Preparing for retirement is not as simple as it used to be. A number of seismic shifts in the prevailing culture are affecting the way we perceive, and prepare for, the future.
With people shifting jobs more regularly, as well as uncertainty about what the state of the economy will be when the time comes for retirement, it’s hard to know what to predict, let alone how to plan for it.
The Moneta Group‘s motto is “Unique Clients Deserve Unique Strategies.” They’ve been a company for almost 150 years, working with a vast array of clientele from all walks of life, and possess a uniquely deep financial insight because of it.
The Moneta Group’s Diane Compardo took a moment to share with us some of this insight and how to best prepare for retirement.
Can you briefly describe Moneta Group? What do you do? Who is your usual clientele?
Our mission at Moneta Group is to be the premier provider of financial advice and Family CFO services to our diverse clientele. We take pride in our role as a financial fiduciary to our clients, and we are committed to acting only in their best interests at all times. We serve as a financial sounding board and many times are the first contact for our clients for any and every financial matter they encounter in their daily lives. This includes identifying goals and objectives; planning for financial sustainability, asset allocation and investment selection; income tax planning; estate planning; and risk management. Our clients are often successful individuals: small business owners, corporate executives, and thriving professionals. We also work with institutions and retirement plans to provide expert investment counsel and outstanding service.
Moneta Group started back in 1869. What have you learned by being a financial institution in that amount of time? What are some challenges for businesses and individuals that are the same as when you started out? What are some new challenges people face?
Moneta Group’s history dates back to 1869 and has its roots in the insurance industry, as the modern “wealth management” or “family office” firms simply did not exist at the time of our founding. As the financial industry evolved, so did Moneta. Even in 1933, we strove to offer holistic advice focused on the unique needs of our clients – William P. Worthington, an early leader of our firm, embraced the mission of “problems to solve, not prospects to sell.” Clients most value Moneta Group’s independence as a firm (we are owned by our Principals, not a parent company or a bank), the firm’s transparency with respect to compensation, and the individual attention that Moneta Group’s Principal teams offer their family and institutional clients. We are trusted family advisors in a relationship business, and we relish that role.
What advice do you have for people planning for retirement if they’re just starting out in their careers? What about people who are about to retire?
For someone just starting out in his or her career, time is one of your most valuable assets. Begin contributing at least 10% of your wages to a retirement account immediately – either a retirement plan offered by your employer (a 401(k) or similar plan) or a Roth IRA if your employer doesn’t offer one. The effect of compounding interest is real – contribute to the account every month, choose low-cost index funds, increase your contributions with every pay increase, and watch your money grow for the long-term. Resist the urge to check the account balance daily or even monthly – these are dollars for retirement 30 or 40 years down the road, not for tomorrow’s bills. Make sure the many financial decisions you make along the way (lifestyle changes, insurance decisions, level of debt, credit rating, etc.) are consistent with your long-term goals.
For someone approaching retirement, it is not too late to start saving to an IRA or an employer retirement plan. Every dollar counts, especially as people are now living much longer in retirement. As life expectancies increase, so must retirement assets. We find that most clients end up needing approximately 90% of their current income for retirement – you may be able to live “simpler” in retirement, but chances are you won’t want to downsize your standard of living dramatically. Consider deferring Social Security benefits until age 70 to receive an increased benefit when you do start collecting, if you don’t “need” the monthly income today. Today’s retirees are some of the last to enjoy relatively generous employer retirement benefits such as pensions. Talk to an unbiased financial advisor who offers comprehensive service about how to best utilize these benefits. Don’t automatically assume the best answer is to roll over your 401(k) balance into a IRA or take a lump sum from your pension.
Moneta Group’s approach involves “individual attention based on personal, long-term relationships.” What are some things you might notice from working with a client over a length of time, and how would you help them to prepare for retirement?
Moneta Group is focused on advising its clients on any financial matter that they may experience during their lifetime. Every life event that our clients face is an opportunity for us to add value. When a client family has a baby or becomes grandparents, we’ll advise on how to best save for the child’s education. When a client starts a new career, we’ll help them with their company benefit elections. As clients prepare for retirement, we’ll help them calculate the level of retirement income they need and how to save for it today. As clients stop working, we’ll help them with the transition to Medicare, applying for company retirement benefits and Social Security, and managing the transition from the working world to what’s next. If appropriate, we may also conduct family meetings to assist with multi-generational planning. By working with families for extended periods of time, we come to a deep understanding of their unique goals and objectives, which ultimately allows Moneta Group to offer them the highest-quality, most comprehensive advice.
