Monday, October 20, 2014

A Geek in Manhattan

I joined Joe Tomlinson and Wade Pfau in Manhattan this past week for a panel discussion about turning assets into income after retirement. The panel was hosted by MarketWatch's Bob Powell. The video will appear on the MarketWatch website in due course.

If you are not reading these three, then you need to start. I’ve linked their names to their websites.

Heck, Nobel Laureate, William Sharpe mentioned in Advisor Perspectives that he reads Wade’s blog. I think that's a big deal. They don’t call it the “Sharpe” ratio because its pointed, you know, and then there's the Capital Asset Pricing Model. Bill has a blog, too. (And, yes, Wade reads it.)

On Wednesday evening, Joe, Wade and I sat up until well after midnight in the Algonquin Hotel lobby talking about TIPS bond ladders. (I know, right?) Wade referred to this as our own "Algonquin Roundtable." I knew Dorothy Parker frequented the hotel and that James Thurber lived there for a while, but the Roundtable was a fun piece of history to learn. My wife and I stayed there several years ago, hoping some of the "literary cool" would rub off.

The conversation was so much fun for me that I lost track of time and I swear I wouldn’t have noticed if Derek Jeter had walked into the lobby. I learned three things.

First, as you can see with the Jeter thing, I tend to exaggerate a little to make a point.

Second, I am a total geek. This was one of the most enjoyable things I've done in a while. (I am undoubtedly the only person who knows me that wasn’t already aware of that. Becoming so excited when my son gave me Mathematica should have tipped me off. My high school yearbook holds a lot of hints, as well.)

And third, while the three of us have interesting disagreements, they are largely on the fringe. On the important things, we are in complete agreement.

I mentioned during the panel discussion that I am not a huge fan of annuities, in part to bait Joe and Wade into a livelier discussion (Joe bit, Wade just smiled). And while I am not a huge fan of annuities, I am also not a huge fan of sustainable withdrawal strategies. I think we all agree that there is no single great solution to funding a retirement that could last 30 years after funding a working career that could last 40. Working 40 years to pay for 70 is a challenging problem, to say the least.

Joe is a strong advocate for life annuities. I suggest you visit his website and give them a thorough consideration. I don’t think they are right for me personally, but I believe they are ideal for people in certain situations. They are the only way to guarantee income no matter how long you live and I agree with Joe that you should purchase an inflation rider. There have been good arguments that insurance companies overcharge for this inflation protection and that is probably true. But, I wouldn’t forgo fire insurance because I thought insurance companies overcharged for it. When you need it, you need it, and insurance won’t seem too expensive if your house burns down or a tank of gas costs three hundred dollars.

The panel discussion was a lot of fun. I hope you’ll watch the video when it is available. One of my favorite clients was able to attend in person and that was a real treat for me.

Now, I’m on to Charlotte this week to speak at the RIAA conference.

Before long, I'll be back at Caffe Driade drinking lattes, reading papers and writing blogs, but this is a nice change.


  1. Dirk, congratulations. Soon more people will recognize what your clients have known all along - what a great adviser and person you are. Can't wait to see the video. Brad

  2. Would love to know what you each think about TIPs bond ladders, especially now.