May 3


The Dark Underbelly of Wall Street

The Dark Underbelly of Wall St. 

I’m a positive, enthusiastic guy.  But, this is a story that needs to be told. 

Early in my career, while still living in Pittsburgh, I met with a retiring school teacher.  She was in her mid-60’s, single, no children, and in rather poor health. 

In addition to her teacher’s pension and social security, she had been able to scrape together $200,000 into her retirement accounts.  I asked her, “When do you plan on spending this money?” She answered me in the same way most people answer that question.  “I guess when I absolutely have to.”

I offered, “Well, you’re not going to live forever.  Why not take a little bit out each month and do something nice for yourself?  Or for someone else?”

She fought back a little bit, but in the end she signed the paperwork to start receiving a couple hundred dollars a month that she intended to use to pay for her niece’s braces (as her sister was unable to afford them).

A few days later I was called into my manager’s office.  At the time, I worked with a team of advisors at a large investment firm who reported to a senior manager named Frank.

As soon as I walked into his office, I knew something was wrong.  Frank was not happy.  In fact, in addition to Frank, two other managers from the firm were present. 

“Dave,” Frank said, “we are in the business of helping people manage and grow their money.”

“Ok,” I replied meekly.

“You see,” Frank continued, “at the end of the day, we make our money based on how much money we are managing.  Right?”

He had a good point.  The financial industry is generally paid based on assets under management.   The percentage can vary, but generally the company handling your accounts receives around 1% per year.  If you have a $100,000 account, they make around $1000 a year in management fees. 

“Dave,” Frank declared, “We are not in the business of telling people to take money out of these accounts.  That is not our job.”

I was floored.  Did I just get in trouble for suggesting someone pay for their niece’s braces? 

As I left with my tail between my legs I murmured, “Sure, Frank, I understand. It won’t happen again.” 

That experience taught me an invaluable lesson that has never left me.  In a sense, the entire financial management system is inherently biased.   We are paid to manage and grow.  We are penalized when people spend their own money. 

And it isn’t hard to convince people to not spend any money, right?

Mr. and Mrs. Jones, you need to keep saving, because you just never know.  We’ll start spending this money down the road when it makes more sense. It is my job to make sure you don’t run out of money.”  Blah.  Blah.  Blah.

Really? I thought my job was to help you get the most LIFE from your money- not see how big we can grow your pile between now and the day you die.

Often times my clients will come to the same realization.  It usually sounds something like this: “Wait a minute, Dave.  By telling us to spend more money earlier in our retirement, aren’t you taking money out of your own pocket?” 

My reply is always the same: “Yes, that’s true.  But I have come to the glorious realization that if I serve and help you- and if I help you without any consideration as to my own benefit- I actually end up becoming more successful!  It all comes around.  In the long run, if I focus on serving you to the best of my capacity, good things come back to me.”

I can only hope the rest of the industry comes to the same realization- because if they don’t, tens of millions of baby boomers are going to live their retired lives acting and feeling like they’re broke. 

And they will all get to a point in their lives, usually in their 80’s or 90’s when they are going to finally realize that they don’t need to worry about running out of money.  They will never have to work as a Walmart greeter and they will certainly not have to live off of dog food to survive. 

I hear it in my office all the time.    Whenever I sit down with someone in their 80’s or 90’s, I always ask them the same question.  “What advice do you have for someone who is just starting their retirement?”  Nearly every time I get the same answer: “Get them to spend more money earlier in their retirements!  We waited too long.  Now our health is failing and it is too late for many of our bucket list items.  What were we waiting for!?

But I’m drawing a line in the sand.  This is going to stop.  There is NO WAY I’m going to let this happen to you.  Not on my watch. 

We are going to get you the most life from your money, and you are going to look back on your retired years and say, “I did that right.” 

Be Blessed, 


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