their portfolio is investment in asset classes outside of these categories. Real estate and commodities are two segments not highly correlated to those asset classes that could bring down the overall movement or volatility of your portfolio. As an investor, you need to regularly balance the level of risk in your portfolio.

There’s a big difference between saving money and putting it into an investment account versus when you get to retirement and you now need to distribute money out of the account. Your strategy can be driven by two philosophies: What’s your risk tolerance? What level of risk do you need to achieve your goal?

Where do people get into trouble trying to achieve investment diversity?
You might hold one brokerage account with 15 different mutual funds, but each one of those funds is fairly similar. Even though you’re diversified in the number of mutual funds, they all basically do the same thing, so you’re not diversified within that asset.

Conversely, it’s typically unwise to use one mutual fund or one money manager to fit into every different asset class. Another risk would be to have your entire net worth and future income tied up with one particular source, such as your employer through stock ownership and a pension plan.

Diversification is not as much about the assets you own as it is about how those assets fit together to help you meet your long-term wealth building goals.

What’s the key to having a good investment strategy?
You always start with a financial plan and make sure you know where you need to be at the end of your goal.

Do your homework and understand where you are in relation to your goal before you make any changes. Talk to a financial professional who can help you understand next steps and determine how environmental changes could affect your asset allocation or diversification strategy. ●

Financial Professionals of Stonebridge Wealth Strategies are registered representatives who offer securities products through AXA Advisors, LLC, a registered broker-dealer and member FINRA/SIPC, investment advisor representatives who offer financial planning and investment advisory products and services through AXA Advisors, LLC, an investment advisor registered with the SEC. Annuity and insurance products offered through AXA Network, LLC. AXA Network conducts business in CA as AXA Network Insurance Agency of California, LLC, in UT as AXA Network Insurance Agency of Utah, LLC, in PR as AXA Network of Puerto Rico, Inc. Asset allocation, diversification and rebalancing do not guarantee a profit or protection against loss. Asset Allocation is a method of diversification which positions assets among major investment categories. This tool may be used in an effort to manage risk and enhance returns. AGE- 116266(06/160(Ext.06/18)

Insights Wealth Management is brought to you by AXA Advisors, LLC

A look at best practices for managing your company’s 401(k) plan

Companies that offer employees a 401(k) plan must recognize their responsibility to act in the best interests of those employees, says David C. Barth, AIF, a financial consultant at AXA Advisors, LLC.

“Regulators such as the IRS and the Department of Labor are not as concerned about whether you made a perfectly timed investment decision or have the absolute lowest cost plan for your employees,” Barth says. “It’s more about having a process that confirms you are satisfying your fiduciary duties, acting on behalf of your plan participants, and offering a menu of prudent investment choices at a cost that is reasonable for the services you’re receiving. Is there documentation that offers evidence that it’s not just a roll out the plan and forget it type of mentality?”

The challenge for many businesses, especially the smaller ones, is finding time to address these important fiduciary duties. Fortunately, there are professionals with experience with retirement plans who can provide support.

“You need a process in place to manage your plan and if you don’t have one, you should reach out to a qualified professional and figure out the steps to help ensure you’re doing the appropriate due diligence,” Barth says.

Smart Business spoke with Barth about best practices when it comes to managing your company’s 401(k) plan.

What is a fiduciary best practices approach?

The biggest part of this approach is forming a committee with multiple people inside the company who work with your 401(k) plan and make decisions that pertain to it. Typically, you’ll have the owner or president, a financial person such as the CFO, an HR representative and in some cases, a member who represents the rank-and-file employees to represent the other side of the organization. Consider hiring an outside advisor with fiduciary credentials who can help you through the process of forming the committee and managing your duties. Then it’s a matter of ensuring that the committee meets on a regular basis and documenting what is discussed at those meetings. Create and follow an investment policy statement that guides your company’s investment decisions. The goal is to create structure, regular dialogue and documentation around your 401(k) plan.

How does this process serve the best interests of individual 401(k) plan participants?

