Paul was a comfortably retired dad with a financially strapped son, whose own retirement prospects appeared dim. But grown sons too often don’t listen to their fathers. That’s why Paul called in his advisor to help his offspring, John.
Certainly, Paul knew John’s situation wasn’t entirely the younger man’s fault. For John’s generation (he’s 40), economic changes make retirement planning a harder task than it was for Paul. “Please help my son,” the worried dad asked his financial advisor, Todd Black.
“Family is what really matters in most financial planning discussions,” said Black, an advisor at Dogwood Capital Management in Cumming, Ga.
Paul retired a few years ago, the old-fashioned way. After working for more than 35 years at a pharmaceutical company, he has a great pension and healthy savings. He provided a comfortable life for his wife and two sons. Now, he lives in a beautiful lakeside house in a nice suburb of Atlanta, spending spare time sailing on his boat.
But while he is set, he worries about his children. His sons, like most others of their generation, have a less certain future in retirement, with traditional defined-benefit pension plans (which usually calculate payouts according to final salary and years of service) disappearing and the possibility of outliving their savings increasing.
Paul’s primary concern was about the financial health of his youngest son, John, who recently quit his job and moved back to Atlanta from Michigan. He never liked the cold winter in the north. John sold his house there, which ended up losing money.
Paul fretted about the setbacks frustrating his son. An old-school father who did not express much emotion to his children, Paul figured that his advisor, Black, as a neutral third party, was better suited to take care of John’s financial matters.
“I’m concerned about my son,” Paul said. “He seemed discouraged.”
“I’ll talk to him,” said Black, reassuring Paul that he would give John encouragement and advice. He then gave John a call and offered to handle his finances.
Picturing a comfortable retirement like his father’s, John readily put his faith in Black. The father-son relationship was a good one, but “it’s still easier for John to call me when he has questions,” Black said.
John started a new job at an insurance company in Atlanta, so Black made sure that he took full advantage of his new retirement plan, plus health and life insurance programs. The advisor also updated his old retirement accounts. He analyzed John’s 401(k)s, rebalanced his investments and used target-date funds (which shift their asset mix to more conservative securities as investors grow older) to create a diversified portfolio appropriate for his age group.
Black made John save more aggressively by advising him against his bachelor-style spending habits, such as wanting to own a nice car. Although he grew up with his father driving a BMW, “it doesn’t mean you need one,” Black told John, who took the advisor’s suggestions and saw his savings grow.
“I’m proud of him,” Paul said to Black in another phone call. They believed that at this rate, John had a significant chance to replicate his father’s successful example, which gave Paul a lot more carefree boating time.
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