FROM THE CHAIR

I’ll huff and puff and blow your retirement down

By Jeff Jones, NAPFA Chair

We all know the story of the three little pigs. Those three boys had mooched off of Mama Pig long enough, and she told them to hit the road. But like any good mama, before their departure she warned them about the wolf. But not all of the little pigs took the warning to heart, and so came the straw, stick, and brick houses with some huffin’ and puffin’, and they all lived happily ever after.

3 retirement houses

Let’s take a look at the three retirement houses.

The straw house is built using an employer-provided 401(k) with a 5% elective deferral, no emergency fund, little to no life or disability insurance, a large home and new car with 30-year and six-year financing, respectively, and no estate plan. One little huff and puff, and this house comes crashing down.

The stick house is a bit stronger but still susceptible to the huffin’ and puffin’. It adds some basic insurance coverage, a small savings account, simple wills, and removes the consumer debt that burdened the straw house. Still not strong enough to stop the big bad wolf, I’m afraid.

Now, the last house is built to withstand. It’s built with solid bricks: retirement accounts like traditional IRAs, Roth IRAs, employee retirement plans, investment accounts, planning for risk and insurance, wills, powers of attorney, healthcare directives, trusts, disciplined savings, the assumption of inflation, and Social Security and Medicare planning. You can even renovate the house with education planning for children or grandchildren. Maybe some charitable planning. This house is built to last!

Many of our clients came to us to help them build their retirement houses. For those who will not commit to a retirement plan, we’ve warned them about the wolves.

Why this story matters

You’re already planners. You know these things. So, why do I tell you this story? Because storytelling is also is one of the most important tools you can use when working with your clients.

Storytelling has been used by humans to teach, pass along information and history, and instill values and beliefs for millennia. Storytelling connects us. It’s human. It’s engaging. It’s memorable, which is why we remember the story of the three little pigs (along with so many others).

We can present clients with quantitative information—overwhelm them even. However, with no emotional connection to the numbers, some plans are destined to fail. When working with your clients, tell stories. They may be your own. They may come from another client situation. They may come from your NAPFA peers. They will help you convince your clients of the value of the advice that you give them backed by quantitative data.

See you in San Diego!

Shifting gears a bit, last month, we wrapped up our fall 2022 conference in beautiful Denver Denver (see “Run your practice better with insights from the NAPFA Fall Conference” in this issue of NAPFA Advsior). Connecting in person is one of my favorite benefits of our association. There were hours of amazing educational sessions where I learned to build stronger “houses.” NAPFA members build stronger together.

I hope to see you in San Diego next spring for our next national conference.