The committee needs to realize that it is making decisions on behalf of the masses and not on an individual basis. The goal is to structure an investment menu that provides aggressive investment options for the participant who wants to be more aggressive along with more conservative options for the conservative investor, as well as a vehicle to assist participants in making choices that are appropriate. It’s giving the participant population the ability to have quality choices in different categories so they can structure their plan to meet their own unique needs. Employers typically want to do right by their employees. But if they are lacking the right guidance from an outside fiduciary consultant, it may not be happening simply because they don’t know what they don’t know. If you develop and follow a process to review and monitor funds that is guided by a professional, you’ll have a diverse investment menu. You’ll have a mechanism in place to swap out an underperforming fund and possess the data you need to negotiate fee reductions from your service providers when appropriate, thereby reducing the fees for your participants.

How can you evaluate your plan advisor?

Work with somebody who spends a lot of time in the qualified plan world. If they are experienced specifically in retirement plans and fiduciary needs, that’s important. Make sure there is a through and regular review to evaluate the advisor team, what they do and who they service. Ideally, your advisor will help you work with your plan provider to better understand your participant demographics and target investment education in a way that enables your people to maximize the value of their investments, and, ultimately their retirement readiness.

This article is for informational purposes only and is not intended as legal or tax advice. David Barth offers securities through AXA Advisors, LLC (NY, NY 212-314-4600), member FINRA/SIPC, offers investment advisory products and services through AXA Advisors, LLC, an investment advisor registered with the SEC, and offers insurance and annuity products through AXA Network, LLC.  AGE 115601 (6/16)(Exp 6/18).

Insights Wealth Management is brought to you by AXA Advisors, LLC

 

How to secure your retirement plan in a volatile market

January of this year was the worst January for the stock market in the history of the market. Fortunately, February and March, for the most part, made up for those losses. But when the market is volatile, it can make investors nervous, especially those close to retirement, says Michael Fertig, AIF®, vice president at Fragasso Financial Advisors.

“There are a lot of pressures that are put on a certain group of pre-retirees today,” Fertig says. “Whether it’s paying for their children’s college education, kids moving back in or taking care of elderly parents — or some combination of all of those — it sometimes becomes almost impossible to fund your own retirement.”

Smart Business spoke with Fertig about retirement security during volatile markets.

What’s important to remember in times of volatile stock market change?

Investors need to be honest about their risk tolerance upfront, in order to elect a strategy that they can live with. That doesn’t mean you can’t adjust your strategy, but certainly one of the worst times to do so is in the midst of a volatile market.

You also need to work out a compromise with your spouse, if your risk tolerances are different. That might mean separate portfolios or finding a middle ground.

It’s a good idea to put together a worst-case scenario. Your adviser can go back to what your portfolio blend would have looked like in 2008. If it’s 70 percent stocks, 30 percent bonds, it might have been down 30 percent or X amount in terms of real dollars. What does that do to you? Do you lose sleep if you’re down that much? If yes, then you’ll want a slightly different mix.

Once you settle on a suitable asset allocation model to give you enough return to allow you to reach your goals with the amount of risk you’re willing to assume, the hardest piece is sticking with it. You can’t tear up the portfolio every time there’s a blip. When you look at events like Y2K, the tech bubble or 9/11, it always seems like this time it’s going to be a worse, longer and steeper decline. But every time the market has rebounded and come back stronger.

How can investors have retirement security, no matter what the market does?

Investors can’t always control their time horizon — a 20- or 30-year retirement is becoming the norm. In fact, of the babies born today, half are projected to live to 100 or older. The baby boomer generation is already starting to redefine what retirement looks like, with many working part time or doing consulting until they are 65 or 70.

Investors also can’t predict what the stock market will do.

What you do control are your savings. A lot of people don’t maximize the opportunities of their employer retirement plan. It’s also a good idea to increase your retirement savings every time you get a raise — get that money out of your paycheck before it gets into your hands.

