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The Work Forever Plan? Just Say No.

By Don Schreiber, Jr. – WBI Founder and CEO

In my recent article, Will the Tax Cuts and Jobs Act Take a Bite Out of Your Retirement?, I expressed my displeasure at the Act’s implications for the Baby Boomer generation’s ability to do just that — retire. Articles abound in the media about a new retirement planning concept for Baby Boomers — “The Work Forever Plan.” I don’t know about you, but I’m not willing to throw away the promise of a fulfilling retirement. Unfortunately, there are a lot of Baby Boomers who have not saved enough for retirement and for whom the work forever plan will be a reality. But if you’re not in that category and have saved enough, I believe there is a better alternative for successful retirement out there.


The Tax Cuts and Jobs Act’s higher taxes are likely to reduce your ability to save, reducing your spendable retirement income. This is likely to reduce the probability of a decent retirement lifestyle for millions of Boomers. Today’s low relative yields on income-producing investments compound the retirement problem further. With aging population dynamics in the U.S. and the apparent thirst for yield in most developed nations, investors have been pushed to take more risk by chasing higher returns in junk bonds or risky high-yield stocks. Higher yielding investments historically provide more cash flow but dramatically increase the risk of losing capital — capital that can’t easily be replaced by older investors through another lifetime of work or savings. With market volatility increasing and clearly indicating increased risk, investors who are retired or are approaching retirement need to have an effective plan to protect capital from another devastating bear market. Protecting capital from large losses is the most powerful thing you can do to improve your chances of sustaining retirement income.


When you retire, your portfolio will need to grow over time to generate income that keeps pace with inflation. However, you will need to tame bear market losses first. Twenty-five years ago, WBI launched the Retirement Income strategy to help investors retire successfully and achieve their goals in retirement. Our philosophy incorporates the three pillars required to increase success.


The first and most important pillar is managing risk to capital. We feel that over any calendar year, a retired investor should limit a loss of capital to about 10%, instead of incurring normal bear market losses of 50% or more. The hallmark of WBI’s management process is active risk management.


In our opinion, the second pillar of a successful retirement income strategy is to generate cash flow from interest and dividends to support income withdrawals. By generating cash flow close to your income need, you can avoid liquidating underlying shares of your investment which can lead to compounded liquidations of capital. When fully invested, the strategy is designed to produce generous cash flow from interest and dividends.


When market conditions are favorable, your portfolio needs to capture consistent return to grow capital and income to keep pace with inflation that can rob you of your purchasing power. We believe that WBI Retirement Income – an active, risk-managed strategy using a blend of high-yield dividend-paying stocks and fixed-income securities – can provide retired investors with current income and capital growth to meet their goals.


The true test of a money manager is how they perform in both good times and bad. Investors need to look beyond today’s rate of return and focus on success over your lifetime. The metrics below tell a more complete story of how a manager could protect your money to get you to and through retirement.

Retirement Income Strategy vs. S&P 500 1/1/2000-12/31/2017

Source: Morningstar, Net of Fee, 2018.

Performance shown is composite performance which, prior to 8/25/14, only included accounts invested in a model allocated to individual securities. When an Affiliated ETF is launched, a new model reflecting accounts invested in the full suite of Affiliated ETFs is included in the Composite. Models implemented through Affiliated ETFs were added on 8/25/14 (the initial 10 ETFs), 7/25/16 (11 ETFs) and 1/06/17 (12 ETFs). The model implemented through individual securities and the models implemented through Affiliated ETFs are substantially similar. The Affiliated ETFs do not have performance history of comparable duration; therefore, models implemented through Affiliated ETFs could have performed better or worse over the same period and does not indicate future performance.

Important information

Past performance does not guarantee future results. The views presented are those of Don Schreiber, Jr. and should not be construed as investment advice. Don Schreiber, Jr. or clients of WBI may own stock discussed in this article. All economic and performance information is historical and not indicative of future results. This is not an offer to buy or sell any security. No security or strategy, including those referred to directly or indirectly in this document, is suitable for all accounts or profitable all of the time and there is always the possibility of loss. Moreover, you should not assume that any discussion or information provided here serves as the receipt of, or as a substitute for, personalized investment advice from WBI or from any other investment professional. To the extent that you have any questions regarding the applicability of any specific issue discussed to your individual situation, please consult with WBI or the professional advisor of your choosing. This information is compiled from sources believed to be reliable, accuracy cannot be guaranteed. Information pertaining to WBI’s advisory operations, services, and fees is set forth in WBI’s disclosure statement in Part 2A of Form ADV, a copy of which is available upon request.

