From a consumer’s perspective, it might appear that the only distinction among the many institutions that offer retirement planning services is their marketing slogans. But the carefully crafted phrases and slick brochures may obscure significant differences in retirement philosophies and processes. And the adherents of a particular view of retirement can be almost tribal; they are emotionally and professionally invested in their belief systems, and wary (even dismissive) of tribes with other views. In other words, they’re sort of like the college football fans, where each game becomes a morality play between the forces of good (us) and evil (them).

Moshe Milevksy, a Canadian professor of Finance and author of several books on retirement, identifies two dominant “tribes” in the retirement-planning marketplace. He names one the Insurance Clan, the other the Investment Tribe. Here are thumbnail summaries of the beliefs and recommended strategies for each tribe.

The Insurance Clan

Milevsky says the Insurance Clan, true to its name, sees financial security as the primary focus of their retirement philosophy: “They are well versed in the language of personal risk and…truly understand at a visceral level the importance of protecting a family against unexpected financial shocks.” While acknowledging the mathematical aspects of personal finance, the insurance clan emphasizes the physical and psychological ramifications of one’s financial decisions. As Van Mueller, a Wisconsin financial professional with more than 40 years of experience, puts it in a February 2016 commentary in Retirement Advisor, “Insurance and financial professionals do not make people rich. Our primary responsibility is to keep them from becoming poor.”

One of the things the insurance tribe understands at a visceral level is the fear of running out of money. “(T)he insurance tribe is well aware of the benefits that life annuities can provide,” says Milevksy. “They understand the value of risk pooling and diversification” to ensure financial security for a lifetime, no matter how long that may be.

The Investment Tribe

Milevsky observes that, in contrast, most members of the investment tribe don’t have a background focused on risk management. Instead, “They grew up imbibing the waters of capital markets, stocks, bonds and security selection…[T]his second group tends to be more cerebral and intellectual,” believing that every financial challenge can best be addressed through the pursuit of optimized returns based on statistical analysis. Where the insurance clan touts guarantees and security, the investment tribe makes performance its value-add.”

It’s why an investment management company’s full-page ad in the March 21, 2016, Wall Street Journal boasts its offerings have “outperformed 95 percent of their peer indexes over a 20-year period.” The implication: Smart investing can be more rewarding than risk management.

Thus, “When it comes time to deliver a retirement income, the investment tribe tends to shun insurance solutions in general, and annuities in particular, and takes a rather different approach to generating income in retirement. They have embraced something called the 4 percent rule, which is another way of saying: ‘I can bake a better annuity at home.’” The 4 percent rule is the simplest version of a spend-down strategy which attempts to ensure, even though there are no contractual guarantees, that you will not outlive your money. In keeping with their analytical heritage, investment tribe retirement practitioners have developed ever-more-sophisticated variations of the 4 percent rule.

From these brief descriptions, it’s reasonable to conclude each tribe has a plausible model for retirement. The insurance clan is correct to recognize that retirement is not simply a game in which the outcome is determined by mathematical formulas; your financial decisions affect your physical and emotional well-being. And while the certainty of guarantees may be hard to quantify numerically, they provide real value.

Yet decisions based solely on emotional responses to money (like the fear of losing some of it) can result in missed opportunities. Historical data from the investment tribe shows superior results can be possible with long-term commitments to dispassionate, data-driven strategies. For individuals to match these historic returns, they must temper the angst of short-term fluctuations and uncertainties.

So, Who’s Your Tribe?

If you attend the Iron Bowl, the annual Alabama-Auburn football game, it’s sort of hard to be a neutral spectator; in the midst of two passionately devoted fan bases, there’s a lot of pressure to choose a side. It’s often the same when prospective retirees meet with representatives from the insurance or investment tribe. They want you to embrace their version of retirement planning. This is especially true among what Milevsky calls the “ultra-orthodox” members of each tribe, like the insurance agent who believes all financial issues (including retirement), can be addressed with a whole life insurance policy, or the investment rep that considers low-cost index funds the only “pure” financial instruments.

Do You Have to Choose a Tribe?

If you and a financial professional don’t ascribe to the same views of retirement planning, it is going to be hard to have a good working relationship. But your tribal choice isn’t necessarily binary, insurance or investment. In fact, the best decision might be an approach that blends both tribes. Because, more than some members of the Insurance Clan and Investment Tribe might want to admit, the two tribes sort of complement each other.

A base of guaranteed retirement benefits can make it easier—financially and psychologically—to persist with long-term investment strategies for the rest of your assets. And the opportunity for higher returns makes it palatable to allocate a percentage of assets to safer but often lower-yielding insurance products.

Even though the ultra-orthodox members of each tribe tend to get the most attention because of their passionate commitment to their ideals, most financial professionals who identify themselves with one tribe have respect for the other. For them—and for you—it’s not either/or, but both. The practical application is deciding on the right mix of insurance and investment for your unique circumstances.

So when someone like Van Mueller asks, “If you had a choice, would you want to be rich or would you want an absolute and positive guarantee you will never be poor?”

Your answer can be “yes.” There may be two tribes in retirement planning, but choosing one doesn’t mean having nothing to do with the other. This is your retirement, not the Iron Bowl.

See www.wagroupllc.com/epreil for full disclosures and disclaimers.

Guardian, its subsidiaries, agents or employees do not give tax or legal advice. You should consult your tax or legal advisor regarding your individual situation.

By Elozor M. Preil

 Elozor Preil, RICP®, CLTC is Managing Director at Wealth Advisory Group and Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). He can be reached at [email protected]