Julie Jason



“Managing Retirement Wealth” was our speaker, Julie Jason’s, topic last week. She began by noting that, by retirement age, most people had a collection of investments – but could these be described as a “portfolio”? The distinction revolved around the need to establish a goal and to link the performance of the investments to the achievement of that goal.

The starting point was to complete a cash flow analysis to establish needs and to include one’s spouse or significant other in the process. As an example of the importance of this, Julie described the case of a woman who was widowed and left with four young children. Her husband had been the CFO of an important company. She lived in Connecticut but received advice from a New Jersey group. Why? Because the group had been recommended to her by her accountant. When the lady visited Julie she brought with her two bags of unopened mail, in one of which was a disclosure document provided by the advisers that showed a referral fee paid to the accountant of $30,000 per annum. The wealth management firm had invested in high flying stocks at the time of the Internet bubble. After the crash, she had sued them and had asked the accountant to testify on her behalf. But he refused because of conflict of interest – his $30,000.   The fee, incidentally, was not itself illegal because it had been identified in the disclosure statement. Furthermore, the lady had filled in the form to say she had over 10 years investment experience that justified an aggressive investment strategy. In fact, she had nothing of the sort; the form had been completed for her by the young associates at the New Jersey firm.

All this illustrated the fact that retirement planning should be viewed as a joint venture between spouses in which one party may well be learning new things at a late stage in life. Julie cautioned that the more experienced partner should be patient and engage in a dialogue with the partner, focusing initially on common goals such as grandchildren, college funds and so on and that would lead to the need for a cash flow projection and from there to portfolio structuring.

Julie referred us to two handouts that she provided. The first was headed “performance analysis” and showed how progress should be monitored, by using standard deviation methodology to compare the volatility of the portfolio to the S & P and the beta, or risk, also compared to the S & P – for example, a beta of 0.5 equated to half the risk of the market. Performance against the agreed upon target should be monitored at least annually – preferably more frequently.

The second handout described the disclosure document that all advisers were required by the SEC to provide to their clients since September 2011. It was known as Form ADV Part 2A. Retirees should make sure they receive and read this document that among other things disclose the fees charged, other fees such as the referral fee to the accountant described earlier, and custody arrangements for the securities purchased – this went to the heart of the Bernie Madoff swindle.

A number of questions arose in Q and A. How to assess future medical costs? Very hard, depended on individuals. In general she was not a fan of long term health insurance.

According to their ad, the performance of 75% of T Rowe Price’s funds beat the Lipper indices over 10 years. Was this a good yardstick? Julie advised: Do not select a fund based on an ad or Morningstar rating. Instead, select a fund based on the manager’s stated goals and were these being achieved?

How do you know when a fund has gone bad? Read my book, she said – but two telling signs were: an increase in fees charged and a reduction in the fund’s assets. If these two conditions were present, it was time to head for the door.

How did she feel about an adviser that charged only on the profit it made? Not recommended because it probably led to taking on too much risk.

Finally, on the importance of reading fund prospectuses, Julie said what made them interesting was to read two and compare the one with the other. (Sounds like watching paint dry to me.) On the Peter Knight scale of 1-10, this was an informative and focused 8.