Bricolage

In my opinion, the majority of investment advice out there seems like it just came off of a factory production line. For some reason, financial planning has become formulaic and advisors are trying to fit a variety of clients into a single mold dictated to them by higher ups in the firm. While a great deal of this advice may be appropriate for the aspirational customer trying to grow a nest egg, it is ineffective at protecting wealth for those who have already achieved financial success. Over the years, I have found that there is about as many ways to protect a client’s wealth as there is to grow wealthy in the first place. There is, simply, no one right way to preserve wealth only a way that is right for the client.

One example in particular illustrates my point. A client of mine came to me when needed to generate a certain percent on her money to maintain her income for retirement. She had a solid nest egg in the form of about $2 million in assets. Unfortunately, interest rates for bonds were below 2% and as a result she could not generate enough income to live on without taking on additional risk. The one size fits all advisors were proposing an annuity, which would lock her capital away forever.

As I tried to think about the best way to meet her income needs, one of her sons provided the solution when he told me that he wished he could simply pay his mortgage to his mom rather than the bank. As it turns out, both of her sons were unable to refinance their mortgages and had a balloon payment coming up. All of a sudden, I had a eureka moment: my client could become the Bank of Mom and get the income she received while helping her two sons reduce their mortgage payment.

While the strategy had risks as one of her boys could default on the loan, both had reliable jobs and a good relationship with their mom. Deciding that the plan was a good idea, my client turned down the annuity proposal and instead followed a plan more suited for her and her family’s needs. With wealth preservation, there is simply no one size fits all approach. By taking a look at your individual circumstances and needs, you can develop a creative approach that dismisses cookie cutter solutions for an approach that truly fits into your life.