Madoff’s Money Madness & Mistrust

I have not lost money due to the Maddoff scandal and would guess that neither have you. This was not because we have been savvy investors. No, it’s because we did not have enough money for Mr. Madoff to invite us into his exclusive club. Lucky us.

I have many clients who are considering retirement or who have retired. When working with them in seminars or individually I stress the importance of managing their money. My strong advice is to find a financial advisor they can trust and work with him or her to provide them with the information they need to make sound decisions. A financial advisor is as important in retirement as a good doctor and lawyer. Mr. Madoff’s crimes have now made my work to have my clients use a financial advisor all the more difficult.

Do you understand?

The first rule for building trust with a financial advisor is that the advisor should be able to clearly communicate his or her ideas to you. Being lost in a professions’ jargon should be a red flag to you that the advisor does not know how to work with you, or worse that they are keeping you confused and uncertain on purpose.

The Emperor Has No Clothes

It is remarkable to read the growing list of wealthy people who fell in behind the wealthy person ahead of them in line to throw their money into what is now known to be Mr. Madoff’s money pit. I read that a number of truly smart investors had professionals look into Mr. Madoff’s money management and they were so concerned that they reported him to the authorities; to no avail. Everyone believed everyone else and the emperor walked naked on Wall Street to the cheers of his supporters.

Who Can You Trust?

Begin by trusting yourself. If something does not feel right, explore it. Also, have two sets of independent eyes looking at your statements. Your first set of eyes is yours, you should learn how to read your investment reports and then read them. The second set of eyes can be independent financial advisor, accountant, estate lawyer, banker or another trusted advisor who understands investing and is motivated by your best interests. (If you do not have enough money to use a financial advisor to invest then you should for investments that are guaranteed or are very safe.)

People feel good about their professional investor when both performance and trust is high. Neither good performance nor trust alone can produce comfort for you. You really need both.

The following twelve questions can help you to understand your trust level with your financial advisor. It is one of 15 tools, charts and ideas offered in Chapter Five, The Financial Domain, of Beyond Work: How Accomplished People Retire Successfully (Wiley, 2008) that can help you choose and work with a financial advisor.

Bill Roiter’s[i] Twelve Questions to Assess an Advisor’s Trustworthiness

Here are 12 simple questions you can ask yourself to determine how much you trust your advisor or how much you may trust an advisor you are considering using. Read each statement and mark how true it is for you.

Trust Component: My advisor is	To what extent is each statement true for you?	Not True	Somewhat True	True	Very true
1. Trustworthy	1. I can trust my advisor.	1	2	3	4
2. Attentive	2. My advisor listens to what I have to say.	1	2	3	4
3. Understanding	3. My advisor understands what I tell him or her.	1	2	3	4
4. A clear communicator	4. I understand what my advisor tells me.	1	2	3	4
5. Thoughtful	5. My advisor knows my situation and does not think of me as a general ‘type of client’.	1	2	3	4
6. Interested in my well-being	6. I believe that my advisor cares about me (is not just focused on the fees I pay).	1	2	3	4
7. Open to my ideas	7. My advisor welcomes my questions and discusses them with me	1	2	3	4
8. Competent	8. I feel that my advisor is skilled in his or her specialty.	1	2	3	4
9. Reliable	9. My advisor follows through on the plans we create.	1	2	3	4
10. Honest	10. My Advisor quickly takes responsibility for mistakes or problems.	1	2	3	4
11. Available	11. My advisor is available when I need him or her.	1	2	3	4
12. Compatible with me	12. I like my advisor as a person.	1	2	3	4
Sub-total for each column
Total of the four columns sub-totals
Range of scores = 12 to 48 12 = No trust 13 to 24 = Some trust 25 to 36 = Trust 37 or above = Strong trust

How did you rate your advisor? The higher the score the better. If your score falls between 20 and 36 you can look at the questions with the low scores and talk with your advisor about your concerns. You can use this Advisor’s Trustworthiness tool for all your advisors, not just your financial advisors.

Is Your Trust Warranted?

While trust is a major component of your work with a financial advisor you should have the advisor’s performance and credentials reviewed by a knowledgeable person you already trust. Remember that trust is not faith: always trust with your eyes open.

Do you trust your financial advisor? Why or why not?

[i] This copyrighted material is an excerpt taken by the author, Bill Roiter, from his book Beyond Work: How Accomplished People Retire Successfully (Wiley, 2008)

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Your Life Beyond Work

Welcome to this blog which is based on my book: Beyond Work: How Accomplished People Retire Successfully (Wiley, 2008).  The research I conducted for the book provided me with a new understanding and appreciation of retirement.  This understanding has deepened as I work with people considering retirement or recently retired, conduct daylong seminars for those considering retirement and as I write articles and work with the news media.  I will use this blog as a way to share my ideas and to learn from yours.

