During my morning cruise of the financial landscape comes a few frighting snippets from the following link
http://blogs.marketwatch.com/encore/2014/03/04/rethinking-the-4-retirement-spending-rule/
in particular the follow two statements found in the article
First:
“Now, J.P. Morgan is entering the fray with an alternative to the 4% rule its own. The good news: You’re likely to be able to withdraw more than 4% of your account’s balance each year. The bad news: The method is fairly complicated to implement, so you will need the help of a financial adviser (which is good news for J.P. Morgan, which employs a network of them.)”
Second:
“The bank’s “Dynamic Withdrawal Strategy” adjusts both withdrawal rates and a portfolio’s investment allocations annually, in response to changes in both the markets and a retiree’s personal circumstances.”
Note the 4% rule is as they said in the movie “Pirates of the Caribbean” quote “more like a Guideline rather than a Rule”.
How nice of those wonderful folks at J.P. Morgan. I am sure that they are all honorable, nice, concerned and carrying individual. I will bet that even their mothers even love them. Unless you are their mother or some how directly related to them I rather suspect that the reciprocal is not the case.
Retirement planning is complicated at best. That said, there are two major complicating factor for which J.P. Morgan or any one else has no control over, or much less an exact answer for.
The first major complicating factor for which J.P. Morgan or any one else has no control over or exact answer for is just how long are you going to live. There is only one entity that know this information, and they are not telling. Now J.P. Morgan can make some educated guesses, but they are really nothing more than guesses, if they are wrong you are the one on the hook, and they are the ones off of the hook.
The second major complicating factor for which J.P. Morgan or any one else has no control over or answer for is just how healthy are you going to be during your yet unknown golden years. J.P. Morgan can make some guesses, but again as before you are the one on the hook, and they are the ones off of the hook.
Of course their method is complicated? To most of us it might also appear to be confusing, after all there is profit in confusion. Of course with their complicated and confusing method you will need a guide, and it just so happens that they have many guides who are versed in this complicated and confusing method (What a deal, I bet you might even get a cup of coffee or a soda.)
J.P. Morgan is in a revenue capture mode (They just keep paying lawyer to clean up their mess, of which no one person or persons is truly responsible for (either criminally or civilly))(In the mean time they got to use the money). They are closing up shop of some of their other more lucrative revenue capture endeavors,(since the government has either outlawed it or has via regulations and oversight made the costs too high, and conversely the profits too low) IE. prop trading or as I like to call it betting against your customers (they would say adding liquidity to the market) (You say mishmash, I say hodgepodge).
So it is only logical that with the current trends in demographics (old people are the fastest growing demographic) that they set up camp in the vast untapped fields of retirement advise and management, with the prospect unlimited and unfettered fees and commissions are just ripe for the fleecing. Lets just face facts old people are easy marks, and the folks at J.P. Morgan are basically just a bunch of college educated suit and tie wearing Grifters. Not to put too fine of a point on it but I suspect that more of them than you would guess would mate with a snake if you held it for them.
Another statement that made in the post that just scares the crap out of me is this little quote:
“The bank’s “Dynamic Withdrawal Strategy” adjusts both withdrawal rates and a portfolio’s investment allocations annually, in response to changes in both the markets and a retiree’s personal circumstances.”
Just what does that mean? Well the article is strangely silent, but I can only infer that at least once a year they (J.P. Morgan) are going to look at your portfolio and to paraphrase Monty Python “Now for something completely different” just rearrange it, and in the process that at the very least will generate new commission for them, and quite possibly incur additional taxes for you. (Truly a Win Win scenario). This feature will also be on top of the management fee (probably based on assets under management) that they are going to charge you annually. (I just love naked, aggressive, and unrestrained capitalism. Don't you?).
Two final points to remember about letting these wolves into you tent. Somewhere deep down inside the agreement that you will have to sign if you want to have all the features and benefits of their world class service.
First is the fact that you will have NO recourse via the courts when you find out that they have truly bent you over the axle and driven you home. No your only recourse will be via the FINRA arbitrations process as sanctioned by the Securities and Exchange Commission. (Their bat, your balls, their field, their concession stands, their parking, their players, their umpires.)
Second somewhere in the tomb of a document/contract you signed was a requirement for you to be forth coming with any and all information that might have a direct bearing on the decisions being made by J.P. Morgan concerning the planning and management of your retirement assets being held for you by J.P. Morgan. I would not be surprised (but you might be) if the document contains explicit methods for you to formally convey this information to J.P. Morgan in a timely fashion, and failure on your part is not a failure on their part (See your on the hook, and they are not on the hook). Your odds are not good, see preceding paragraph.
