Financial Blog

Maintaining cash flow when the paychecks peter out

As financial planning evolves from asset accumulation to portfolio drawdowns, the key role for advisers becomes helping clients who are retiring replace their paychecks.

Other drawdown decisions involve asset liquidation, converting portfolio securities to spendable cash.

"The answer on where to pull assets from is not the same for everyone," says Jessica Hovis Smith, a CFP and the vice president and director of financial planning at Longview Financial Advisors in Huntsville, Ala. "We want to make sure that tax planning and portfolio liquidation are annual decisions that are in keeping with the client's plan."

Smith's firm makes those annual decisions by reviewing the portfolio, including all taxable and tax-favored accounts, at the time.

"We adjust across multiple asset classes to ensure the portfolio stays in balance with the client's risk tolerance, risk capacity and risk need," she says. "Depending on the current market conditions, this could mean cutting back on equities or cutting back on fixed income."

This story is part of a 30-30 series on ways to build a better portfolio.

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