Joanna made plans to celebrate. At 10:06 am on February 22nd, 2007, her divorce was finally final! A bit too early to enjoy an adult beverage, she headed straight for the outlets. Retail therapy was in store and she looked forward to some healing! Have any friends who’ve done this? The people who love Joanna want her to be happy, healthy and healed. But they also want her to be able to pay the bills she racked up in her celebration. Joanna’s first stop should have been to her trusted advisor. Instead, fast forward 7 years when Joanna comes into my office. She is now in her mid-50’s, has had a few health issues and is still earning about $65,000, not that much more than in 2007. What has changed, she explains is there isn’t much left in her accounts and she thinks she might have to sell her home so she can send her last son to an expensive college like the first three sons enjoyed. She pushes all her paperwork across the table.
I can see she hired an ‘advisor’ from a well-known big firm and she’s taken the time to list her expenses on a sheet I sent over before our meeting. While looking over tax returns, her spending, and her account statements, it’s clear she’s underwater every month by $5,000. I ask her what plan she’s been working off of until now and she says she was expecting her investments to do better and her money to last longer. She says at least her ‘advisor’ never charged her for his time. We lock eyes as she bears a sheepish grin acknowledging the ‘oops!’ hanging in the air. Back in 2007, Joanna walked away from her 23 year marriage with $960,000 in cash, a paid for home she thinks is worth $975k now, and a $5k/monthly support check that ended last month.
Some Thursdays are just another day of helping clients manage their financial lives, divorcing couples navigate a good financial outcome, and helping those with less funds get started through online planning. Today’s Thursday involved a midday break to attend a celebration of life ceremony for a friend’s brother who died unexpectedly. Danny, as I briefly knew him, is one of those good souls, the kind of person I’d want to be near in any kind of trouble. At the service, we heard from several who’d known Danny for decades and his kindness was universal and consistent. The whole family is like that – even the extended family. Having lived all over this country, I’ve found there are good people everywhere – you just have to find them. The Reeves family and extended family are good people.
Patsy, Danny’s widow, described their blended family as having been “grafted together with many, many ‘opportunities’ to grow in understanding and love”. When a person from Chicago (as I am born and raised) hears ‘graft’, we don’t normally consider opportunities to grow in understanding and love, but Patsy was very convincing and as I thought about it, it occurred to me that her understanding of blending families is profound and important. Grafting can mean transplanting (living tissue) as a graft. This is no easy task. It means lots of days when one could make the choice to not be understanding, not love the family member and definitely not grow. But if you took the more difficult path as Danny and Patsy clearly have, what could be the rewards for that? In winemaking grafting means taking root stock that works and placing a new vine on top of it to get something even better than that with which you started. And so it is with good people.
Here we are again. Apparently financial services firms are staging their usual hissy fits over being asked to level with consumers about who and how they actually serve or fail to. The shocking headline in a recent Wall Street Journal article indicates “Brokers Would Have to Put Clients’ Interests First” and that’s just making the big boys very, very unhappy.
Remember one of this firm’s mantras? Ask more questions, expect better answers. Let’s do a quick tour of Financial Services in America, circa 2015:
You as the consumer get to figure out if you can,
• What qualifications make the person in front of you ethical, experienced and education as anyone can call themselves a financial planner
• How your financial professional gets paid whether through fees or commissions on products they sell you
• Whether the advice you receive is covered under the ‘suitability standard’ or ‘fiduciary’ standard
• How much you’re paying in fees and/or commissions
This is a real David vs. Goliath issue with the entrenched Wall Street interests fighting to keep the old rules and threatening to take their balls and go home by suggesting everyone who isn’t wealthy will lose access to professional advice. It will take consumers insisting on the fiduciary rule for it to happen. John Bogle of Vanguard fame has long beat this drum on behalf of consumers. Robert Port, an Atlanta attorney who represents investors harmed by the misconduct of their stockbrokers or advisors, believes the financial services industry “sells trust, but only wants to be tied to the suitability standard.”