In the last great romantic novel of the 20th century, The Russia House, John le Carré calls one of his protagonists "the determined primitive, as people who deal in human nature have to be." (The emphasis is, in every sense, mine.)

Almost 20 years ago, I used a longer version of this characterization as the epigraph for my first book-length exploration of the investment advisory process, Serious Money. My point then (as now) was that we financial advisors deal above all else not with economics, nor with the capital markets, nor with tax and estate laws, but with human nature. And to do this successfully-which means nothing more or less than to help families achieve a financial peace which they could never find and keep on their own-we must become that determined primitive.

Hence, I confess that gauzy intellectual abstractions like modern portfolio theory and the efficient market hypothesis passed me right by. Moreover, I thought and think that anyone who was fool enough to believe there was such a thing as a "standard" deviation deserved everything he got. I never understood what any of those higher-mathematical chimeras had to do with the craft of advice, which for me is a very simple but devilishly difficult life's work: persuading people to do with their money what they need to do with it rather than what they want to do with it, in the full knowledge and acceptance that these two things are always and everywhere antithetical.

Finally, I have never attached any psychological or even demographic credence to the idea of the baby boom. When Rudy Giuliani (b. 1944) and I (b. 1943) were seniors at Bishop Loughlin Memorial High School in Brooklyn in 1961, were that year's freshmen (b. 1946) in any important way different from us? Did we not have the same upbringing, from parents whose lives had been scarred if not shattered by the Great Depression? Was their outlook on life, on money, on risk and safety, any different from ours, and is it any different today? Did we panic out of equities in 2008-09, and they not?

No; we were and are all the same. All of us are being forced to make the big retirement income decisions regarding our savings and investments, and  all are in the same terrible quandary. I suggest that dealing effectively with this quandary will be the essential career challenge to the personal financial advisor for at least the next ten years.

Of these millions of people, now being cattle-prodded into retirement, the advisor may with certainty say three things. First, they are three years older than they were three years ago, when the equity market topped out. Second, in the ensuing cataclysm, they lost those three years, which they most certainly could not afford to lose in the run-up to retirement. And third, they have less money saved for retirement than they did three years ago-because sometime between then and now, when their retirement nest egg had declined 30%, 40% or even 50%, they panicked out. And are, by and large, still out, if they're not actually-in the wake of the "flash crash" correction of this spring-out again. 

If these people are to have any hope of regaining their financial footing, and keeping it for the rest of their lives, they must be counseled by one of us determined primitives. And they must be told-unapologetically, straightforwardly, with no hedging or mincing of words-five things.

(1) If all they are is the average couple, one of them is still going to be alive, and needing a lifestyle-sustaining income, 30 years hence. I assure you, as one of them, that they don't know this, and I state as an article of faith that it is impossible to invest successfully for a retirement you cannot imagine. But a non-smoking couple of average retirement age (62) in this country has a joint life expectancy of 30 years. This is actuary-speak for the reality that one of them will not pass until age 92, having had to fight off rising living costs for the intervening three decades. This defines the issue. We have to help people-if they'll allow themselves to be helped-realize that their time horizon regarding the retirement income problem is 30 years, and that today's alarmist headlines will have no effect whatsoever on that outcome.

(2) The determined primitive can express the essential economic reality of a 30-year retirement to his prospects in just ten words: "Every year, everything you need to buy will cost more." This is no more than a confirmation of the prospects' own six-decade life experience to date. The problem is that they are unconsciously not working from their own life experiences; they're working from their parents' horror stories of the Depression. Hence, as their parents did, they can only think of "risk" and "safety" in terms of principal. The determined primitive will work to cause them to see that their primary financial risk is not loss of principal but erosion of purchasing power, and that the mortal financial danger of a three-decade retirement is not losing one's money but outliving it. 

(3) Given these inarguable truths, there is really only one rational retirement income investment objective. It is to be able to draw from one's portfolio an income which rises through time at some function of the rate at which living costs rise. Only in that way can the rising income offset the rising living costs, thereby sustaining lifestyle, and enabling the retirees to maintain their dignity and independence-the two most important things in life as we grow older.

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