Prior to retirement, you want to pay off as much debt as possible. Many pre-retirees borrow from their retirement plans to pay for college, especially if they didn’t start saving early enough. You may argue that if you borrow from your retirement plan, rather than having your kids take on student loans, at least you’re paying yourself back. That’s a legitimate, accurate and reasonable argument, but it doesn’t account for the time value of money. It will come down to personal preference, so have your adviser take you through what your retirement plan looks like in both scenarios. If you borrow from the plan, in most cases, it means having to redefine what your retirement looks like.

When you’re three to five years away from retirement, start getting serious about how much you’re going to need in terms of spending. Once you retire, it may change, so you’ll need to stay in regular touch with your adviser.

Also, decide how much of an emergency reserve you want to set aside that should never be invested — six months of living expenses, $5,000 or $10,000? If you keep several months of necessary distributions in cash, you’re not selling stock that’s already depressed and pouring salt into the wound.

One of the worst mistakes people can make is getting too conservative before they retire or as they enter retirement, because of how much life expectancies go up every year. That’s why, again, understanding your risk tolerance is critical.

Insights Wealth Management is brought to you by Fragasso Financial Advisors

Potential pitfalls and risks of saving and drawing on your retirement

Many people put off saving for retirement, thinking there’s just not enough money at the end of the month, or often focusing on current lifestyle.

“They tell themselves they’ll start putting something away for the future as soon as there’s extra,” says Chad Vavpetic, Regional Vice President at AXA Advisors, LLC.

“The problem is, it never gets easier. Demands on your money will always expand to consume your full income, if you allow it to happen.

“It’s common for young professionals starting out now to have tens of thousands of dollars in student loan debt. They often feel like, ‘Retirement is 40 years off, I can’t start thinking about that now. I have to pay off these loans, buy a car, get my own place.’ That’s a huge challenge. Time is everything when it comes to accruing sufficient retirement assets, and starting early is key, even if you start saving a relatively low percentage of your income initially.”

Smart Business spoke with Vavpetic about the common risks and pitfalls related to retirement planning.

What are some mistakes people make when projecting how much money they will need in retirement?

The first mistake for most is failing to understand that saving for retirement is no longer the responsibility of your employer or union through a defined-benefit pension plan. It often now falls completely on you. Many are not saving enough in defined contribution 401(k) or 403(b) plans to make up for the reduction or absence of that traditional pension.

Even those who are committed retirement savers may not be adequately prepared for two of the primary risks facing financial security in the golden years, inflation and longevity. While inflation has averaged 3.18 percent over the last century (inflationdata.com), many financial professionals believe that the fiscal policy the federal government has employed since 2008 will likely result in the devaluation of the dollar, growing the cost of living at a faster-than-normal rate in coming decades. That means more retirement dollars will be required just to maintain preretirement lifestyle, not to mention the added expense of traveling to visit the grandchildren or that winter home in Florida. Couple inflation risk with increased life expectancies, and the possibility of outliving retirement assets becomes a very real concern.

What about tax liability?

Tax liability is one of the biggest deterrents to accumulating retirement assets; you need a strategy that is conscious of that. Traditional pretax and Roth retirement contributions are very simple and powerful ways to save on a tax advantage basis. There are also more advanced strategies, often used when IRAs and employer-sponsored options are limited or have been phased out due to income level. Saving on a tax-advantaged basis is essential.

Tax liability is also a major concern at distribution time. For example, cashing in a big chunk of your retirement to pay off low-interest debt like a mortgage in lump-sum fashion could have big tax implications and may not be the most advantageous decision. As you transition into retirement, it’s more about cash flow than assets and liabilities. Having a sound distribution strategy is extremely important.

Is it possible to successfully plan your retirement on your own?

Retirement planning is no longer a do-it-yourself endeavor. Markets are as volatile as ever, as has been evident in recent weeks. Tax laws and regulations are more complicated than ever. Financial products are increasingly advanced, as the industry continues to innovate in response to the changing economic environment.

Somebody has to be knowledgeable of all of this. You can either become an expert, or work with someone who has that knowledge. The need for qualified professional advice has never been greater.

A good adviser can help you design a strategy that serves your individual goals and addresses your concerns, while seeking to both protect and maximize your retirement income.

