Helping Advisors Blog

As Edna, the designer in the Pixar Animation Studios’¹ animated hit “The Incredibles” clearly points out: “Words are useless dahhhling….Gobble, Gobble, Gobble!” It is a truly funny moment when Edna emerges from retirement to show off her new superhero designs. The moment works because we all have been in a situation where words just can’t and don’t exactly convey what we are trying to say. Pictures are, in fact, worth a thousand words.

In our business, we are often asked to explain abstract concepts like annual rate of returns and tax efficiency. Easy enough: it’s what you earn and, if sheltered, your money can grow without receiving that dreaded 1099 form. Everybody understands the benefit of tax relief and well, you know the rest…

But what makes our business unique is the intangibles that we sell.

How does one “test drive” an efficient frontier? How does one plan for retirement thirty years away when tomorrow’s trip to the doctor can bring the unexpected? When people buy tangible things (cars, houses, vacuum cleaners), they get to try them out, or at the very least see them. Retirement, in contrast, is one of those elusive ever-moving targets. Rates of Inflation, Returns, Interest, and Taxes all require imagination…and guesswork.

That’s right: guesswork. Unless you or your client is plugged into the Psychic Friends Network (and I doubt it because they went dark for a time), it’s all about the assumptions. Of course the industry sells using past historical results and finds comfort behind the disclaimer “past performance is no guarantee of future results”… Isn’t it ironic that, even when armed with boatloads of technical data, it’s the mountain charts, graphs, and pictures of Grandma at the beach do most of the explanation?

The question is: How do we translate those soft focus pictures into the client’s personal situation? How do we put them on the beach? We must find out what is important to them: intellectually and emotionally. It is often said that people act out of either fear or greed. Perhaps we need to remember that, regardless of those influences, every person’s most basic need is still survival. As Maslow’s hierarchy of needs points out, without that, everything else is just icing.

There are no mulligans at age 65. A picture perfect retirement takes strategic planning, the will to act, and above all, courage. Convincing people to act in their own interests, even though they can’t see, touch, or test-drive the vehicle for getting there, is always a challenge. Starting with proper allocations and regular rebalancing, Russell believes retirement planning requires discipline, thought, and action. It is not a passive or automatic exercise. As advisors, we must remain advocates for our clients: encouraging, and sometimes even demanding, them to act.

Ultimately, they will be the ones who have to see themselves in the pretty pictures, but we can help them make the necessary translation into their own language. Pictures can be worth a thousand words.

But translating them into action is priceless.

John Harrell is a Bank Channel Specialist for Russell’s private client services business.