This post was authored by Salvatore M. Capizzi, Dunham's Chief Sales & Marketing Officer. If you have questions concerning today's topic, please call us at (858) 964 - 0500. Hold us to higher standards.

How the Award-Nominated Dunham Retirement Income Program Can Prepare You for the Largest Wealth Transfer in History

Late last summer, I was at Del Mar Beach in San Diego, enjoying my morning walk and watching the early surfers riding the waves. The sun had barely risen above the horizon, and what caught my attention was not those riding the waves but rather a group paddling further out, positioning themselves for something I could not yet see.

Intrigued, I asked a nearby veteran surfer what they were doing.

“They are not interested in these waves. They are positioning themselves for the big set coming in about twenty minutes,” he said. “You can barely see it on the horizon, but it is there, and it will be worth the wait."

Later that day, it struck me that this is not much different than what is happening in the retirement planning industry. While many advisors focus on the current wave of Baby Boomer retirees, the most significant wave is still approaching.

The Golden Opportunity: The Baby Boomer Wave

To appreciate what is ahead of us, you only need to look at the birth rates of Baby Boomers. The phenomenon began modestly in 1946, with 3.4 million births, a 20% increase from the previous year. Yet this was merely the beginning. The numbers swelled to 3.8 million in 1947, reached 3.9 million by 1952, and added more than 4 million births annually from 1954 through 1964.(1)

This accelerated pattern is where the opportunity lies for financial advisors. The later Boomers, born after 1954, represent a substantially larger demographic group than their older counterparts. These "trailing-edge" Boomers accumulated more wealth than their older siblings, having had 401(K) plans for their entire working lives. Fidelity gives us a glimpse of this, reporting a total of 398,594 millionaire IRA account holders at the firm and 497,00 millionaires in Fidelity-sponsored 401(K) plans.(2)

Also, remember that this coming group has benefited from both the real estate boom and the post-2008 market recovery as they enter their retirement planning years.

And of the total 76.4 million Baby Boomers born during this era, representing nearly 40% of the American population, the largest concentrations appeared in the latter years. For perspective, those born in 1964, the final year of the boom, will not reach traditional retirement age until 2029.

Put simply, here is why this is such an exciting opportunity for financial advisors.

  • Massive Demographics - of the 76.4 million Boomers, the largest cohort was born between 1954 and 1964.
  • Wealth Accumulation - this group benefited from consistent 401(k) plans, rising real estate values, and market recoveries.
  • More To Come - The youngest Boomers won’t reach retirement age until 2029, signaling that the biggest wave of retirements is still ahead.

This is an unprecedented opportunity for financial advisors who recognize that the most significant phase of Boomer retirement planning remains before us, not behind us. The window remains open, but positioning must happen now to capture this approaching wave of retirees seeking sophisticated guidance for their substantial assets.

How Both the Dunham Retirement Income Program and DunhamDC Can Set You Apart

The Dunham Retirement Income Program, featuring the innovative DunhamDC strategy, is reshaping how financial advisors seek to provide financial security during their clients' golden years.

This program focuses on key concerns such as running out of money, managing inflation, emergencies, healthcare expenses, and leaving a legacy for loved ones. By providing a comprehensive program, the Dunham Retirement Income Program enables retirees to embrace this new phase of life with confidence and clarity.

It is a solution designed to support retirees' unique and evolving needs, helping them navigate life's unpredictable financial landscape with resilience and reassurance.

At the heart of this program is DunhamDC, a proprietary algorithm that seeks to mitigate sequence risk, which is one of the most significant threats to retirement income sustainability.

DunhamDC - which Buys Fear and Sells Greed - employs a systematic, unemotional approach to asset allocation, increasing equity exposure during market declines and reducing it during market highs.

This disciplined strategy is inspired by Warren Buffett's timeless investment wisdom: "Be Fearful when others are greedy and greedy when others are fearful."

In our view, this represents a thoughtful approach to managing market fluctuations. By adapting dynamically to market conditions, DunhamDC seeks to reduce the impact of extreme volatility on retirement portfolios while maintaining a focus on growth.

This innovative approach has garnered recognition within the financial services industry. The Dunham Retirement Income Program, powered by DunhamDC, has been nominated for a prestigious 2024 Luminary Award for Innovation in the asset management category.

This acknowledgment highlights Dunham's commitment to delivering forward-thinking solutions that empower retirees and financial advisors to navigate the complexities of retirement planning.

As the wave of retirees entering retirement grows significantly between now and 2029, Dunham's Retirement Income Program is poised to help financial advisors capture this opportunity.

With its emphasis on adaptability, security, and a disciplined investment process, DunhamDC provides a foundation for addressing the diverse needs of this expanding demographic. By partnering with Dunham, advisors can offer their clients a retirement strategy to support their financial goals and enhance their quality of life.

Closing Thoughts

Just as seasoned surfers spot the perfect wave amidst the ordinary swell, we too must see that the true Boomer opportunity isn’t a thing of the past - it’s still forming, rising on the horizon, ready to be ridden.

The 36 million Boomers entering the retirement sweet spot through 2029 represent the most significant transfer of wealth in human history. Each relationship properly planned for through the Dunham Retirement Income Program and DunhamDC could lead to substantial assets under management in the years ahead.

