It's essential to deliver the bad news with hope and actions that can be taken to fix the problem, he added, recalling a recent situation. Colarossi was beginning the retirement income distribution process for a client with $5.5 million in assets, of which only $2 million were investible.
"She was living a very high lifestyle, withdrawing 10 percent per year, and I had to say to her, 'It won't work,'" he said. "She was stunned, and asked, 'What do you mean?'"
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The first thing Colarossi did was reassure his client that she'd been very successful and had accumulated a wonderful portfolio but did not have the income she needed.
"She hadn't been looking at the withdrawal percentage, just the dollar amount," he said. "People do simple arithmetic, [and] she didn't understand that the equilibrium rate—what her investible assets needed to earn—was 14 percent."
Colarossi explained, "She was taken aback, questioning if I was right. But I quantified everything, and eventually she said, 'I think you have a point.'"