Consider RICP®
There are many reasons to consider earning a designation focusing specifically on the topic of retirement income planning. We discuss some of them below.
Retirement Income Planning is Complex
Creating a retirement income plan for a client is complex. It starts with asking the client to first visualize and then plan for the unknown. Clients are also asked to plan for everything from fulfilling unmet dreams in the early years of retirement to how they will be cared for when they can no longer care for themselves.
There’s also no cookie cutter solution, as everyone has a different set of circumstances, goals, and resources. And everyone has something to deal with, like an adult child out of work, a grandchild they are putting through private school, or a house on the lake the whole family can’t live without. Once you figure out the goals and put together an income plan, you also have to be ready for the landmines along the way. What happens if inflation is high, taxes go up, or life goes on for a very long time? And these are just a few of the issues. In the Retirement Income Certified Professional® (RICP®) curriculum, we identified about 18 risks that are faced in retirement.
Financial advisors also recognize the complexity as a 2012 survey by Investment News and The American College of Financial Services revealed that 93 percent of financial advisors indicated that advisors/wealth managers need to know more about retirement income planning.
New Field with a Rapidly Expanding Knowledge Base
There a lot of smart people trying to figure this out. First, there are the academics looking at interesting questions like what is a safe withdrawal rate from a portfolio, how to maximize utility (satisfaction) in retirement, what is the most tax-efficient withdrawal strategy, and what is the impact of Social Security claiming decisions. Then you have companies trying to create the right products for their clients, and advisors trying to capture best practices. You also have software vendors looking to create helpful tools that are comprehensive, but easy to use and can provide reporting capabilities that make sense to the client.
In the RICP® designation, we are able to capture these many different voices in video interviews. We talk with practitioners, academics, company representatives, and software venders to find out their latest thinking. The curriculum currently includes 38 outside experts expressing their thoughts about retirement income planning.
There are Many Plausible Solutions
One of the most interesting aspects of retirement income planning is that it is a relatively new field and there are competing theories and strategies. There are three primary approaches that advisors identify that they use: the systematic withdrawal approach, the income flooring approach, and the bucketing (multiple portfolio) approach. In the RICP® designation, we have compelling experts making great cases for their particular solutions. The fact that there are different approaches can at first seem disconcerting, but each new idea helps round out our understanding of the field, and provides different answers for different types of clients.
This Work is Important
Maybe the best reason to consider pursuing the RICP® designation is that there simply may be no more important work that financial services professionals can do—and being prepared to do the best job for your clients will help you sleep better at night. Proper planning can result in a fulfilling life, financial independence, and comfort for a client’s children and grandchildren. Mistakes or lack of planning on the other hand can be devastating and can mean running out of resources later in life when it’s too late to do much about it. This can result in dependence on others and hardship on family members.