CHICAGO – The advisory world is being roiled by changes. How should advisers adapt as passive investing and automated advising continue to grow? What about changing definitions of risk in a fiduciary environment and new client goals?

Some of the leading thinkers in planning and investing haggled over these concerns at the Morningstar Investment Conference, finding common ground in some areas and offering practical advice to advisers in an evolving world, as the name of the session promised.

RIA Blair duQuesnay said the new fiduciary law doesn’t go far enough, and I certainly agree. In fact, it may even harm consumers who believe fiduciary actually means putting the client's needs first, which I believe won’t be the case.

RIAs Bill Bernstein and Blair duQuesnay discuss the struggle to save for retirement at the Morningstar Investment Conference. Photo by Jim Tweedie.
RIAs Bill Bernstein and Blair duQuesnay discuss the struggle to save for retirement at the Morningstar Investment Conference. Photo by Jim Tweedie.

In a lively back-and-forth on the nation’s retirement crisis (not enough Americans will have saved nearly enough for the years when they won’t be working) and on automated investing, widely followed RIA Bill Bernstein noted that automated robo advising is great for small investors, yet investing can be difficult.

As duQuesnay sees it, Americans are struggling to save and automated savings is critical. Morningstar’s Don Phillips argued that investors are often their own worst enemy, chasing performance to avoid pain and move to pleasure – a point I make regularly. I do think software is better at managing portfolios than people.

When it comes to clients who’ve retired and are spending their portfolios, duQuesnay pronounced herself a fan of deferred income annuities, which she called longevity annuities. Bernstein said he likes DFA target date funds that heavily use TIPS for liability matching. Like many advisers, he said delaying Social Security is the best longevity annuity and wasn't a fan of deferred income annuities due to inflation risk. I fully agree with Bernstein on delaying Social Security and also that private longevity annuities expose investors too much to unpredictable inflation.

Allan S. Roth

Allan S. Roth

Allan S. Roth, a Financial Planning contributing writer, is founder of the planning firm Wealth Logic in Colorado Springs, Colo. He also writes for AARP and has taught investing at three universities.