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November 20, 2006
Podcast for 11/20/06: Interview with Dr. Larry Kotlikoff
Kim interviews Dr. Larry Kotlikoff, an economist from Boston University and developer of the financial-planning software ESPlanner. The software is based on the concept of "consumption smoothing."
MP3 Download: Hi (128k) | Lo (24k)
Length: 29:01
Notes:
2:00 The problems with conventional financial planning -- it typically sets the wrong target for retirement spending and saving.
3:57 Even a 10% mistake in determining your target can lead to huge mistakes in savings amounts, life insurance, etc.
4:25 Technology and mathematics allow us a more realistic way of determining our targets, we don't need to guess.
6:10 Most of the traditional financial planning companies suggest bad targets and profit off their bad advice
8:40 There's a structural problem with the industry; going to traditional financial planners is like going to an old-time doctor who gives you a 2-minute checkup and charges you for a special elixir.
10:08 How do we distinguish the good advice from the bad? Dr. Kotlikoff talks about his software product, ESPlanner.
11:38 There's one prescription coming out of the economics profession, and that's consumption smoothing. ESPlanner is built on consumption smoothing.
12:35 Defining the terms consumption smoothing and sustainable lifetime standard of living
15:20 There are a lot of factors that go into generating the reports that ESPlanner makes. User puts in basic information.
21:15 Financial planning is not something to spend only 5 or 30 minutes on. You need to take it seriously.
23:27 Would this software replace the need for a financial planner?
23:55 All the data behind this software is continually updated (taxes, Social Security benefits, etc.)
27:00 Everyone's been putting their head in the sand when it comes to financial planning. There's a better way to do it.
27:52 Where to get the software and how much it costs.
Resources:
ESPlanner software
Kim Snider, Kim Snider Financial Communications, Chronim Investments and/or Snider Advisors make no representation that the information and opinions expressed are accurate, complete or current. The opinions expressed should not be construed as financial, legal, tax, or other advice and are provided for informational purposes only. Call 866-952-0100 to request the Snider Investment Method™ Owner's Manual, which includes a description of the Snider Investment Method, investment objectives, risks, suitability and other information. Please read and consider carefully before investing. All investments are subject to risk including possible loss of principal.
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Kim Snider is an author, speaker and host of Financial Success Coaching, Saturdays at noon, on KRLD Newsradio 1080, Dallas - Fort Worth. This blog is primarily devoted to empowering individual investors with information to help them be good stewards of their money. Above all, it is about achieving true financial success. Kim's book, How To Be the Family CFO: Four Simple Steps to Put Your Financial House in Order is in bookstores now. Order yours from Amazon or other fine booksellers today.
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