top of page

Why is it so hard to just get an answer?

Prospective clients often come to me with a seemingly simple question: should I fund a Roth IRA; do I need more life insurance; should I buy this house or that house, or no house at all? They had maybe taken to the internet to find their answer, only to come away with more questions. Surely there’s a simple way to just solve the problem?

I find myself setting a lot of expectations at the outset of our work together. Decisions can’t be made in a vacuum, and I can’t tell you what you should do before I explore a lot of things about you, some of which might seem kind of unrelated to the matter at hand. This means that the work is a lot deeper and more emotional and personal - but also, I think, a lot more meaningful and relevant! - than people expect.

Picture, if you will, a little old lady, recently widowed. Her late husband handled all their finances, but now that she’s got her bearings a bit after her loss, she would like you to help her understand her investments. You look at her statement and it’s full of technology stocks.

On the surface, it would seem that this is a problem: shouldn’t she need a more conservative portfolio? But this is why giving good advice is complicated. Whether a change needs to be made to this portfolio can only be answered well and accurately once we find out much much more about her situation.

Let’s say that you have a series of conversations with her and learn more about her life. She and her late husband retired from good union jobs and have generous pensions, which she will continue to receive. He had a life insurance policy that named her as a beneficiary. Their home is paid off, and she has a stable tenant renting the second apartment, and that income covers the taxes and insurance and maintenance of the house. Her expenses are low. Her kids live nearby and are able to help her with errands and doctor visits if she needs it. As it turns out, this portfolio is not really playing a role in her financial health, and she intends to leave it as a legacy for her grandkids someday. So an aggressive portfolio may very well be completely appropriate. Once you dig just a little bit, the real story emerges and the best advice can be given.

So it goes with most client-advisor relationships: there is a balance between the technical answers - which are needed, and often time-sensitive - and aligning the money decisions with the particular client circumstances and needs. This can’t really be automated. I have often complained loudly about the complexity of the financial oceans in which we all swim, and that is definitely a thing. But even if we got everything as simplified as can be - for example, there should be one kind of tax-deferred retirement account that everyone can use, not five to have to pick through - it still doesn’t quite cross the finish line of understanding what’s right for you, right now. For that, you’ll have to get deeper, and a good advisor will guide you through the choices you face.


Commenting has been turned off.
bottom of page