Morningstar Advisor - Spring 2008 - 8

Contributors Rod Bare To Rod Bare, director of assetallocation strategies for the Morningstar Index group, the advice embedded in target-date funds goes a long way to helping investors create a retirement portfolio for the long haul. But it’s not always enough, he says. The beauty of target-date funds—the simplicity of a one-size-fits-all portfolio—is also their weakness: Investors who share the same retirement date don’t necessarily share the same retirement-income needs and goals. Here’s where financial advisors can pick up the slack. “Advisors have a key role to play in helping investors pick well-constructed asset-allocation funds that fit their clients’ unique circumstances,” he says. The target-date indexes Bare helped develop (“Beyond Target Date,” page 47) should help; they give advisors new benchmarks rooted in research from Morningstar and Ibbotson Associates. “With these indexes,” he says, “advisors have tools to select glide paths that last a lifetime.” Peng Chen Peng Chen, president and chief investment officer of Ibbotson Associates, has spent years trying to figure out how to build portfolios for investors in retirement. “Adding the Income Dimension” (page 32), co-written by James X. Xiong, is the latest extension of Chen’s research, which has included papers on human capital and merging asset allocation and longevity risk. Despite some breakthroughs, there’s still a lot of work to be done. “Retirement income is difficult because it is multidimensional,” Chen says. “The portfolio needs to generate income, and at the same time, it must last the entire retirement.” Then, there’s longevity risk, market risk, taxes, and investor behavior. “As you can see, we are only addressing part of the picture,” he says. A holder of master’s and doctorate degrees in consumer economics from Ohio State University, Chen just celebrated his 10th anniversary at Ibbotson. Natalie Choate Boston attorney Natalie Choate was on the road in California and had to get a room, not for the night but to be able to present a live Web seminar for MorningstarAdvisor.com. “Hotels get very suspicious when you try to rent a room by the hour,” she says. She found a willing inn and pulled off the presentation with her trademark mix of lawyerly expertise and humor, both of which are needed to explain the often unintelligible rules regulating retirement benefits. As a top expert on IRAs, 401(k)s, and other retirement plans, Choate is in demand, and that’s fine with her because she gets to pursue her other love: traveling. “My husband wanted us to buy a big rig, quit our jobs, and be a husband-and-wife truck-driving team,” she says. Instead, they travel together to Choate’s speaking engagements across the country. All the while, she contributes a monthly column and podcast for MorningstarAdvisor. com. For this issue’s section on retirement income, Choate writes about 10 do’s and don’ts when dealing with required minimum distributions (page 36). Shout The illustrator charged with depicting retirement income and the other financial topics in this issue was Alessandro Gottardo (aka Shout), who’s based in Milan, Italy. He says the above picture is the best one that has ever been taken of him. Shout’s work has appeared in publications around the world, including The New York Times, Le Monde, Guardian, Esquire, Newsweek, and The Economist. In 2007, he won the David Usher Memorial Award by the Society of Illustrators of New York. Shout was among Print magazine’s best 20 young international visual artists for 2007 (March/April issue). His work appears in the current edition of Illustration Now! Vol.2 (Taschen), a prestigious guide that collects the best 150 commercial illustrators from 50 different countries. 8 Morningstar Advisor Spring 2008

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Morningstar Advisor - Spring 2008

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