Helping a client work through indecision

I wrote previously about married clients who were going back and forth trying to decide between two competing living and working options. This kind of unending circle doesn’t even require two participants: All it takes is one client having the same conversation over and over in his or her head.

A Massachusetts client whose father had died a few years earlier asked if I would meet with his mother, Sofia, who was then about 75. She knew she couldn’t maintain their New Jersey house on her own, and she wanted to live closer to family, but she couldn’t decide whether to move to a condo or to a retirement community, as her children were urging. She was just stuck.

I asked Sofia about the options. She started listing pros and cons of the retirement community, then suddenly jumped to “but I don’t think I can afford it.” Then she began explaining her financial concerns, and just as she seemed about to acknowledge that finances wouldn’t be a problem, she shifted to “but I don’t know if I’d like it there.”

I suspected she had been having this same endless back-and-forth conversation with herself before coming to me. She didn’t settle on either one of her issues long enough to make any real progress.

Her situation was simpler than the couple I described before because there was only one person involved, and because I could give her an objective solution to part of her dilemma. I told her that I knew many people in retirement communities who seemed happy once they settled in, but that I couldn’t tell her whether she would like that. However, I could tell her with confidence that she could afford to move there if she decided she wanted to. She had a house and about $2 million and didn’t have to worry. Obviously, though, she was worried, and that worry was keeping her from focusing on the real question: whether she’d actually like a retirement community. 

I’ve found that clients who know me well and have confidence in my judgment may be content with hearing “you’re OK” from me, but most people need more than that. Clients who are comfortable with numbers and quantitative reasoning may want to see the whole analysis. Clients who hate numbers still like to watch me go through some calculations, even if they don’t fully follow, just to see that there’s solid reasoning backing up my conclusions.

A back-of-the-envelope overview can be just the right amount of detail. I explained to Sofia that selling her house would more than cover the community buy-in, and her $2 million portfolio spread evenly over the next 20 years (to age 95) would give her $100,000 a year. There would be inflation, but she would also have investment growth, so as long as she earned enough to cover inflation (clearly, a low hurdle) she would have at least $100,000 a year in today’s purchasing power. Add in her Social Security and she could afford to do whatever she wanted.

This conclusion both reassured and discomforted her. She liked my confidence and my financial advice, but now she had to face the real choice. I told her she needed to go visit some condos and some retirement communities to get a better sense of those alternatives. 

In the end, Sofia took things in smaller steps. She started in a “seniors-only” condo complex near her children and lived there for a few years until she realized she needed more support. Then she moved to the independent living part of a retirement community where she got meals and other services the condo didn’t provide. She is doing well there.

[More: Emotions are information]

Michael Broad is a financial planner and investment advisor in Newton, Massachusetts. Got a good client story or problem you’d like to see in a future column? Email Michael Broad.