Change Is Constant
Advising clients has become more of a
challenge in this risky financial market.
» the lighter side of life
By Penny Righthand, CLU, ChFC
Financial Planning and Spa
had been thinking about changing
he name of my business to “
Right-and Insurance, Financial Planning
and Spa,” thinking it would appeal to a
new upscale audience, when the latest
economic downturn occurred. The new
upscale audience disappeared.
What do you think about “
Posture-pedic Financial Planning” instead? I
would team up with a mattress manufacturer. Some of my clients like that
idea, but others prefer investing in
gold teeth. They think that with either
of these investments, they will at least
know where their money is.
I kind of understand this, but how
sure is anything? Everything is about
change and unpredictability.
Change is always hard, but it makes
life interesting, even when it is unwelcome. Losing someone, losing money
or losing your home is painful, but these
things happen all the time. If we went
around worrying about those things
every day, we would be paralyzed. My
6-year-old grandson said, “If I don’t
want to ever get hurt, Grandma, I guess
I just have to sit in a chair on my hands
and not ever do anything.” He’s so
smart. And it’s all so simple at 6.
Things change all the time. We
were once an agrarian society, and
then we were industrialized. There
were huge upheavals, and some people were left behind. Others learned
new skills, moved to the city or the
suburbs and learned new ways to live
and make money.
go out of business. Then hedge
funds scared some mutual fund
managers into taking on more risk.
And real estate, which used to be real,
became virtual with subprime mortgages being handed out like candy.
All of these inherently reasonable
investments became more risky. The
game had changed, but the consumer
didn’t know it. I didn’t know it. And
clearly the regulators were either on
I can deal with change.
I’ve lost money; I’ve lost people
I love; I’ve lost jobs. I can counsel people
through those challenges. But I feel
slightly compromised in my work when I
am asked to advise clients how and where
to allocate their money these days. Our
work is based on trust. My clients need to
trust me; I need to trust the people who
give me information about the funds and
policies I recommend.
The game had changed, but the consumer
didn’t know it.
Once there were only savings accounts at banks. Then there were
life insurance policies. When mutual
funds came along, some people wor-
vacation or out to lunch. No
one paid any attention until
the whole house of cards began
What good does it do to discuss risk
tolerance and time horizon with
my clients if I don’t know
what risks are being taken
within the investments and
the companies we discuss?
Everyone had a pretty high
risk tolerance while they were
making money. It’s only when the market
tanked that they realized that tolerance
for financial pain wasn’t just theoretical
and that they weren’t playing Monopoly
with play money. Did anyone at the
mortgage companies ask their clients
what their tolerance was for losing their
homes? Did we ask our clients how they
would tolerate a 40 percent to 50 percent
loss of value in their portfolio?
I do my best,
as I’m sure most
of you do, to give
the best advice
I can to people
based on their needs,
desires and tolerance. But
apparently no one knows what the
fund managers or financial whizzes
are doing behind the curtain.
So the mattress or gold teeth
investments don’t sound completely
unreasonable to me. But I don’t think
my broker-dealer will approve of my
new name. And the spa idea definitely
has to wait.
Penny Righthand, CLU, ChFC, lives in the
San Francisco area and is a member of
NAIFA-Alameda County. Contact her at
5980 Horton St., Ste. 500, Emeryville, CA
94608 or at