• Skip to main content
  • Skip to footer
MENUMENU
  • Home
  • About Us
    • Our Philosophy
    • Choosing a Financial Planner
    • Legal and Regulatory
    • Team
    • Careers
    • Contact Us
  • Our Services
    • Financial Planning
    • Ongoing Financial Guidance
    • Portfolio Management
  • Financial Planning Basics
    • Continuing Care Retirement Communities (CCRCs)
    • Retirement Planning and Cash Flow
    • Social Security
    • Taxes
    • Insurance & Risk Management
    • Investments
    • 401(k)
    • Real Estate
    • College
    • Liquidity
    • Divorce
    • Estate Planning
    • Sensible Updates
  • Resources
    • The Types of People We Help
    • Webinars
    • Blog
    • Videos
    • Financial Planning Guidebook
    • Continuing Care Retirement Communities Guidebook
    • Primers
    • Financial Planning Links
    • Client Links
    • Financial Planning for Older Adults
  • Contact Us
Sensible Financial Planning

Sensible Financial Planning

Follow Us

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube
Client Links

Call Us Today
781-642-0890

What Rick is Reading

by
Rick Miller
Ph.D., CFP® - Founder

February 25, 2014

This month, Rick has been writing. His article, “Explaining Risk to Clients: an Advisory Perspective,” co-authored with Paula Hogan, appears in The Market for Retirement Financial Advice, recently published by Oxford University Press. The articles in this book originated as papers presented in Philadelphia in May 2012 at the Pension Research Council Conference with the same title. The articles in the book vary in their degree of technical difficulty, but the target audience is scholars rather than the general public (Amazon considers it to be a textbook).

In “Explaining Risk to Clients,” Rick and Paula identify four approaches (paradigms) for delivering financial advice. Each contributes something to people with financial planning issues – those of us who must make choices about what we would like to do in life.

The Traditional paradigm emerged from stock brokerage and naturally focuses on investments and the investment portfolio.  In contrast, economic theory is the fundamental basis of the Life Cycle approach, which focuses on lifetime earning power and developing a stable living standard. The Behavioral approach recognizes that people are human, which complicates planning because their decisions are frequently not rational. Finally, real world considerations intrude through Advisor Experience. For example, couples don’t always agree on goals and values, risk and return forecasts are very uncertain, and clients frequently benefit from ongoing support. In short, advisors must adapt all of the first three paradigms to the realities of life.

In the authors’ view, the Traditional paradigm has long been dominant, while the LifeCycle approach is gaining ground. The Behavioral approach advances many important issues, but the implications for practice remain to be developed.  Finally, if the first three paradigms represent the “science” of financial planning, Advisor Experience is the “art.”

More articles by Rick Miller Filed Under: Sensible Updates Tagged With: Recommended Books

Footer

Services

  • Financial Planning
  • Financial Guidance
  • Portfolio Management

About Us

  • Our Philosophy
  • Team

Resources

  • Blog
    • The Types of People We Help
  • Financial Planning Guidebook
Sign up for our Newsletter

Follow Us

  • Facebook
  • LinkedIn
  • Twitter
  • YouTube

Locations

Massachusetts

203 Crescent Street, Suite 404

Waltham, MA 02453

Phone: (781) 642-0890
Fax: (781) 810-4830

 

California

600 B Street, Suite 300

San Diego, CA 92101

Phone: (619) 573-4131​

Disclaimer

This content reflects the opinions of Sensible Financial®. We may change it at any time without notice. We provide this content for informational purposes only. Although we endeavor to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability for a particular purpose or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. We do not intend the information contained in this website as investment advice and we do not recommend that you buy or sell any security. We do not guarantee that our statements, opinions or forecasts will prove to be correct. Past performance does not guarantee future results. You cannot invest directly in any index. If you attempt to mimic the performance of an index, you will incur fees and expenses which will reduce returns. All investing involves risk. You can lose any money you invest. There is no guarantee that any investment plan or strategy will succeed.

More important additional information and full disclaimer.

Copyright © 2025 Sensible Financial · All Rights Are Reserved
Legal Disclosure