How to Help Your Parents Through the Crisis, Part 4

EDITOR’S NOTE: With their retirement savings crushed by the 2008 market crash, millions of older adults are turning to their children for help. SmartMoney Senior Editor Beverly Goodman is one of those children, and she recently embarked on this special report for SmartMoney.com and the February issue of SmartMoney magazine. Here’s her story of providing financial advice to her mother – a logistical and emotional minefield that’s challenging even for a veteran financial journalist.

PREVIOUSLY:
Part 1: Goodman and her mother confronted the news.
Part 2: Unhappy with a financial planner. 
Part 3: Dealing with information overload.
Today: Finally, finding some reassurance: How we did it.

See all of these stories in Special Report: Parents in Crisis

Since the beginning of the crash, my mother has lost the equivalent of two-and-a-half years of her take-home pay—a calculation, courtesy of my editor, that I decide against sharing with her. We’ve spent the last few weeks looking for a planner who could help her get back on track. But she’s grown increasingly frustrated with this endeavor, spending endless hours on “homework”—sifting through financial statements, preparing a budget, planning for the future—and she doesn’t feel reassured at all. More than once she’s murmured, “I’m so glad we took that trip to Alaska this summer,” clearly worried it might be her last vacation for a while.

Our last meeting is with a different type of financial planner: an independent, fee-only one who, instead of taking a percentage of her assets, will charge $485 an hour to help her. That figure strikes us as startlingly high, but would ultimately work out to about the same as my mother currently pays for financial advice from Ameriprise. The planner’s name is Gary Schatsky, and he comes highly recommended by journalism friends and professionals in the business. Very quickly, we learn why: We feel at home when we arrive at his office—perhaps because it is his home. As we step off the elevator in an Upper West Side apartment building, two friendly young staffers greet us at the door and offer us something to drink. There’s children’s artwork everywhere, and you can see beyond his office to his living room. “Vida!” Gary exclaims with what seems like genuine pleasure as soon as he finishes a phone call.

Many financial planners make money by taking a cut of the management fee on the funds they recommend. But the fee-only crowd doesn’t have this pressure, and you can feel the difference immediately with Gary. In practice for 27 years, the 49-year-old also holds a law degree, but he skips any formalized “get to know your client” worksheets and uses his own goofy charm to elicit some personal information: our family history, when my mom got interested in quilting, what she thinks of my job. We spend three and a half hours kibitzing and delving into every detail of my mother’s financial life—her car payments, her disability insurance, even her fantasies about what she would do if she were to be handed $1 million. My mother, not quite used to the idea of having more money than needed, requires Gary’s friendly prodding to finally come up with a big splurge—sheetrock the walls in her hallway.

“I think we can get you to that goal,” Gary responds drily. He doesn’t offer any specific investment advice right away. But he does encourage her to pay off all her debt immediately—an idea the other advisers were more lukewarm about, having said she could take her time. “You’re paying 6 percent on your car loan, which isn’t bad,” Gary says. “But paying it off gives you an immediate 6 percent return—which you’re not going to get anywhere else in the market now.” He wants to move her into no more than eight to 10 funds—she now has 16, including those in her 401(k)—all of which will be low-cost funds that don’t carry a sales charge. Most important, he wants her to be involved, to find the process (almost) as much fun as he does, and for her to feel free to call him (no charge).

My mom, not prone to overstatement, says she feels better. I offer to take her shopping, but after wandering around Macy’s for an hour, she’s clearly uninterested and ready to head home. The next day it’s another call. “I’ve already found the information Gary asked for,” she says proudly. “I’m really on my way.” With one eye on the television in my office, I simply say, “That’s great, Mom.” I decide against mentioning the Dow just fell another 400 points.

NEXT: Key tips from financial planner Gary Schatsky.

Our special report continues all this week as Goodman recounts the process of getting her mother back on track. Following that, she will chronicle her ongoing experiences in an online diary. ALSO READ: Parents in Crisis: Finding the Right Adviser.