Introduction

When I was twenty-seven, I transitioned to the field of financial planning in 1989. My career move was partly a practical decision; my wife, Wendy, and I had been married for two years, and we were preparing to have a family. I wanted to settle on a career with solid prospects and move on from the entertainment business, which is highly volatile and unpredictable.

I believe financial planning was always in my blood. I knew the transition was a wise move professionally, but the truth was that I had always been interested in investments. I had always enjoyed reading books and articles on the subject, and I had developed a keen interest in the subject over the years. Eventually, I sat for the Series 7 examination, a challenging test that everyone wishing to sell securities must take. Only about 65% of the people who take it pass the first time.* Passing allowed me to work with a small brokerage firm in Florida.

Finance is an emotionally charged subject, and the way people handle money is deeply personal. They consult financial planners because they want to feel a sense of security and to relax, knowing that their investments are in good hands. They may arrive in their financial planner’s office nursing deep, unspoken fears. Yet, the training I received as a registered representative at a brokerage firm never addressed how I should respond to those fears. Little did I know how much I would discover along my journey.

By industry standards, the training I received was excellent, but it consisted entirely of hard facts and practical advice. I always felt that some key element was missing. I already knew plenty about stocks and bonds, but no one had taught me how to tackle the disorientation that occurs in people who are fearful about their future or their family’s future. I wanted to learn what to do when someone walks into the office seeking not only advice but also reassurance.

I believe that a financial planner who offers only analysis-based advice is doing half the job. People are scared when it comes to money. My training left me unprepared to deal with the deep fears that financial questions often create and to nurture the confidence that people needed to feel in order to make good decisions. A good financial planner will guide families toward enjoying their lives, not being fearful of the lack of money to fulfill their dreams.

Too often, the financial services industry does a poor job of serving people. It’s full of math whizzes who want to trade stocks, bonds, and currencies around the world. It’s full of analysts who can take a clinical stance based on algorithmic calculations. Generally speaking, it’s not an industry that serves ordinary people who want to raise their children, retire, provide for a spouse after their death, and have the finances to handle any eventuality that might occur in their old age.

Very quickly, I decided that I didn’t want to be that type of financial planner. I wanted to be someone who understood the emotions of clients and supported them based on their real—sometimes unspoken—priorities.

The Question beneath the Question

If you’ve ever experienced fear, in any circumstance, you understand that it doesn’t respond to logic. Right now, think of something that scares you. Let’s say you’re afraid of heights. No matter how much someone tells you that the bridge won’t collapse or the building has been here for fifty years, it doesn’t make your fear go away. You don’t need logic; it doesn’t help. Now imagine that you have an investment portfolio, the economy is in trouble, the news is filled with negative outlooks on the economy, and your investments are down 20 percent. This might be perfectly normal, but if you’re in the grip of fear, you may succumb to the temptation to act unwisely. You could lose a lot of money, all because you act from a place of panic. This is why it is imperative that your financial planner understands your questions beneath your questions.

What does this look like? Let me provide an example. In my current practice, typical clients might be a sixty-year-old couple. They are five years away from retirement, and they want to know whether or not they have enough money.

The way they present their question may imply that they want a mathematical answer. “Joel, do we have enough to retire?” Based on an agreed rate of spending, we can do some calculations, figure out a rate of return, and conclude that they’ll be fine. Or we might conclude that it’s too soon for them to retire and that they should work for a few more years.

At some deep level, however, whatever answer we come to will be insufficient. Why? Because what they’re really saying is that they’re approaching a major transition in their lives and are not sure how it will feel. They may not even know how to admit to the uncertainty and anxiety that are dominating their thinking. Many financial planners can tell them how they should manage their money. What they really need is someone to let them know if they’re on the right track.

The point is this: what clients say they want and what they actually need may be very different. Maybe you can relate to one couple I recently started working with. Their initial question was whether or not they could retire in two years. Beneath that question, however, I noticed some major anxieties. One of their children is addicted to drugs, and they feel heartbroken and powerless. Additionally, they have a family history of Alzheimer’s disease and feel scared that one or both of them will develop the disease.

In working with this couple, I certainly need to consider the financial component to their question. If one member of the couple does succumb to Alzheimer’s, there will be financial repercussions. However, I also need to do my best to prepare them to enter an uncertain phase of their lives.

Your Retirement

This book is for you, whether you are planning your retirement or are already retired. You might have retired some years ago and now want to make sure that you’re making the right choices with your money. Perhaps your goal is to make your investments sound. You’re comfortable in the retirement phase of your life, and your interest in connecting with a financial planner comes from a desire to check that you’re maximizing the value of your capital and not making any mistakes you might come to regret.

It’s possible that you feel unsure how much you can support your children or grandchildren. Perhaps you’re concerned that future generations of your family, especially those who are in the early years of adulthood today, won’t have the same opportunities as you did when you were growing up. You want to help your grandchildren but don’t want to deprive them of the lessons you learned by starting with nothing.

You may be just now on the cusp of retirement. In that case, you’re probably caught up in the drama of big life changes, and your immediate concern is that the process will flow smoothly. You may need to discuss the progress of your investments and the process of turning your assets into a reliable income stream while sheltering them from taxes. You want somebody to be straight with you so that you don’t make a major error and walk into retirement before you’re ready.

You may have only just recovered from the cost of educating your own children. To catch up from these expenses, you might be considering somewhat risky investments in order to build retirement quickly. But let’s be clear: you can’t afford to take a big hit to your savings from a stock market downturn. You may not have the time to recover.

If any of these situations describes you, the right financial advisor can guide you toward an investment mix that seeks not to expose you to too much risk. The more time you have to get your finances in order, the more likely you will be able to position yourself for a strong retirement.

My grandparents lived through the Great Depression, an experience that forever shaped their relationship with money. Now members of the baby boomer generation who grew up in the prosperous 1950s and 1960s are entering retirement. They may have very different attitudes toward money than my grandparents did.

If you grew up in poverty, you may be more cautious with money than someone who grew up wealthy. My wife grew up in a family where prosperity was viewed with suspicion. Even today, she remains uncomfortable with any outward displays of success. I grew up in a family where my parents did charity and church work. Money was a matter of faith. They trusted that God would provide and thus were not focused on what they didn’t have. As you can imagine, my wife and I entered into marriage with very different financial philosophies. This is common among couples, and it doesn’t necessarily go away when you retire.

As financial advisors, it’s our job to understand the character of our clients and seek to set them up for success. We need to understand why certain behavior is common in times of stress. Our job is to help clients avoid sabotaging their own efforts and acting against their own best interests.

In recent years, this industry, in some circles, has been reduced to a software program, but I do not believe in any...