In Case of Emergency, Break Glass

Topic: Wealth Planning

R. Denys Calvin, CFA

October 17, 2016

Image used with permission: iStock/chanwangrong


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In Case of Emergency, Break Glass

A few weeks ago I stumbled across a snippet on the web about an unusual wedding gift. It arrived from the bride’s great aunt with instructions not to open it until the newlyweds had their first serious disagreement.

After 9 years they finally relented, not because of any dispute, but because of curiosity and the confidence that by then they had within them the tools for creating and maintaining a strong, healthy marriage. The contents were unremarkable: a couple of wine glasses, a candle, and a packet of money for each of them, with instructions to her to “get a pizza, shrimp or something you both love” and to him to “go get flowers and a bottle of wine”. What they realized after opening it, however, was that the real “gift of the gift” was its power during 9 years of married life of having forced them, when each disagreement arose, to assess whether it was truly that serious, and to put whatever the underlying issue was into perspective. Each time they had to decide whether the drama du jour was so serious that it warranted cracking open “the gift”.

“Heartwarming, to be sure. But where on earth is he going with this?” you’re probably wondering.

This story struck an emotional chord, of course. But reflecting on it, there seem to be a few interesting parallels between the gift in the story and the role of a good financial advisor.

First, and most obviously, a financial advisor worth his or her salt will act as a sounding board, helping a client discern what’s serious from what’s merely dramatic, particularly when emotions are running high. In so doing, the client will be better able to maintain a sense of perspective about matters financial, and not let their emotions get the better of them.

Second, as in a marriage, it’s the “long game” that really matters in looking after retirement savings. But success over the long run involves doing many small things right, day in, day out, and not just making the occasional splashy gesture. Having someone or something there as a touchstone, or regular reminder, helping to stay the course, can be invaluable.

Third, like the gift, a good financial advisor can deliver real value in ways other than the obvious fee-generating ones. In late 2008, in the heat of the financial crisis, simply persuading a client not to cash out their portfolio, but to remain invested to capture the eventual recovery, had a profound impact on the client’s financial well-being. Presuming that the advisor’s real value and role are primarily in managing investments is making the same mistake as valuing the wedding gift mostly on its contents, not on its role as a governor on the couple’s behaviour.

In a few months, when new regulations have clients and advisors alike inundated with reporting that focuses entirely on returns and fees (CRM2), it will be worth remembering that the right advisor can provide significant value beyond making investments and delivering returns.

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