section 1 - The American College Online Learning Center

3. Understanding systematic withdrawalsa. Many surveyed advisors adjust the amount of the systematic withdrawal on anon-going basis using various dynamic withdrawal strategies.b. The most common adjustments include adjusting(1) For inflation(2) In order to match the initial withdrawal percentage (resetting)(3) As a result of simulation analysis(4) As a result of expected stock market valuationc. Usage of the dynamic withdrawal strategies according to the FPA Research CenterUse of Dynamic Withdrawal StrategiesYes, I may recommend adjustments to the withdrawal amount initiallyrecommended, but not based on the application of any specific policies.Yes, I may recommend adjustments to the withdrawal amount initiallyrecommended based on the application of dynamic withdrawal policies.No, I typically maintain the withdrawal amount initially recommended, except forinflation adjustments.35.3%29.5%18.8%No, I typically maintain the withdrawal amount initially recommended. 11.2%Not sure/ I don’t know 5.2%d. Adjustments according to the FPA Research CenterAdjustments Typically Made by Advisors who Use Dynamic WithdrawalOPTIONSPERCENTAdjust the recommended withdrawal amount so that it keeps pace with inflation. 35.6%Adjust the recommended withdrawal amount if the current withdrawal ratepercentage varies too much from the initial withdrawal rate percentage.Adjust the recommended withdrawal amount based on the current results of aMonte Carlo or other simulation analysis.Adjust the recommended withdrawal amount based on current and expected stockmarket valuation levels.Adjust the recommended withdrawal amount so that it maintains the initialwithdrawal rate percentage.34.5%34.5%33.2%18.4%Other* 12.3%*Other responses most commonly include adjusting based on client need/goals, changes in clientsituation, and various market shifts.e. Surveyed advisors believed systematic withdrawals are more effective thantime-based segmentation (also known as the bucket approach) and theessential-versus-discretionary income approach (also known as flooring).4. Approach versus producta. The FPA research indicates that the overwhelming majority of surveyed advisors(over 78 percent) first select an approach, and then select and manage theproducts needed to implement the approach (rather than using a product withan embedded strategy).6.7