Transitions & Changing Strategies: Donlan & Barcomb

Do you have enough money saved for retirement? Do you know the age when you wish to retire? What will your monthly budget look like after you exit the workforce? What about the number of years you expect to live once you retire?

These are just a few of the central questions a financial advisor will ask you, and it’s okay if you haven’t considered the answers before. A great financial advisor will help you find your personalized answers to each of these questions. From there, she or he will work with you to develop a customized savings plan to help you achieve your financial goals for retirement.

Enter Donlan & Barcomb Wealth Advisors, a team that is quickly approaching 70 years of combined experience in the field. Robert Donlan and James Barcomb are partners of the firm, which began in 2002 when Barcomb joined forces with Donlan to form their new joint venture. This year, Donlan is nearing 35 years of industry experience, while Barcomb nears his 30th year. Jared Burns became the newest addition to the firm in 2016, bringing years of experience from both the financial industry and a successful small business venture. Lori McLear is a keystone to the operation as well, providing expert customer service and administrative support to the team.

Retirement and Workplace Exit Strategies
“We ask our clients, ‘When do you want to retire?’ versus ‘How much money do you need?’” said Barcomb. Once he knows when a client would like to retire, then he can work with them on helping them reach their goals.

“The earlier the better…but we tend to catch many of our clients about 5 to 10 years before retirement,” said Donlan. Many clients have saved on their own in some way, but are looking for professional advice on how to make the transition as smooth as possible. “We want to make sure they have all their ducks in a row. We want to make sure their accounts are positioned properly, college is paid for, and we work on debt reduction,” said Donlan.

“A lot of companies are getting rid of pensions but instead, they are giving huge matches on a 401(k). Take advantage of that,” said Barcomb. “Everyone has their own risk tolerance,” he pointed out, “but the most important thing is to take full advantage of whatever your employer offers you.” Each client at Donlan & Barcomb has a “Client Profile,” which helps them gauge tolerance and review each client’s securities and accounts in a personalized way.

The Transition from Accumulation to Consumption
“For the most part, most of our clients have done a fantastic job saving,” said Barcomb. North Country couples often share the common question of how to combine their retirement assets and establish a game plan for how to withdraw those assets during retirement. “We help them pull all of their different retirement and savings plans together and develop a plan for them based on that,” said Barcomb. “Once we help them create their plan, they just need to work their plan. We’re here to help them along the way.”

For many families, the toughest part is transitioning from the accumulation stage to the distribution stage. Many people who consider themselves “savers” have a tough time watching their accounts switch from growing to shrinking each month. Donlan & Barcomb focus in on the numbers and craft plans for their clients to help manage that difficult transition.

In some cases, retirees will take their retirement income and put it back into a savings account because they are more comfort- able watching their savings grow. This is a good habit for many, but the financial implications are counterproductive. By putting additional retirement earnings in a savings account, rather than choosing to take less out of their retirement each month, the retirees are sacrificing potentially higher returns they could be earning in their retirement fund.

Social Security
Is Social Security going away? Donlan & Barcomb don’t think so. According to Donlan, the question is not whether Social Security will exist, but in what form? “For example,” said Donlan, “millennials may not be able to pull from Social Security until they’re 65 or 66 instead of 62, like it is today.”

Ultimately, the effort to predict and plan for Social Security may become more than it’s worth. The best way to plan for Social Security in the future is to assume that Social Security will not be there, but then enjoy it in whatever form it comes. “Plan accordingly,” said Barcomb. “It’s like preparing to bake a nice big sheet of plain tea cake that you know will taste great when it’s ready. If you end up having some icing to put on top later, that’s just a bonus.”

“Millennials are not saving anywhere near what they need to be saving because they are getting into so much debt with college,” said Barcomb. “I think millennials have a bigger savings challenge ahead of them than the older generation did.” With pensions disappearing and the looming threat of Social Security shrinking and/or changing, millennials need to focus on saving more than the previous generation.

Generally, millennials should strive to save $100 per month as soon as possible, if they haven’t started already. “You don’t miss it if you never saw it,” said Donlan, referring to savings that are automatically deducted from a paycheck. Even so, a $100 monthly deduction into savings is often not taxed (depending on the type of account). In that case, the loss of income the saver “feels” each month will be closer to $75, not $100, after taxes.

Not everyone is able to save early. The big question: When has the damage been done from waiting too long? According to Donlan, if an individual enters his or her mid- to late 40s before beginning the savings process, it’s likely that significant savings damage has already been done at that point. Moving forward, the individual must become overly aggressive to catch up.

Realistically, millennials need to plan for a longer working career, which can help add to the total savings one may achieve during that time.

Overall Changes in the Industry
The average age of a financial advisor is 62 years old, which leaves a huge exodus from the profession within the next decade. What’s going to happen to the industry? First and foremost, the opportunity to enter the profession has never been greater. Today’s college students and young professionals have a great opportunity ahead of them if they are interested in the industry.

Regulations are changing as well. For starters, the Department of Labor has become another regulatory body over the financial industry— joining FINRA, the SEC, and state regulators. The new DOL regulations are intended to address the department’s belief that advisors may “operate with conflicts of interest that they need not disclose and have limited liability under federal pension law for any harms resulting from the advice they provide.” This has come as a major change to the industry and officially went into effect in June 2017. Donlan & Barcomb pointed out that they have always worked in their clients’ best interests. “Working closely with our clients to plan for the important financial stages of their lives has demonstrated our value as trusted advisors,” the partners said. “Through this collaborative relationship, we strive to maintain a path to readiness and know how to work toward a solution.”

There’s More Than One Way…
Financial planning is dependent on you, your goals, and your timeline. By partnering with a financial advisor you trust, saving for retirement can be an exciting journey. Start early, work your plan, and prepare for your future.

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Donlan & Barcomb is not affiliated with The Investment Center, Inc. or IC Advisory Services, Inc.
The views expressed today are our own and do not necessarily represent the views of The Investment Center, Inc. or IC Advisory Services, Inc.
The information contained is derived from sources believed to be accurate. However, we do not guarantee its accuracy. The information contained is for general use and it is not intended to cover all aspects of a particular matter. Neither the information presented nor any opinion expressed constitutes a representation by us or a solicitation of the purchase or sale of any securities. The information contained is not appropriate, by itself, to guide investment decisions.