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Retirement investors are really facing three main challenges today. One is inflation. Persistent inflation erodes your purchasing power over time. Two is volatile markets. Volatile markets make it really difficult to generate consistent income. And three is longevity. Quite simply, people are living longer and thus they need more sustainable income strategies.

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Active management is crucial because it gives investors the flexibility to adapt as markets evolve, identify undervalued asset classes, and make tactical decisions. It's really all about maximizing income potential while managing risk. We believe active management makes sense in most instances, but for clients that are looking for something that's more cost effective, hybrid strategies can be a great option. They go active where it matters and where we believe you can achieve alpha and then goes passive in asset classes that have historically proven to be very efficient.

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Asset allocation is all about balance. You want growth strategies that help you accumulate and maintain your savings and preservation strategies to help protect your wealth. So this is going to require a thoughtful balance of equities and fixed income, as well as diversification within those asset classes to help manage risk. Target date solutions make the entire retirement investment process more easy and more effective. Target date glide paths are designed to automatically adjust as you age, providing more growth-oriented strategies earlier in your career, and then de-risking into more conservative income-oriented strategies as you age. This professional portfolio management really reduces the burden of decision making from the retiree and ensures that you have a portfolio that evolves as your needs change.

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Inflation poses a significant risk to retirees as it erodes your purchasing power over time, and retirees experience inflation differently than other age groups because costs like health care have been rising at a level above general inflation.

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Active management plays a critical role in defending against inflation. Active managers can access dynamic strategies that are inflation resilient, such as TIPS, commodities, and other real assets. This enables them to build portfolios that are more resilient in the face of rising prices.