From the December 2010 issue of Investment Advisor • Subscribe!

Jazz, Children and Retirement

Good investment advisors, I would argue, are like jazz musicians.

As I was preparing for the third annual Retirement Income Symposium in Chicago in early November, I had a discussion with Mark Cortazzo, an advisor with MACRO Consulting in New Jersey who was talking about how the best-laid plans for clients gang aft agley (my words, following Robert Burns, not Mark’s). It can be the client’s own obstinacy or prejudices that keep her from following up or heading in the wrong direction after a plan is written; often, Mark pointed out, it can be well-intentioned or ill-intentioned family members that nudge the client off the path. That’s when I lit upon a new metaphor for the work you do.

Good investment advisors, I would argue, are like jazz musicians. Any decent musician will tell you that getting all the notes right in a composition is only the very beginning of making music. Like a jazz musician who needs first to master the melody, it’s only when you’re performing with—and playing off—other musicians that music is made. You have to improvise off that melody in order to be a good musician. You have to work with the other members of your band, and then sell that song to your audience by adding subtleties of tempo or softness or loudness—“dynamics” in music parlance—that gets your audience to pay attention and listen to that tune.

As an advisor, it’s one thing, and an important accomplishment, to get your “notes” correctly when it comes to a plan for clients, but then you have to start making music. You have to convince your clients to stick to the plan, monitor the plan and make adjustments as the other “players” in your jazz combo—the markets, regulation, life—present you with the need to improvise.

Here’s a new theme that you may have to improvise off: During his presentation at the Retirement Income Symposium, David Macchia of Wealth2k mentioned in passing the growing trend of adult children who live with their parents long past the point when the children of a previous generation (like mine) would have headed off on their own. The trend has been exacerbated, the Pew Research Center reported last year, by the recession.

Macchia suggested there might be a chance that we’d return to the concept of “retirement” that prevailed for, oh, the last 500 years or so, when multiple generations of the same family lived together, and each helped the other according to their needs. The ways that boomers raised their children—keeping them very close at hand, especially in the economic classes that would and will produce your clients—suggests, I would argue, that those children may very well stay close to, or in, your clients’ homes for some time to come. They will be an economic burden for a longer period of time for those clients, but perhaps they will also constitute human capital that can be relied on during your clients’ retirement and old age.

Those are the notes, among many other discordant sounds coming from the capital markets and our capitalistic society and the nation’s capital. Now it’s your turn, as always, to improvise some beautiful music for your clients.

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