Making Lemonade

Laura Hearn is a private client advisor for RMB Capital Management in Chicago, which manages about $1.2 billion in assets for wealthy families around the country. Even though her firm’s clients significantly outperformed the S&P 500 in 2008, their double-digit losses last fall sparked an increase in concerned phone calls.

“The advisors at our firm were on the phone all day every day calming investors,” she told me. “In early 2009 when the market did not recover as anticipated, the call volume got even heavier and panic turned into anger.”

Listening to this part of Hearn’s tale, I thought of the losses and disappointments that so many of us are going through right now: not just vanished wealth but salary cutbacks, job losses, home foreclosures, shrinking business revenue, credit starvation, and on and on. Amid all this trauma and turbulence–and often because of it–some people have been able to create positive change in their own lives and the lives of others. Whether you call this process creative destruction or making lemonade when life hands you lemons, these stories are immensely cheering. Hearn’s is one of them.

She continues, “One night last December I returned home exhausted and melancholy, and thought to myself, ‘I need some perspective. Yes, we investors have a right to be concerned and worried. But in the grand scheme of things, aren’t we “lucky” to have money to invest? What about the folks who have nothing, the folks who have no regular access to food, shelter, and clothing?’”

The next day Hearn contacted a local community homeless shelter that needed help preparing brown-bag meals. In January, her firm implemented a program called Winners Making Dinners. On the last Thursday of every month, RMB Capital Management volunteers bring food items to work and make lunches for the shelter.

The program has been a great success on many levels. Hearns says, “At every Winners Making Dinners workshop, we are reminded of the people who do not have any assets to be allocated. We are reminded that some people don’t have the basics. We are reminded that we, as a firm, need to slow down, take some time to appreciate our lot in life, and keep it in perspective.”

Disruption as a Catalyst for Change

Amid widespread anxiety about the future, stories like Laura Hearn’s may inspire more of us to make lemonade out of the lemons in our lives. In fact, many people are reassessing their goals and choosing work that is more personally meaningful. Since they have less to lose (or have already lost it), why not take the risk?

Dan Wishnatsky of Special Kids Financial in Phoenix told me about a friend of his who devoted part of his time to guiding a school for children with special needs. After being laid off from an 18-year career with a big-box retailer, his friend took the leap of becoming the school’s full-time director. “The positive impact on the school has been at least fourfold,” Wishnatsky says. “He is now able to bring a full-time commitment along with business acumen, compassion, and understanding to the cause of helping families and children who on many days live as gallant, yet humble heroes.”

He adds, “For some strange reason, most change is for the best. Most of us worship at the feet of efficiency, not realizing it because it is such a part of our fabric. Driving the same way to work every day may be the most efficient, but not the most enriching. Change is good and way underappreciated.”

Leia Francisco, an executive development and life coach in Kerrville, Texas, told me about a former client who was a high-powered administrator in a large hospital system. She worked such long hours that she could have dinner only once a week with her three children (all under the age of eight), and that was at 10 o’clock at night!

This executive’s wakeup call came when her salary was downsized and her job reorganized, though the hours were as demanding as ever. After considering her options, she quit and relocated with her family to the Southwest. There she developed a longstanding passion of hers, weaving, into an extremely lucrative business with high-end clients around the world. Not only is she doing something she loves, but she works from home and is able to spend lots of quality time with her children.

Recession and layoffs are inspiring a number of people like these to blaze new career paths. In the May 31 Washington Post, Elizabeth Razzi reported on a former corporate sales & marketing director who now runs a franchise called College Nannies & Tutors. A New York lawyer was prompted to close her crisis management consulting business and move to Washington, D.C., to pursue her love of politics and public policy. Another lawyer whose firm has frozen salaries found profit and pleasure in selling Mary Kay cosmetics on the side. Even though Razzi’s profilees gave up some compensation to make these changes, they all described their new work in terms like “exciting,” “important,” and “life-changing.”

As Leia Francisco reminded me, Daniel Levinson wrote about how people return to unrealized dreams in midlife and sometimes transform them into reality in The Seasons of a Man’s Life (Ballantine, 1986). Nancy Schlossberg’s Going to Plan B: How You Can Cope, Regroup, and Start Your Life on a New Path (Fireside, 1996) is an excellent guide to making this happen, recommended by motivational consultant Ed Jacobson.

Surviving a Bushel of Lemons

Sometimes the lemons just keep coming, and leaving your job isn’t an option you want to take. A few years ago, Rick Kahler, a fee-only advisor in Rapid City, South Dakota, lost five employees in 60 days. One moved out of town, the second left to become a bank trust officer, the third was permanently injured in an accident and could no longer work, the fourth had to quit after knee surgery, and the fifth was hired away at double the salary. This left Kahler and his then operations manager, Darla Creal, alone in the office.

To avoid disruptions in client service, Kahler and Creal had to work seven days a week for 18 months. “It was pretty terrifying at the time, looking for new help while working constantly,” Rick recalls. To complicate matters, his departing planner had told him she was leaving because of the firm’s inefficiency. “I was earning way less than my peers,” he admits. “My gross was similar, but my labor costs were too high. I knew there was a problem, but I didn’t know how to fix it.”

Three or four months after the storm of lemons hit, he hired a customer relationship management consultant for two days. It was a great investment. “I discovered that what we needed to change was right at our fingertips,” he says. “It was pretty painful, but we did change. I was forced to learn some systems from the ground up, and we threw out other systems that weren’t working very well.”

The unforeseen crisis forced him to correct inefficiencies that were costing as much as $150,000 a year. Since then his firm has been able to maintain an annual growth rate of 22%, while hiring only two people to replace the five who left.

The lemonade part, according to Kahler: “I now have a normal, mature solo practice, and I feel really good about that. In the last three years, my income has doubled or tripled, and Darla’s income has increased by 50%.” He has also written three books, so it’s been a very creative period for him as well. “We are typically more resilient than we give ourselves credit for,” he says now.

The Flourishing of Altruism

In postulating that self-interest is the primary human motivation, economic theory based on Adam Smith’s philosophy ignores certain findings about altruism, according to an article in the May issue of Ode, a magazine for “intelligent optimists.” In “The altruism in economics,” writer Jeremy Mercer says that new insights from behavioral economics show that the reverse is actually true: altruism is a stronger motivator than personal financial gain. He cites Bruno Frey, an economist at the University of Zurich, who insists, “People are much more altruistic than standard economics claims. The challenge is for economists to nurture this intrinsic motivation instead of crowding it out.”