There is a question that scares the living daylights out of every living, breathing male. The kind of question you hear, but pretend you didn’t, then to do whatever you can to remove yourself from the situation. Suddenly there is a call/email/child/plumbing issue that requires your IMMEDIATE attention. BRB (Be right back) as my boys say…(But you don’t return, do you…)
It’s a question for which there is no reasonably good answer.
Ok, here you go. Here’s the kryptonite question.
"Does this dress make me look fat?"
Let’s deconstruct the aforementioned; after all, this should be a harmless query. If you say YES, I desperately hope your couch is comfy because that’s where you’re sleeping. If you say, No, you’re clearly and unequivocally an unmitigated liar. You may sleep in the bed that night but good luck getting any rest. (It will be mighty frigid in there!)
And she may look as beautiful as the day you married her…like Marilyn Monroe in that famous white dress or, well let’s just say it’s a tough one!
The equivalent question in my business is:
"Do I have enough money to retire and spend what I want in retirement?"
The challenge is that a) Many people don’t and b) most only want to hear the answer that appeals to them and how THEY see their situation. (It’s a phenomenon called confirmation bias. We seek information to validate what we already think.)
So the advisor’s dishonest answer is irresponsible at best; criminal at worst. The equivalent of saying - “You look GREAT in that garment," even if it’s 3 sizes too small and you ripped it just by putting it on. Many advisors are afraid to tell the truth for risk of losing the client or incurring his or her wrath.
I don’t roll that way. Not only is it my moral duty, but also my (legal) fiduciary duty. People in my position are bound by law to make decisions that are best for our clients. That’s it; plain and simple.
But wait, there’s more. An honest advisor protects his or her clients from themselves.
Let’s say this again but a bit differently. Think of an NFL quarterback. A difficult position in a challenging, dangerous sport. So the quarterback’s coach exists not only to help the passer avoid blitzing linebackers (who want to take his head off), but also to protect the quarterback FROM HIMSELF. Bad passes, throwing off the wrong foot, rolling right when it was better to roll left. You get the picture.
So I don’t say it to be provocative, but the reality is that many investors need to be protected from themselves.
In quiet moments I find it kind of humorous. Often, a good advisor is seen as the enemy; someone for whom people should be protected from or wary of. Some advisors are dishonest - I get that. And there may be fees involved; advisors earn a living like everyone else. So there is skepticism. So if that’s the case, think about it this way to get the help you need.
Keep your friends close, and your enemies closer!
Do whatever you have to do but ask for the truth even if it costs a little. Demand the truth. Want the truth. Accept the truth and act on it.
I’ve have people sit in my office and weave the darnedest yarns to me. How X assets now and Y dollars of spending each year will get them to the finish line when it clearly won't. At that juncture, there just a few options. None of them are particularly pleasant, but important to discuss.
1) Keep your job (Work a few years more)
2) Save more (Tighten your fiscal belt a few notches)
3) Live on less in retirement (Everybody LOVES this one)
And a 4th option, invest more wisely; a step in the right direction as most statistics clearly show that the average stock investor doesn’t do nearly as well as the average stock fund. (Just Google "Dalbar Investor Study" if you think I’m pulling your leg.)
We should be honest here. Most people suck at investing. Absolutely terrible at it. They buy high and sell low. They zig when zagging is appropriate. Run the ball when a pass is necessary. (Keeping with the football analogy!) Moreover, numerous studies show that retirees are notoriously bad at determining how much they need to live on. Looking through rose-colored glasses, not enough honesty.
So here’s some guidance as we enter 2017. Find an advisor who is not only bound by law to do what’s in your best interest but also has the wherewithal (stones/guts) to share what may be unpleasant to hear. I just told a couple the other day they didn’t have enough to retire the way they want. Maybe they appreciated my candor, maybe they didn't - but I slept good that night because I did right by them.
And the husband is going to keep working a few more years which is the right decision for him and his family. (A choice that will also help him in terms of social security. More on that in the coming weeks.)
So call it a New Year’s Resolution if you want. In 2017, pledge to learn the truth about your prospects and what you need to do to enjoy a secure and (hopefully) tax-free retirement.
This resolution may be easier to keep than that eating healthier thing.
Happy New Year!
Required disclosures: Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and (Strataxa Retirement Advisors, LLC) are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents.
Information provided is not intended as tax or legal advice, and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional
Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker dealer services. Advisory clients are charged a fee for assets under management while insurance products pay a commission, which may result in a conflict of interest regarding compensation.