While the “annuity puzzle” is well-documented in the academic literature, there is no “mutual fund puzzle.”
From a performance perspective, I give robos an “A” for being average, and hope that future research can make more meaningful statements as to how robos truly impact investor outcomes.
The fact only roughly 1 in 20 annuity quotes include a COLA suggests that advisors are not considering, and retirees are not being provided with, information that is essential for determining the optimal annuity benefit payment structure.
I recently traded emails with someone who is provably smarter than me. He was very interested in buying a SPIA with payments linked to inflation, which is also called a real annuity. Real annuities are often depicted as perfect for a retiree. But after obtaining some quotes and running an analysis, I concluded the idea was “nuts.”
DALBAR’s report is commonly cited as “proof” that mutual fund investors have historically made poor market-timing decisions. While DALBAR does not publicly disclose its approach, in this article I use a transparent and industry-accepted methodology, based on publicly available data, to demonstrate that investors’ returns have not been nearly as bad as DALBAR claims.