This is not an offer to buy or sell any security. No security or strategy, including those referred to directly or indirectly, is suitable for all accounts or profitable all the time. WBI Enhanced SMA® accounts are subject to investment risk, including the possible loss of principal. The ETFs in WBI Enhanced SMA accounts may invest in other ETFs, mutual funds, and Exchange-Traded Notes (ETNs) which will subject the account to related additional expenses of each, and the risk of owning the underlying securities held by each. Investment risks may include but are not limited to: market, economic, political, interest rate, currency exchange, leverage, liquidity, credit quality, model, portfolio turnover, trading, REIT, high yield stocks, nondiversification, concentration, commodities, options, new fund, and client specific restrictions. WBI’s Passive ETFs are not actively managed and WBI does not attempt to take defensive positions in declining markets. You should not assume that any discussion or information provided here serves as a substitute for personalized investment advice from WBI or any other investment professional. If you have questions regarding the applicability of specific issues discussed to your individual situation, please consult with WBI or your chosen professional advisor. This information is compiled from sources believed to be reliable, accuracy cannot be guaranteed. WBI’s advisory operations, services, and fees are in the Form ADV, available upon request.

WBI has an inherent conflict of interest in investing in or recommending Affiliated ETFs as follows: 1) WBI and affiliates receive management fees from Affiliated ETFs. To avoid receiving two layers of management fees in situations where clients invest in Affiliated ETFs through SMA and Platform accounts, WBI will either: (i) waive the management fee at the account level; or (ii) credit the management fees paid by the Affiliated ETFs to WBI and its affiliates with respect to an account’s investments in Affiliated ETFs against the account-level advisory fees the account owes WBI, and 2) WBI’s affiliated broker-dealer, Millington Securities, Inc., receives commissions and other compensation (including order flow payment) for transactions effected on behalf of Affiliated ETFs. Trades WBI places through Millington will be subject to WBI’s duty of best execution and applicable law. Net of Fee Performance (NFP) is net of WBI’s investment management fees and includes reinvestment of dividends and other earnings. Both Net of Fee Performance and Gross of Fee Performance were restated effective February 28, 2017, to reflect the exclusion of management fees paid by the Affiliated ETFs to WBI held through the WBI Enhanced SMA® accounts which resulted in understating Gross of Fee Performance, and as a result, Net of Fee Performance. Additional information is available upon request. Benchmark performance does not include deductions of transaction and custodial charges or investment management fees, which would likely reduce performance results. Because the strategy involves active management of a potentially wide range of assets, no widely recognized benchmark is likely to represent performance of any managed account. WBI managed accounts may own assets and follow investment strategies which cause them to differ materially from the composition and performance of the benchmarks shown. Indices are unmanaged and may not be invested in directly.

S&P 500 TR Index: includes a representative sample of large-cap U.S. companies in leading industries where all cash payouts (dividends) are reinvested automatically.

WBI’s Retirement Income Strategy is one of six separately managed account strategies currently offered by WBI. Other strategies may have different results.

You are not permitted to publish, transmit, or otherwise reproduce this information, in whole or in part, in any format to any third party without the express written consent of WBI Investments, Inc.


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Unless otherwise indicated all performance is sourced from Bloomberg.


The views presented are those of the authors and webinar or podcast hosts/participants, and should not be construed as investment advice. The authors, podcast participants, webinar hosts, or clients of WBI Investments, LLC (WBI) may own stock discussed in these insights. WBl is an investment adviser in New Jersey. WBl is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. WBl only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of WBI's current written disclosure brochure filed with the SEC which discusses among other things, WBI's business practices, services and fees, is available through the SEC's website at: This site contains links to third-party websites. WBl does not endorse, approve, certify, or control these websites and does not assume responsibility for the accuracy, completeness, or timeliness of the information located there. Your access to and use of such websites is governed by the terms of use and privacy policies of those sites, and shall be at your own risk. WBI disclaims responsibility for the privacy policies and customer information practices of third-party internet websites.

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