Insights Wealth Management is brought to you by AXA Advisors, LLC

Chad Vavpetic offers securities through AXA Advisors, LLC (NY, NY, 212-314-4600), member FINRA, SIPC, offers investment advisory products and services through AXA Advisors, LLC, an investment advisor registered with the SEC, and offers annuity and insurance products through AXA Network, LLC. AXA Advisors and AXA Network do not provide tax or legal advice. 107310 (09/2017)

How to potentially increase the wealth you leave your heirs

People born in the 1930s and 1940s enjoyed the many benefits of a robust economy when they entered the workforce, says Mark C. Pagni, ChFC, CLU, a Financial Consultant at AXA Advisors, LLC.

“They enjoyed solid wages and cradle-to-grave, employer-paid benefits including pension plans and health insurance plans,” Pagni says. “They also enjoyed strong government benefits like Social Security, and Medicare, both programs that are likely going to be reduced or postponed to later ages, for our young children or grandchildren.”

Today, the economic climate has changed dramatically. Many company benefits are being trimmed or discontinued, and pensions are becoming more and more uncommon. In the midst of these changes, legacy planning might make a real difference in the quality of life that our survivors enjoy someday.

Smart Business spoke with Pagni about the value of legacy planning and how to potentially increase the wealth you leave your heirs.

Who should be looking at legacy planning?

Your first concern should be to make sure that you have put away enough money through saving and investing to secure your own retirement and financial well-being.

One of the first steps is to identify extra money in your retirement and investment accounts, which you will likely never need. I refer to it as junk money. If that extra money isn’t there, continue your efforts to secure your own future before you worry about what you’ll be able to pass on to your heirs.

Once you have addressed your own retirement needs and you’re in a position to do some legacy planning, you will want to pay attention to how your assets will transfer at death. In order to provide a smooth transfer of wealth, you may need to do some basic estate transfer planning, using trusts and proper titling, to minimize delays and unnecessary tax consequences. The advice of a good estate attorney could make a lot of difference here.

How can life insurance be a good wealth transfer tool in the legacy planning process?

One of the simplest and safest ways to help ensure an inheritance for your heirs is to purchase life insurance, assuming you are insurable. Joint life insurance policies, for married couples, may provide a higher death benefit per dollar of premium, as compared to single life policies. Consider using unneeded assets to fund the premiums, such as the annual Required Minimum Distributions from IRAs or other pre-tax plans, or the interest and dividends from your other investments. Even just setting aside a half of one-percent of your liquid net worth each year may be a relatively pain-free way to better secure a meaningful inheritance for your family.

What are some of the potential benefits of using life insurance in legacy planning?

One potential benefit would be to better secure your financial legacy. Your net worth will be subject to market forces, and may go up and down in value over time. Life insurance, looked at as an asset rather than insurance, may provide portfolio stability for your heirs, through the predictable, contractually guaranteed, and generally income tax free death benefit. Guarantees are backed by the claims paying ability of the issuing company. Another potential benefit might be to indemnify your heirs for the income taxes that they will be responsible to pay, when you leave them with substantial IRA or other qualified plan funds. Although there are various settlement options available to IRA beneficiaries, those accounts will never escape eventual income taxation. The result of this strategy may be to significantly increase the net after tax inheritance received by the heirs.

Consider using life insurance if you are concerned that your estate value may be diminished by the need for long-term care. It could be used to restore your estate values that were spent on your long-term care, after your death. The odds of any of us needing long-term care someday, although significant, are not as certain as dying is.

*Mark Pagni offers securities through AXA Advisors, LLC (NY, NY 212-314-4600), member FINRA/SIPC. Annuity and insurance products offered through AXA Network, LLC. AXA Network conducts business in CA as AXA Network Insurance Agency of California, LLC, in UT as AXA Network Insurance Agency of Utah, LLC, in PR as AXA Network of Puerto Rico, Inc.

AXA Advisors and AXA Network do not offer tax or legal advice. You should consult with your professional tax and legal advisors regarding your particular circumstances. AGE 113200 (4/16) (Exp 3/18)

Insights Wealth Management is brought to you by AXA Advisors, LLC