This summer Bonnie and I were flying home from an investment management conference in San Diego, and I read an excellent article about resilience in the June 2009 Wealth Manager Magazine. I was drawn to the subject because after the 2008 financial meltdown, don’t we all want to be resilient?
The article by Robin Scheman referred to research published by Diane Coutu in the May 2002 Harvard Business Review: “How Resilience Works”. This is my favorite dictionary definition for resilience: “capable of withstanding shock without permanent deformation or rupture.” Ms. Coutu’s research revealed that resilient people possess three characteristics:
1. A staunch acceptance of reality
2. A deep belief, often buttressed by strongly held values, that life is meaningful
3. An uncanny ability to improvise
The purpose of financial planning is first of all to reveal financial reality for the client. For example: Can I afford to quit working now? Can I afford to start a business? My nest egg declined 37% in 2008; what does it mean for my future?
A few years ago, I was working with a couple as they were transitioning into retirement. The husband had already retired from his corporate position and was doing some consulting. The wife had given her one-year notice that she was retiring as the literacy coach for a local school district. Our planning had developed to the point where we were getting very detailed about how their accumulated assets and benefits would last beyond their lifetimes.
Then, a relative invited them for a long weekend to their vacation home at Sea Ranch. My clients came home all excited and asked me if they could buy a home at Sea Ranch. The reality was “no,” not without changing everything including withdrawing her retirement notice from the school district for several more years and making sure the husband could consult full-time indefinitely. Resilient people are drawn to reality. My clients let go of their Sea Ranch dream and decided that what they always wanted to do for a while was live in San Francisco – so they found the perfect flat to rent in North Beach, and they found a renter for their Berkeley home. This was a realistic dream because it was financially neutral.
As more and more baby boomers observe their parents living into their 90’s, the reality of funding a 30 to 40 year retirement begins to sink in. If your mother is 95 and still going strong, doesn’t it make sense to let go of the old notion of retiring at 60 or 65? In the last year of her life while she was still working on stage, Bea Arthur told Charles Osgood: “Retirement is for people who do not like their work.” This attitude is part of the retirement revolution that views work as something you want to do as long as you can. We have organized Bell Investment Advisors around the notion that one of the highest human accomplishments is to find work that you love and that you will keep doing as long as you can including when you can realistically cut back and cycle between work and leisure. Reality is a friend of resilience. The next time I write this column, I will explore the second characteristic of resilient people: that life is meaningful.
Jim Bell, CFP® is President and Founder of Bell Investment Advisors, Inc. 1111 Broadway, Suite 1630 in downtown Oakland. The firm has been providing personalized financial planning, investment management and career planning services since 1991. www.bellinvest.com 510-433-1066
Published in Piedmont Post on September 16, 2009