A SEA OF INVESTMENT CHOICES
Teaching clients to swim
Many people are deathly afraid of the water and of learning to swim. They’re not comfortable in water over their heads and the fear of drowning is very real; water is a foreign medium for us land mammals. A patient swim instructor makes all the difference in helping a person put the fear in perspective and focus on the goal. Whether the goal is survival swimming, a fitness goal or racing, a good coach guides the improvement and keeps the swimmer on track to become, and remain, successful. Comfort in the water is a life skill; you never know when you are going to really need it.
Financial planning and investing are, like water, foreign mediums for most people. They’re afraid of market volatility, investment terms and the myriad products. Investors can be overwhelmed and confused by the choices. The financial media exacerbates that fear with doom and gloom scenarios, stock picking, market timing and track record advice – a veritable sea of information that is peripheral to the client’s needs. How much is truly pertinent… for the client?
“When I talk with clients about their money decisions, it is first a conversation about how they got where they are: who makes the decisions, recommends the investments and what the strategies are they’re attempting to implement. Long term goals are great, but if you don’t understand, at least conceptually, how things actually work, then how will you track your progress or success without a basis for measurement? Since the clients and I are co-creating their plan, I stress the fundamental understanding of the importance of research and science behind investing as it relates to portfolio selection and distribution strategies. The math matters.”
J’Neanne’s process, called ‘Rescue Your Retirement’ encompasses the various decisions that must be made to ensure a solid plan – from taxes, to Social Security claiming, to pension choices, to long term care and health care. Retirement is also a foreign medium. Since you’ve
never been there before, how do you know which strategies will work or are the best. It’s hard to see the picture when you’re in the picture and most people have a hard time envisioning what comes next. You could ask 100 people what they did and get 100 different answers; what meets your needs? A comprehensive approach to retirement planning is important because the money decisions around the money are as important as the money itself. Understanding your numbers is critical to being prepared for a change in income and benefits and realizing that you are now disinvesting.
As a demographic, people are living longer than ever before. Two-thirds of the people that have ever lived to age 65, are living right now. This is a monumental shift in economics and advisors must account for retirements of 30 years or more. As J’Neanne explains,
“We’ll discuss whether it’s possible to make the money last that long. How many types of risks should be considered? Managing expectations is key to understanding and managing the many risks clients face as they begin to depend on their savings. Another analogy I often use is mountain climbing. You spend 40 years accumulating; you’re climbing the mountain. Then retirement happens and you’re reversing course, you’re down climbing. This is where most people are killed on a mountain. Running out of money before you run out of life is the equivalent. Any number of factors could result in compromising savings.”
Emotions around investing change when a client is near or just into retirement. Most clients become more risk averse and want to lower their equity exposures, but they’re not clear on how to do it effectively. J’Neanne is consistently
Commitment to Excellence The Five Star Wealth Manager and Five Star Investment Professional awards recognize professionals in the financial services industry who are committed to excellence.
‘coaching’ her clients on the importance of appropriate versus inappropriate risks, whether the topic is investing, refinancing, real estate or business. She often uses the example of roller coasters and even has a few visuals in her office as aids to help clients assess how much risk they’re willing to assume. Most clients are not comfortable on the ‘Anaconda’.
An essential component in the client-advisor relationship is trust. Clients must be able to trust that their advisors will steer them in the right financial direction, so the fiduciary duty of putting the client’s best interest first is critical. J’Neanne takes this lifeguard duty seriously and ensures that her clients know the difference between real data and fake financial news. Additionally, she routinely educates her clients on the many schemes that target seniors. Preservation of capital isn’t just about proper portfolio allocation, it’s also about avoiding frauds and scams that leave seniors penniless or bankrupt. “I don’t want my clients swimming with the sharks.”
For more information on Theus Wealth Advisors, visit: www.theuswealthadvisors.com