Ep 407: Building Retirement Portfolios With A Liability-Driven-Investing Approach To Manage Sequence Of Return Risk with Mark Asaro

Financial Advisor Success

Michael Kitces

News, Business, Entrepreneurship, Business News

4.8 • 696 Ratings

🗓️ 15 October 2024

⏱️ 89 minutes

🔗️ Recording | iTunes | RSS

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Summary

Mark Asaro is the Chief Investment Officer of Noble Wealth Management, an RIA based out of Colorado that oversees $320 million in assets under management for 160 households. Mark stands out with his liability-driven investing approach, which builds retirement portfolios focused on managing sequence of return risk, leveraging the use of closed-end bond funds to generate income to cover client expenses during the critical early retirement years.

Listen in as Mark shares how Liability-Driven Investing (LDI) matches retirement portfolios to client spending needs, securing early retirement finances through strategically allocated fixed income to generate income and equity to manage inflation risk. He dives into his tactical approach to rebalancing portfolios, using market conditions to optimize asset allocations between equities and bonds. Mark also reflects on his firm's strategic shift during the 2022 market downturn, when it capitalized on high bond yields, why he believes investment management isn't a commodity, and how the LDI approach ultimately supports clients' long-term financial stability and peace of mind.

For show notes and more visit: https://www.kitces.com/407

Transcript

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0:00.0	Welcome to the Financial Advisor Success Podcast, where you go behind the scenes with
0:07.1	financial planner, speaker, and consultant Michael Kitsis to hear stories of how leading
0:12.4	financial advisors navigated the inevitable challenges that arise on the path to success
0:17.4	and get insight from leading industry consultants about how to break through to the next
0:22.2	level in your advisory business. And now here's your host, Michael Kitsis. Welcome, everyone.
0:29.1	Welcome to the 407th episode of the Financial Advisor Success Podcast. My guest on today's podcast is
0:35.0	Mark Asaro. Mark is the chief investment officer of noble wealth management, an RAA based in Greenwood Village, Colorado, that oversees $320 million in Assets Center Management for 160 client households.
0:46.7	What's unique about Mark, though, is how he uses a liability-driven investing approach to build retirement portfolios and manage sequence of return risk, with a particular
0:54.6	focus on using closed-end bond funds to generate the income needed to cover his client's expenses
0:59.3	during the early and most financially dangerous years of retirement. In this episode, we talk in
1:05.0	depth about Mark's approach to implementing liability-driven investing, or LDI, which involves
1:10.3	understanding the client's year-by-year
1:12.2	spending needs and then creating an asset allocation designed to generate sufficient income to meet
1:16.3	those specific spending liabilities as they come do. How leveraging an LDI approach allows Mark to
1:21.8	illustrate to his clients the investment income that will cover their early spending needs
1:26.2	so they don't have to worry about selling
1:28.3	assets during market downturn. And how Mark's LDI approach has helped him attract more risk-averse
1:34.6	clients who aren't necessarily comfortable with the traditional approach to retirement portfolios
1:39.2	and then helps those clients get comfortable to actually spend more of their money in retirement
1:43.9	in the
1:44.2	process. We also talk about how Mark actually executes the portfolio construction process
1:49.7	using an LDI framework with an overweight allocation of fixed income to build a bond tent in the early
	...

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