I attended my first academic conference as a PhD student last week, which was mostly devoted to the presentation of new research and papers for critical review by other academics. I attended some sixteen paper presentations. Here are a few key insights I gleaned, which may be of interest to our readers:
Dr. Lin, California State University, presented a paper on dynamic dollar cost averaging, showing that varying regular investment amounts (like monthly deposits, for instance) based on market valuation levels can improve returns. Buying more when prices are down (but when it is scary to buy) and less when prices are high can lead to greater profitability. While this seems obvious, it can be difficult to stick to this discipline. Dr. DiLellio, Pepperdine University, presented an intriguing analysis of optimizing ROTH vs. traditional IRA withdrawal strategies. Dr. DiLellio demonstrated that the “popular” wisdom of drawing down one “bucket” first—as promulgated by such giants as Fidelity and Vanguard—appears to be wrong, and that a plan of pulling out just enough from the taxable traditional IRAs to max out lower tax brackets—and no more—leads to more net retirement income and bigger estates in the end (he was kind enough to email me the paper, and interested readers can view it here); this can lead to as much as 10% more terminal wealth rather than following the advice of big mutual fund companies would suggest. Finally, Dr. Xiao, University of Rhode Island, presented an analysis of consumer satisfaction levels with financial advisors. Drawing from (admittedly generic and subjective) FINRA data, Xiao and Porto found that consumers were generally satisfied with investment and tax advice (not when delivered together!), but not with insurance advice—I guess no one loves an insurance agent! Until next time, Jeff.