Whether or not you agree with the president’s policies — and many advisers don’t — it’s clear that Barack Obama’s public persona and tone are in sync with the current mood of the country.
In last night’s address to Congress, the president was serious without being dull, stressing responsibility on the part of all Americans. Mr. Obama made his case plainly but fluidly and spoke forcefully, conveying the feeling that things will be all right if we all work hard.
Let me be clear: I’m talking about the president’s style and tone, not necessarily his policies. You may think highly of the substance of that program or consider it Democratic Kool-Aid, but let’s leave substance aside for the moment and just talk about the way Mr. Obama delivers his message. He knows that the nation is fed up with the baloney of the Wall Street and Washington elite, so he speaks directly and earnestly — even to the point of being criticized for being dour.
If poll numbers are to be believed, the style works. And that’s the reason I think the style would work well for financial advisers. In fact, if advisers aren’t already communicating in ways that are thoughtful, sober and measured, they should take a page from Mr. Obama and get more serious.
I’m not accusing advisers of ever having been frivolous or anything other than earnest in dealing with other people’s money. And true financial planners have been conducting serious conversations about budgets and saving for decades. I do think, however, that for too long, large segments of the financial business have been guilty of selling average Americans a fanciful dream — a golden retirement — that may have been deliverable at one point but no longer.
The mantra was simple: Just keep investing regularly, take calculated risks in a diverse range of investments and you too will be able to golf in Arizona or Florida in the winter. That was the image, but it relied on a bit of market magic to enable someone making $50,000 or $75,000 or even $100,000 a year to leap to a better life in retirement than the one they enjoyed in their peak earning years.
Rising markets and a pretty good economy enabled many advisers to sell the dream. Now we’ve all woken up, and the coffee smells a little bitter. The truly wealthy (even those not touched by Madoff or Stanford) are shocked by the sudden evaporation of their capital. IRA and 401(k) millionaires — a rare breed statistically even before the shellacking of equity prices — are now worth maybe $600,000 or $700,000, which means the $40,000 or $50,000 a year they could have drawn down in retirement is now down to maybe $25,000 or $35,000. Less well-off investors face even more-dismal prospects.
New realities require sober conversations about what’s really possible these days. Even those advisers who shunned the
financial planning ABCs are going to have to review family budgets, encourage thrift and find ways to downsize expectations creatively. In a sense, it’s a time for advisers to become their clients’ financial dads, explaining how and what to do so everything will be OK. That’s serious business.
