We simply don’t know how things are going to turn out. Every client is a sample of one in a set of one. Our real expertise comes in helping clients deal with change and feel the most comfortable they can in their own situations, and also by letting them know that we are walking with them through their indiscernible future. This is difficult. Not only must we understand a variety of wealth management topics, but we must also be honest at those times our expertise is more limited.
One of our clients is extremely anxious about everything. She has more money than she needs, spends less than she could, and thinks extensively and intensively about every decision she makes. She is thinking about moving back to her birth state and entering a continuous care community, and feels as if she needs to make the move soon.
We could help her find a comfortable situation within her means. But the only family she has back home is a cousin. By contrast, she enjoys a large support system of friends and church members in her current state of residence. She’s moving back home because that’s what her mother did when she needed help. We asked her whether her mother’s siblings had been there to assist her when they were close by. She said no. We asked what made her think her cousin would be there for her.
It’s also important to understand the effects that separating from friends has. The client was going to leave a home she loved in a place she loved with people she loved because there was a tape playing in her head that she needed to go home. We instead spent time looking at comfortable places in her current state.
There is no way of knowing whether staying was really a better alternative than moving home. The only thing we knew is that she gave up less by staying put. This discussion is not about identifying a “correct” decision. That implies a precision that doesn’t exist. The issue is what will make her the least anxious about a decision that is highly complicated.
In order to get great at working with key issues, advisors need to become more self-aware. We make decisions based on our own influences. The 4% rule for retirement withdrawal came into play because people were asking how much they could spend to avoid running out of money in retirement. But was that the right question? Instead, what if we asked this: How can we walk clients through the inevitable physical and emotional changes they are going to experience as they age? I think most of us fall back to the 4% rule because it is a more comfortable discussion. What is my spending capacity and what is going to happen to me are both questions that need to be accounted for.
“We can shake free of our unconscious influences if we first admit they are there, if we can find and identify them, over and over again, as they appear in our day-to-day lives,” Epstein writes. As professionals, we must distinguish the aspects of planning that come from our own lives and experiences if we are to help find out what a client is experiencing. I see this in my own life, where a strong desire to be liked has often led me to make choices that were inconsistent with what I wanted for myself. I have given to charities in which I don’t believe, supported family members who may not have benefited from support, and given time to things that were not meaningful. I am better at seeing the influence from this trait and it has helped me engage in difficult conversations, helped me say “no” to people more often, and take better care of myself. But it’s been a long and difficult road to getting there.
What are the things that are getting in your way and how willing are you to look at them?
Ross Levin, CFP, is the founder and chief executive officer of Accredited Investors in Edina, Minn. Email Ross at [email protected].