The idea of retirement as a retreat from the active world no longer holds water.   Today, our focus is not what have done, it is what we can do.  If I had my way we would retire the word retire and replace it with a word that represented the idea of moving forward.  As a realist I doubt that this will happen in our lifetime.

What I did learn from my research is that there is a true shift in how people in their 50s and above think about what is important.  This shift occurs whether you stop working for money or not.  From our early 20s to our 50s we typically have a life focused on our careers and our families.  Beginning in our 50s our priorities shift and what we want changes.  In effect, we enter a new New Adulthood, a time when we build on our career-focused life to create our new life.  As Career Adults most of us put our energies into building success at work and into raising a family.  The energy we had to spare we used to satisfy our personal needs and wants.  This what changes as we move beyond work.

New Adults have priorities that differ from what has come before.  We face four major challenges:

1.    Financial security as we reduce or give up our earned income.

2.    Physical well being as we age and manage our health.

3.    Social well being as we rely more on friends and family.

4.    Personal well being as we decide for ourselves what we need and want.

Do you know what you want?

Twas the Night Before Retirement

Twas the night before Retirement, when all through the house
Joe was up stirring, awaking his spouse
His 401(k)’s disappearing, his health insurance too
Joe was worried and scared knowing not what to do

When outside of his door there arose such a clatter
Joe rushed out to see what was the matter
Not knowing what happened, he stood there and shivered
But lo and behold! A package was delivered

“What’s this?” Joe wondered, “I must have a look”
Though he knew in a moment it must be a book
Suddenly Joe was relieved, his worries no more
Bill Roiter’s Beyond Work was his own and he had to explore

In the pages he found eye-opening advice
On how to retire successfully, the words clear and concise
In retirement, Joe learned, he must focus on four domains
Financial was one, but Personal, Social, and Physical remain

Baby boomers are worrying about their futures, no doubt, but the holiday season also adds pressure and stress to already uncertain times. With less control over finances, stress has played a larger part in their lives. Somehow, the happy in the holidays is taking quite a hit this year.

When retirees worry too much about their finances, they forget about three other areas in their life that cannot be put aside: their personal, physical, and social domains. When financial security is taken off the table, so to speak, retirees and boomers can look for happiness from their family, friends, and themselves. By concentrating on other matters they can remain not only successful, but also happy.

Happy Holidays!

Did you know that 100 years old isn’t as old as it used to be?

I feel bad for the people who are 99 years old and looking forward to the big one-oh-oh.  Turning 100 is not what it used to be 20 years ago.  The centenarian club is more crowded than it used to be, with more than 50,000 members in the United States alone.  If you want to get the attention once given to people turning 100, you will have to wait an additional 10 years to become a 110 year-old super-centenarian.  In 2002 there were about 18 members of that club. (Source).

What this means for those of us considering retirement or recently retired is that this age inflation is due in part to the advancement made in medical care.  More 100 year-olds mean more people in their 90s, 80s, and younger.  Many once deadly illnesses can now be treated or even cured.  Your odds of living well longer have improved.  Greater longenvity for those in their 100s also means greater longevity for you and for me.

Medicine is doing what it can, as fast as it can, to help you recover from, manage, or cure many diseases.   You can increase the effectiveness of medicine by partnering with a good doctor and doing what you can to stay as healthy as you can be.

You can learn about the role of your health during retirement in chapter 5, “The Physical Domain”, in Beyond Work: How Accomplished People Retire Successfully.  Specific information about 8 remarkable trends in health care that will be in place in 10 years or less can be found on pages 120-124 of chapter 5.

You can order a copy of Beyond Work: How Accomplished People Retire Successfully from Amazon by clicking here.

At what age to you think that you be old?  Why?

Are you worried about your retirement finances?

We live in worried times. I don’t have to tell you how uncertain the economy is today, how we have all seen our hard- earned retirement savings whither. It is clear that the only thing our country’s best economic thinkers can do is sit in the front couple of seats this roller coaster we’re riding and yell, “keep your head down!” This was not the financial security we had planned on as we looked towards retirement.

People are looking for help with our growing worry over our once-secure retirement finances. If you are not worried then you are either very rich or you have just not been listening. Worry is natural—it warns us of impending danger. This is a good thing. However, too much worry, such as worrying about worrying, can paralyze us. It can lead to a flight toward any sense of safety, which might serve as a quick fix that may briefly reduce the worry, but won’t improve your situation. Worried decisions are almost always bad decisions.

Worry as a growth industry
Worry has created a minor growth industry for retirement seminars. Unfortunately, these seminars only address a small fraction of what it takes to retire successfully. They tackle some of the financial issues at stake, but ignore the other aspects needed to craft a successful retirement. You can read the rest of this article at lifeafter50.com