That was the goal Herman came with. But that is not the beginning of the story or case study. It began with Gary. Gary had a small account of about $15,000 which was given to me by another stockbroker back in 1987. I was new in the business in 1986 and my qualification for taking on new clients was whether they could “fog a mirror”. I took anyone.

Soon after taking on Gary’s account, he got married to Nancy. Nancy had her own account and they kept their accounts separate. Nancy saw how well I was doing with Gary’s account so she moved her account to me. A few years passed and Gary and Nancy decided to divorce. They did not want to keep their accounts with the same stockbroker and Nancy insisted she wanted to stay with me. So, Gary moved his account.

Another few years passed and Nancy married Herman in the mid-1990s. That was how Herman entered the picture. He had roughly $200,000 and after discussing with Nancy Herman moved his accounts to me. Herman was working and figured he would add about $100,000 to his account before he retired. He had a defined benefit pension from work that would cover about 80% of his income needs and social security when he retired would bring him up to 100% replacement of his paycheck.

Nancy passed away early in this century. Herman inherited her house, but as he reached retirement he decided to buy a home and move to Nevada. By this time his accounts had grown substantially. He took money from his two accounts to pay for the Nevada house. When we talked it through we concluded he would probably need to tap into his accounts with me to replace 110% to 130% of his employment income. He would draw income from the accounts.

What he really wanted to do was create enough wealth that he could leave each of his three daughters $ 1 million each one. He had been to a planner in 2006 or 2007 who told him that goal was impossible. The financial plan generated by the advisor was well designed with a growth focus and the recommended asset allocation and diversification.

Herman shared the plan the advisor had given him. The plan clearly showed there was little to no chance of ever reaching the goal for his daughters. The other advisor was pushing him to move his accounts to him. He had reviewed Herman’s current holdings and told him the holdings were risky and he could lose a lot of money.

To that I responded, “Herman what would you expect? Would you expect the other advisor to say: Wow! You have done so well with Mike and I cannot come close to that”? No. The other advisor needed to plant doubt about the future. And, of course, we always have to say that past performance is no guarantee of future performance.

I remember it well. His meeting with the financial planner took place some months before the Great Recession. When accounts dropped during 2007 and 2008, I was concerned about Herman along with several other clients. I wondered from time to time if I was wrong and if Herman would never make that goal for his daughters. I was also surprised during that time Herman never once called even though his accounts were down and seemed like they would never get to the goal. Not once did he ever call during the Great Recession or in the following years.

Herman died in 2016. When Herman died his two homes were worth a total of $1.3 million. His two accounts had grown to $1.7 million even after having taken the funds for the Nevada house and some for living expenses.

He met his goal of leaving each daughter $1 million.

Herman lived through the dot-com bust and the Great Recession. He missed the pandemic and the ensuing inflation period.

We are just one month removed from the initial “carry trade” fiasco. And it is probably not over. That is only one of the black swans or black elephants investors will face in the coming years. Those are events that a computer financial plan and layout of asset allocations cannot anticipate. Computers are great at analyzing past data. If history always repeated the plans would be completely reliable. But history does not repeat, history rhymes. Things that have never happened before happen all the time.

Robert Burns wrote the best laid plans of men often go astray. How do you adjust your plan to accommodate the unknown events?