In episode 105 of the [i3] Institutional Investment Podcast, we speak with Jessica Sclafani, a Global Retirement Strategist with US fund manager T. Rowe Price, which manages $1.6 trillion in total assets on behalf of clients. Retirement is a more complex phase than wealth accumulation and it needs a more sophisticated approach to deliver good outcomes. Sclafani discusses a 5 dimensional approach to retirement and the tradeoffs that come with choosing a suitable approach
Overview of Podcast with Jessica Sclafani, Global Retirement Strategist, T. Rowe Price
01:00 How does one become a global retirement strategist?
04:30 The 5 dimensional retirement strategy is based on the research of Berg Cui a senior quantitative investment analyst in the Multi-Asset Division of T. Rowe Price
05:30 The 5 dimensions of retirement
07:30 To benefit from any of these attributes, you are going to have to compromise on at least one of the other four. So tradeoffs is something that we are going to talk about a lot
10:30 Traditional risk/return tradeoffs don’t work well in retirement. Here is an example.
13:00 Our research showed that out of 2500 respondents, maintaining quality of life was their top ranking concern
14:00 Longevity risk and the risk of sudden portfolio depletion are not the same thing
15:30 When investing for retirement, people are not just focusing on returns
18:00 People in the survey ranked volatility as the least important. Is that a financial literacy issue?
23:00 Guaranteed income streams are not very popular. What is your take on these products in retirement?
24:30 We tend to talk a lot about guarantees, but we don’t talk a lot about what people have to give up for that guarantee
25:00 Our research found that people are willing to give up 6 per cent of their income to go from knowing that their savings would last them until age 100 to having a guarantee for life
28:00 Does A.I. offer a solution for mass-customisation of retirement products?
To read the T. Rowe Price paper, ‘A five‑dimensional framework for retirement income needs and solutions’, please see here.
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[i3] Insights is the official educational bulletin of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe. The [i3] podcast is available on Apple Podcast, Spotify, Amazon Music, YouTube Music, or your favourite podcast platform.