Order of Returns

Nowhere is the order of returns more important than when investing for retirement income. By its very nature the need for consistent (and increasing) income demands that stringent parameters be applied to the design and make-up of this portfolio type.

Drawing a fixed income stream from a portfolio that is experiencing a capital drawdown due to investment losses is similar to throwing gas on a fire. As income is withdrawn from the decreasing capital pool the percentage the income withdrawal accounts for increases. This can be catastrophic as the portfolio can quickly pass the point of critical-mass where it can no longer support the income withdrawal stream.  Shortly after this point the client simply runs out of money.

Managing with a goal of consistent returns, with minimal capital drawdowns, is paramount when investing for retirement income. Our Advance & Protect process, when employed for the management of income portfolios, potentially helps mitigate the volatility of returns while offering the possibility of stable income along with conservative capital appreciation. This objective is pursued through the active management process Advance & Protect embodies - striving to participate in the potential upswings of the fixed income market while striving to move to a protective, cash-heavy stance, when the fixed income markets pull back.