Can you describe what a Family CFO is? What are some reasons people would want to consider this arrangement?
Successful businesses need a Chief Financial Officer (CFO) to manage the company’s financial affairs. Successful families are no different – they too benefit from having a CFO to advise them on all the financial matters they experience during the course of their lives and the unique situations they encounter. Today’s working families have many demands on their time – job responsibilities, family obligations, social and community commitments – and there simply isn’t much time left over for anything, much less something as important as planning for the family’s financial future. That’s where Moneta Group can help. We take the time to get to know our clients and their goals, both qualitative and quantitative. Then we develop a customized Financial Action Plan – a document that recommends specific steps that the family should take in order to accomplish their various goals. We assist the family in implementing the plan so that they are on a customized path to success, and then just as importantly, we are constantly making adjustments as needed based on life events, market conditions, etc.
Do you have any advice for people who are concerned about outliving their retirement?
Be wary of things that seem “too good to be true.” Unfortunately there are a lot of inferior financial products that are marketed toward retirees, exploiting their fear of outliving their savings. Many poor investment choices are made on the basis of emotion. Every person’s unique situation is different. Talk to a financial advisor who offers comprehensive advice (preferably one who is not paid on commission or only wants to sell you “proprietary” products) about how to best prepare your portfolio for retirement. Asset allocation is the primary driver of return, and everyone’s appetite for risk is different. Investment fees and taxes can also make a major impact on your investment returns. Do not accept a “one size fits all” solution.
In your experience, what are a few very basic investments or retirement funds that people might want to consider when beginning to think about retirement? Things they should watch out for?
As previously mentioned, asset allocation is the single largest driver of return. Younger people have a longer investment time horizon, so they may be more comfortable with a more aggressive allocation. Older people closer to retirement will need to start living on their retirement savings in a few years, so a more conservative allocation may be appropriate. Once you’ve settled on an asset allocation that meets your needs and is line with your risk tolerance, look for two things in an investment product: high quality and low cost. There are a lot of quality index funds out there that meet these two criteria. Be wary of expensive mutual funds or financial products that you don’t understand. Be even warier of individual stocks and the risk they carry. In addition, many 401(k) plans now offer age-based funds that automatically adjust your portfolio (e.g., % of equities vs. fixed income) based on how close you are to retirement age.
What are some essential financial resources for people who are planning for their futures?
Read as much as you can, but be selective. Choose quality media that presents information in an unbiased format – The Economist, Yahoo!Finance, and The Wall Street Journal are just a few good places to start. In addition, there are now many financial blogs out there publishing great content. The key is to find an author or writing style that best fits your risk profile and investment philosophy. Also, talk to an unbiased financial advisor who offers comprehensive advice (and not paid on commission), even if only once every few years, to get some expert financial counsel that is tailored to your unique circumstances. There is a lot of financial “noise” out there, and almost all of it is geared at selling you something – an investment, an insurance policy, an annuity, etc. Recognize this so that you can be informed and objective when it’s time to make a decision.
One of your areas of expertise is asking all the right questions and helping people to find the answer. What are the right questions people should be asking themselves when thinking about retirement and the future?
When do I want to retire and how long do I expect to be retired? What do I need to save today to be able to achieve my retirement goals and needs? What trade-offs do I need to make today to ensure I meet my retirement goals? Where should I be saving for retirement – in my 401(k) or in a personal taxable account? Does my company offer a retirement plan? If yes, am I contributing to it and to what level? Can I afford to increase my contributions? What am I invested in? What are my investment choices? Or, if my company doesn’t offer a retirement plan, am I eligible to make an IRA or Roth IRA contribution? How much can I afford to contribute each year? And how much can I expect to spend each year in retirement? How do I protect the assets I have accumulated? How is my financial advisor being compensated? Commissions or fee-based? An unbiased financial advisor who provides comprehensive advice and is not paid on commission can help answer all of these questions.
For more financial guidance from Moneta Group, like them on Facebook and connect with them on LinkedIn. 
