My Worst Advice

Some­times a plan­ner’s guid­ance to a client can go se­ri­ously awry. Why? Re­al­ity doesn’t al­ways match the dream.

Financial Planning - - CONTENTS - BY BEN TAATJES

Some­times a plan­ner’s guid­ance to a client can go se­ri­ously awry.

Five years ago, I made the big­gest mis­take of my ca­reer.

I gave some un­timely advice to a new client and soon re­al­ized the full im­pact that our work can have on our clients’ lives — not just on their wal­lets.

When Jim (I’m with­hold­ing his last name for pri­vacy rea­sons) first vis­ited my of­fice, he was 62 years old and sim­ply gath­er­ing in­for­ma­tion to see if he could re­tire at 65.

I saw he had built up a siz­able nest egg in a 401(k) and was debt free. He was a dili­gent saver over his en­tire ca­reer and was in an ex­cel­lent fi­nan­cial po­si­tion, so I gave him the most sur­pris­ing news of his life. I told him, “Jim, I have great news for you. If you want to, you can re­tire right now.”

He replied, “You mean I don’t have to wait un­til I’m 65? Will I have enough money?”

“That’s right,” I told him. “We’ve cal­cu­lated for risks and in­fla­tion, and with your planned spend­ing, you will have plenty of in­come to re­tire to­day.”

About a week later, Jim vis­ited our of­fice and was very ex­cited. He said, “Guess what, Ben? I took your advice and put in my two-week no­tice.”

With that, Jim said good­bye and left happy as can be.

Now, you may be won­der­ing why this was such bad advice. After all, the plan was fi­nan­cially sound, and he was cer­tainly ready to re­tire — on pa­per, that is.

Three months later, Jim and his wife came into our of­fice for a re­view. Even though only a few months had passed, he looked as if he had aged three years. I could im­me­di­ately tell some­thing was wrong.

As we talked, I learned that all of Jim’s friends were his for­mer co-work­ers. Now that he had re­tired, he was spend­ing most of his time alone, watch­ing tele­vi­sion while his wife was at work. Be­sides hav­ing a small amount of yard work, he was bored and had no plan.

Ad­di­tion­ally, be­cause he had a phys­i­cally de­mand­ing ca­reer, his new seden­tary life­style was neg­a­tively af­fect­ing him. He was in­ac­tive, sleep­ing later and mov­ing vis­i­bly slower.

Men­tally, he was al­ready slower and seemed dis­en­gaged from life. He cer­tainly wasn’t the same up­beat per­son who had strut­ted into my of­fice cel­e­brat­ing his re­tire­ment. In­stead, he seemed like a man dis­con­nected from his pur­pose.

With­out re­al­iz­ing it, Jim had left his pur­pose at work and didn’t have a new one to take its place

In essence, it was as if he had moved into an empty house that he ex­pected to be fur­nished. Re­al­ity did not match the dream.

What I fi­nally un­der­stood was that Jim hadn’t ini­tially come in to re­tire. He had been plan­ning to re­tire at 65. Those three years would have given him more time to process, to say good­bye to his friends and to pre­pare men­tally for his re­tire­ment.

Jim helped me to see that pre­par­ing well for re­tire­ment means far more than fi­nan­cial plan­ning.

To truly serve clients holis­ti­cally, ad­vi­sors should work with them to cre­ate plans that ad­dress their pur­pose, re­la­tion­ships, health and legacy.

Sim­ply put, if you don’t ad­dress the non­fi­nan­cial is­sues, the fi­nan­cial ones will not mat­ter.

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