Practical Applications of The Glidepath Illusion… and Potential Solutions

Abstract

The glidepath approach does not maximize retirement income or reduce uncertainty about that future income, maintains Robert Arnott , Chairman and CEO of Research Affiliates in Newport Beach, CA.

In The Glidepath Illusion…and Potential Solutions , in The Journal of Retirement (Fall 2013), Arnott and Research Affiliates colleagues Katrina Sherrerd , Partner and COO, and Lillian Wu, Research Associate, present a historical analysis of the results of traditional glidepath strategies and compare them to static balanced and contrarian strategies.

The authors point to several problems with the conventional glidepath approach and suggest new approaches for better results. “Our goal is to draw attention to the glaring limitations of plain-vanilla target-date strategies and to show the paths by which these strategies can be improved, not by a little, but by a lot,” Arnott tells us. The results have attracted attention in the broader media, including Financial Advisor Magazine .