The Emotional Side of Money Management

“Managing money is not that hard,” says Bob Reby, who joined YPO in 2005. “We add the most value by managing human behavior.”
Since founding Reby Advisors in 1985, Reby – who in addition to being founder is also president and CEO –shepherds his clients through myriad financial highs and lows on the emotional roller coaster ride of stock market crashes and tech bubbles.

No matter how well diversified your portfolio or thoughtfully designed your wealth management strategy, feelings of instability brought on by the fluctuations of the stock market are common. Fear is a normal human reaction to threat, but the correlation between the stock market and money is not always reality based.

“What they report on TV – the reasons why the stock market goes up and down – they’re mostly not accurate,” says Reby. “Managing people’s emotions so they don’t leap off the cliff with the rest of the herd when the stock market drops is very important. If you chart the rise and fall of stocks with companies’ profits, you will see that over time, the numbers in lockstep, but in real time, when the media reports a loss, people get scared and want out. We help mitigate these emotions. This isn’t proprietary information, this isn’t ‘Bob’s theory’ – this is Warren Buffetology 101.”

Recognized as one of America’s top financial advisors, and the no. 1 rated independent financial advisor in Western Connecticut by Barron’s Magazine, Reby Advisors has a reputation for being comprehensive financial planners who customize wealth management strategies to suit individual clients’ needs. Their financial planning tactic measures success beyond the performance of assets and focuses on each client’s individual goals. While some people are interested in leaving a legacy, by leaving money for their loved ones, others are interested in “retiring in style.”

“I always say, ‘It’s not what you earn, it’s what you keep,’” explains Reby. “A lot of discussions we have with our clients are about looking at the risks that could derail their lifestyle and finding ways to minimize those risks.”

Reby’s trademarked Lifestyle Sustainability Scorecard™(LSS™) is the company’s holy grail of risk assessment. A tool used to identify and rate 15 different areas of financial planning, LSS™ allows Reby to calculate and rate how a client is doing with their financial goals and identify the areas to assess for damage control.

“Performance of assets is important but we try to steer people away from that and focus on the things that might derail their lifestyle,” explains Reby. “Most people have modest needs – they want to beat inflation, hit ‘singles,’ not ‘homeruns.’ They might want to grow, but they definitely want to preserve what they’ve spent their life working for.”

Derailment is difficult to prepare for, but by discovering opportunities that increase income capability, protect wealth and reduce taxes, you can set yourself up to weather future storms.

“It’s challenging to motivate a 42-year-old couple who might both be working and who have kids and soccer games after school to start planning for their financial future,” explains Reby. “I usually meet my clients when they have a big transitional event in their lives like they’re selling a business or planning their retirement – when they’re at the, ‘I can’t screw this one up’ phase.”

For a successful financial future, early planning is key.

“When I talk to college kids and my nephews and nieces, I tell them to find out as soon as they can what they’re good at, that they can continually get better at, and that they enjoy doing,” says Reby. “Investing in yourself when you’re young is critical. It’s the time when your biggest asset is your earnings capability. I advise young people to get into the habit of taking 10-15 percent of their income off the top before income taxes or rent or anything else. Also, it is imperative to become comfortable with equities as an investment alternative to get your money working for you as hard as you work for it.”

Whatever your age bracket, financial planning is a balance between being educated about the various avenues for accumulating wealth, having a working knowledge of the vagaries of the stock market and organizing a plan that reflects who you are, with what you want to leave behind.

“Our focus is on clarifying our client’s goals and customizing them to support their personal values and lifestyle,” says Reby. “You can really add value to a family’s life if you do a great job – I take financial planning very seriously.”

(The article is written by Deborah Stoll, YPO)

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