As the morning progressed and I prepared to leave the beach, I watched as those patient surfers who had paddled out early caught wave after perfect wave. They had read the conditions correctly, positioned themselves appropriately, and reaped the rewards of their foresight. For financial advisors, the message is clear - the perfect set of waves is approaching.

The only question is, will you will paddle out to meet it?

Sources:

Disclosures:

This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation. Any investment products or services named herein are for illustrative purposes only, and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance.

Past performance may not be indicative of future results. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. There may be economic times where all investments are unfavorable and depreciate in value.

DunhamDC (“DunhamDC”) is a proprietary algorithm of Dunham & Associates Investment Counsel, Inc. (“Dunham”) that seeks to mitigate sequence risk, which poses a threat to an investor's returns due to the timing of withdrawals. The algorithm employs what Dunham considers to be a pragmatic strategy, generally making incremental increases to the equity allocation when global stock market prices decrease and decreasing it when global stock prices increase. This approach is objective, unemotional, and systematic. Rebalancing is initiated based on the investment criteria set forth in the investors application and is further influenced by the DunhamDC algorithm.

Due to the large deviation in equity to fixed income ratio at any given time, investor participating in DunhamDC understands that a large deviation in equity to fixed income ratio can have significant implications for the risk and return profile of the account. Accordingly, during periods of strong market growth the account may underperform accounts that do not have the DunhamDC feature. Conversely, during periods of strong market declines, the account may also be underperforming, as the account continues to decline, due to the higher exposure in equities. Similarly, if the fixed income investments underperform the equity investments, it is possible that the accounts using the DunhamDC feature may underperform accounts that do not have the DunhamDC feature, even though they may have adjusted the exposure to equity investment before a decline. Therefore, the investor must be willing to accept the highest risk tolerance and investment objective the account can range for the selected strategy. Please see the Account Application for the various ranges.

DunhamDC uses an unemotional, objective, systematic approach. The algorithm does not use complex formulas and is designed to create a consistent process with limited assumptions based on historical data.

DunhamDC may make frequent purchases and redemptions at times which may result in a taxable event in the account and may cause undesired tax-related consequences.

Trade signals for DunhamDC are received at the end of each trading day with the implementation of the trades not occurring until the next business day, which means that there is a one-day lag that may result in adverse prices.

DunhamDC operates within predefined parameters and rules, some or all of which may not be available to review. While this approach can reduce emotional biases and enhance consistency, it may limit adaptability to changing market conditions, economic considerations, or unforeseen events. Extreme conditions may require deviations from the program’s prescribed approach, and such adaptability may be challenging to incorporate. The DunhamDC algorithm is programmed based on specific criteria and rules, it may not capture certain qualitative or contextual factors that can impact investment decisions or movement in the markets. Beyond the initial assumptions used to develop the algorithm, it lacks other inputs or considerations that human judgement and discretion may be necessary to evaluate. DunhamDC may utilize historical data, statistical analysis, and predefined rules. It does not make any predictions and may add to certain investments before they perform poorly or may divest from other investments before they perform well. Dunham makes no predictions, representations, or warranties as to the future performance of any account.

Accounts invested in DunhamDC are subject to a quarterly rebalance to its target allocation at the time based on DunhamDC in addition to the signals provided by DunhamDC at any given time.

Dunham makes no representation that the program will meet its intended objective. Market conditions and factors that influence investment outcomes are subject to change, and no program can fully account for all variables and events. The program requires making investment decisions based on factors and conditions that are beyond the Account Owner’s and Dunham’s control.

DunhamDC is NOT A GUARANTEE against market loss or declines in the value of the account or a timing strategy. Investor may lose money.

Asset allocation models are subject to general market risk and risks related to economic conditions.

DunhamDC has a limited track record, with an inception date of November 30, 2022.

The Dunham Retirement Income Program (DRIP) involves investments subject to risks, fees, and expenses. There is no guarantee that any investing strategy will be profitable or provide protection from loss. Asset allocation models are subject to general market risk and risks related to economic conditions. Past performance may not be indicative of future results.  There may be economic times where all investments are unfavorable and depreciate in value. Loss of original capital may occur.

DRIP is not an insurance product and is not guaranteed. Clients may loose money.

Dunham makes no representation that the program or strategy will meet its intended objective. Market conditions and factors that influence investment outcomes are subject to change, and no program can fully account for all variables and events. The program requires making investment decisions based on factors and conditions that are beyond the Account Owner’s and Dunham’s control.

About the ThinkAdvisor Luminaries Award

Dunham & Associates Investment Counsel, Inc. was nominated as a finalist for the Think Advisor Luminaries Awards 2024 in the asset management innovation category for the period January 8, 2024, to present. The ThinkAdvisor Luminaries award honors firms that excel at financial and investment innovation by creating new financial products, services, or processes which meet advisor and investor client needs, while delivering efficiency and competitive advantages to industry players via new platforms or other tools. In evaluating entries, multiple factors were taken into consideration, including the nominee’s impact on the firm’, it’s advisors and the broader professional community and industry, as well as on the landscape of clients, prospective clients, investors and would be investors nationwide. Compensation was not received from anyone in exchange for rankings for the study. A fee was paid solely to promote the award nomination.

For more information on the Luminaries Award, please visit
https://event.thinkadvisor.com/luminaries-awards/criteria.

Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA/SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.

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