Helen, aged 68 and three years retired, holds a 1,400,000 dollar portfolio plus 180,000 dollars in bank deposits, receives 34,000 dollars a year of Social Security, and spends only 38,000 dollars a year. She grew up in a household that lost its home in a business failure, will not tell her adult children what she owns, describes any discretionary spending as wasteful, and cancelled a long promised trip because it felt reckless. Her planner's modelling shows the plan funds 70,000 dollars a year of spending with a very high probability of success. Which response by the planner best addresses the attitude driving Helen's behaviour?
- APresent the modelling output showing a very high probability of success at 70,000 dollars a year, and recommend that she raise her spending to that figure because the arithmetic settles the question
- BRecommend that she move the surplus capital into an irrevocable trust for her children now, on the reasoning that she will not spend it in her lifetime and the transfer removes the decision from her
- CExplore with her where her beliefs about saving and about secrecy around money came from, name the pattern openly with her, and agree one small trial increase in discretionary spending that she can test and review Correct
- DTreat her reluctance to spend as an accurate expression of low risk tolerance, and reallocate the portfolio into short dated bonds and cash so that the holdings match the caution she is displaying
Why A is wrong: The modelling is sound and a candidate may assume good data changes behaviour, but a belief formed in childhood is not dislodged by a probability figure, and a client told her caution is irrational usually defends it harder rather than spending more.
Why B is wrong: Lifetime transfers can be appropriate for a genuinely surplus estate, which makes this attractive, but it assumes a goal Helen has never stated and removes flexibility from a client whose central difficulty is a fear of running short.
Why C is correct: Working back to the origin of the belief and then testing it with a low stakes experiment is the recognised way to loosen a money script, because it gives Helen her own evidence rather than the planner's assertion.
Why D is wrong: Matching a portfolio to a client's expressed caution is normally good practice, so this reads as client centred, but it confuses a belief about spending with tolerance for investment volatility and would cut the real growth she needs over a long retirement.