Be It Resolved

Thank goodness for New Year’s resolutions! This seasonal exercise allows us to look back at the past year, resolve to do better in mastering weaknesses and taking on old demons, and devise new plans to energize and direct us in the months ahead.

However, clients as well as advisors often carry around old habits, grievances, and regrets that keep their resolutions from becoming real solutions. If you’re looking for ideas that can help you keep moving forward when old baggage gets in the way, consider these situations.

My client told me several months ago that he wanted to spend less and save more for his and his wife’s retirement. Now he explains sheepishly that his extravagant holiday spending was the “final binge” before tightening his belt. Knowing this tendency of his to rationalize every expenditure, how can I help him reach his savings goals? It’s common for many overspenders to have good reasons for their last act of self-indulgence, or to see it as a final feast before they begin a spending diet. Understanding this, empathize with your client about the difficulty of sticking to his spending limits at this time of year. All the “shop till you drop” holiday hype is often compounded by an urge to avoid seeming stingy compared to others or to last year. To make matters worse, overspenders tend to enter into a trance state when they shop, making rational behavior almost impossible.

As the next step, remind him of his desires for his and his wife’s retirement. Give him a realistic estimate of the amount of savings they will need to make this happen.

The third step is to help him learn more about his spending habits so he can modify them. Encourage him to keep a spending diary for two weeks. In this diary, he should write down every penny spent, what he spent it on, where, why, how (cash? check? credit card?), and the way he felt immediately afterward.

By reviewing this diary with him, you may be able to help him spot “points of temptation” or “slippery places” where he tends to overspend. Are there certain days (e.g., payday) or times of day (lunch hour?) when he should be particularly wary of temptation; or certain stores, catalogs, or Web sites he should avoid?

In follow-up meetings, you’ll be able to monitor whether he’s avoiding spending binges and working toward his goals. But even if his progress is slow, don’t chastise him too harshly. After all, you can’t make him change; it’s up to him.And if he feels judged, he may go on more binges to rebel against your “parental” authority.

Last year I promised myself to do more coaching and life planning work, but so far I’ve made very little progress toward that goal. I’m tempted to quit portfolio management cold turkey and open a coaching practice to “walk my talk.” My wife is afraid that we’ll go broke if I do this, but I’m sick of postponing my dream. How can I make her see this? Good for you for resolving not to settle for less! But I agree with your wife that a “sink or swim” approach is too extreme and may be financially dangerous.

Maybe the first thing you need to do is forgive yourself for your lack of progress to date. What slowed you down? Was it client commitments, fear of change, family issues, or perhaps losses you experienced during the year? Write down these impediments, and be gentle with yourself.

Then–perhaps with the help of a supportive colleague or a coach–create a step-by-step plan for taking on more coaching or life planning, with realistic goals and timelines. Try to explore a variety of options, such as adding it to your existing services, making it a sideline, or offering it only by phone or online. Interview some life planners to find out what worked for them and what didn’t, and what kind of income you can realistically expect.

Once you do all this, you’ll feel more grounded and much clearer about the best way to move forward. And I’m willing to bet that your wife will be far less reluctant to support you in living your dream.

While I was discussing long-term care insurance with a client of mine, she told me that one of her New Year’s resolutions is to have a heart-to-heart talk with her father, who lives alone and is in denial about his declining health. She has asked for my help. How should I respond? I would suggest that your client begin by writing a letter to her father about how much she cares about him, and how concerned she is that his wishes about the future will be honored. As a starting point for asking him to share his situation with her, she could reveal details about her own finances, estate planning, or preferences for the end of life.

When these thoughts and feelings are set down in a letter, a parent who is reluctant to face painful discussions about aging, dying, and death can read it again and again and let them in slowly, at his or her own pace. If you have articles about the importance of parents discussing these matters with concerned adult children, your client may want to include them with this letter, too.

Assuming her father agrees to talk about his situation, consider inviting him to meet with your client and yourself in a neutral setting. Make sure you understand your client’s areas of concern, so you can build bridges between the two.