If Retirement Planning Sounds Greek to You, You’re on the Right Track

What if Aristotle were your financial professional? Once you got past replacing your laptop with a stone tablet, a noticeable lack of air conditioning, and trading in your shoes for sandals, perhaps you could visualize the possibility. Now can you imagine what this ancient Greek philosopher would say about such things as Social Security, 401(k) plans and living on a golf course? And what might he say about retirement planning in the age of COVID-19?

Well, consider one of the more famous quotes often attributed — rightly or wrongly — to Aristotle: “It is the mark of an educated mind to be able to entertain a thought without accepting it.” While many interpretations have been attached to this sentiment, thinking outside the box could serve as an accurate modern take on its meaning. For example, no matter what your view is of this pandemic, it has likely affected how creatively you’re thinking about your financial portfolio and plans for retirement. If this is the case, you’re not alone. In recent research by the global marketing agency Metia, 29% of investors surveyed said the pandemic has motivated them to spend more time than usual learning about financial planning, and 38% who work with a financial professional and consider themselves financially literate have changed their distribution strategy.

How do you apply the philosophical tenets of Aristotle to retirement planning? As I see it, an Aristotelian strategy for investors would likely follow his three appeals of persuasion: ethos, pathos and logos, first created circa 360 B.C. On a high level, the ethos would represent your financial professional’s credibility and trustworthiness. The pathos would be your financial professional’s ability to move and motivate you emotionally. And the logos would represent the intellectual and financial reasons why you should follow the path that you and your financial professional have mapped out.

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For this exercise, the three appeals – ethos, pathos and logos – represent the three-legged stool of your retirement plan:

Part 1: Ethos

Ethos is a Greek word meaning “character” that Aristotle would use to describe the guiding beliefs or ideals that characterize a community, nation or ideology. Or, in our scenario, a retirement plan. When you plan for retirement, your plan needs to have credibility. You need to believe in it and trust your financial professional in order for the plan to have a chance to work.

For Aristotle, the purpose of ethos was to “inspire trust” in his audience. So, let’s consider a few key questions regarding the ethos leg of your plan.

• Trust: Do you and your financial professional trust each other?
• Competence: Do you believe in your financial professional’s expertise, skill and ability to guide you? In particular, do you believe your financial professional can help guide you through this disruption?
• Empathy: Do you and your financial professional both believe in your retirement plan?
• Commitment: Are you committed to following through with your retirement plan and making any necessary adjustments to push through this pandemic?
  

Nearly half of investors surveyed by the Alliance for Lifetime Income recently said they are feeling more stress now than they did when the COVID-19 crisis started. Financial stress can lead to emotional mistakes that can dismantle a well-devised retirement plan. That’s why mutual trust between you and your financial professional is more important than ever.

Part 2: Pathos

Pathos is a Greek word meaning “suffering” or “experience” that Aristotle would use to awaken emotion or inspire passion in his audience. What observations come to mind for this part of your retirement plan?

• Persona: Who will you be in retirement?
• Passion: Will you uncover and discover your passion in retirement?
• Purpose: Will you take that passion and follow a path in retirement?
• Path: While COVID-19 has likely changed your direction, will you stay on that path to wherever it leads to and through retirement?

The four p’s of pathos are the essence of your retirement identity and will ultimately enable you to create your retirement story. A plan is more than a number, and a successful portfolio that reflects your life can provide you with the resiliency to handle a life crisis.

Part 3: Logos

Logos is a Greek word meaning “reason” or “logic,” among other things. Aristotle applied the term to refer to “reasoned discourse.” And for our retirement plan, these are the logical and intellectual observations to consider when staying on track.

• Expectation: Are my retirement dreams in line with my retirement portfolio?
• Balance: Is my retirement portfolio balanced for reasonable risk and reward?
• Reason: Do I really understand the potential length and cost of retirement? And have I made the necessary crisis-management adjustments?
• Advice: Am I listening to my financial professional, and is my professional financial professional hearing me?

How do you put the three appeals of ethos, pathos and logos into motion? As Aristotle also is often credited as saying, “We are what we repeatedly do. Excellence, then is not an act, but a habit.” In other words, in order for any retirement plan to work, you must follow it. And that is simple, direct and unchanged in any century — sound advice that any ancient philosopher or contemporary professional would endorse in any market.