| Voices Carry |
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| Written by Elizabeth Jetton |
| Monday, 06 October 2008 21:31 |
 Everyday I read another human interest story about the impact of the sub prime mortgage crisis, the multitudes of foreclosures, spikes in the number of new homeless; stories of extreme belt-tightening in the face of high gas and food prices. I will speculate that most of us have been hit with varying degrees of intensity, from mild awareness that our monthly “lifestyle tab” is up, to making dramatic changes to lifestyle; from going out to eat less, to staying in the home we’ve got rather than moving to the one we want.At the same time the stories and pictures about the impact of the flooding along the Mississippi are astounding. Houses floating down a river that was once a street. Entire towns submerged. In the case of the flooding crisis, there are also stories about neighbors helping neighbors. Teenagers streaming in to fill sandbags from all over. Amish next to tavern owners, building sandbag levees to protect a stranger’s home. Community formed in the face of natural disaster. There is not nearly so much community related to the mortgage disaster. It feels like there is more of a feeling of, “there by the grace of God go I.” There is not much sympathy when hearing that Ed McMahon, Johnny Carson’s sidekick, can’t make the mortgage on his $7million home. We treat it like a contagious disease we hope to avoid. Despite our own personal choices that might not have been the most rational, we tend to want to shame and blame those who find themselves in a difficult spot. “Well, you should have known better.” “That’s what lusting after what your neighbor has will get you.” But it’s hard to resist the mighty flow of desire and what appears to be easy money, just like it’s hard to fight the flow of the mighty Mississippi. No one in the path can escape impact. I’ve read articles that try to identify the “how this happened”, the “who let this happen”, and the role that greed and lack of leadership have played. Much ado about the “then.” And in that vein, I wonder, and I am concerned that the financial planning community did not raise a voice as the tide of manic real estate speculation and tempting mortgages too good to be true, was rising like the waters of the Mississippi. They were coming into our offices and we didn’t connect the dots or ask our colleagues if they were seeing them too. “Them” being clients calling regularly to ask for money to buy another beach lot that they planned to “turn over” in six months or a year like their friend did who, of course, doubled his money “over night”. We didn’t raise a flag as clients came in asking us to endorse the interest-only mortgage that would enable them to buy a house 30-50% higher in price than the ones we said they could afford. Why? We lost sleep over these clients, gave them sound advice, set financial policies to guide them, but we didn’t ask our brethren, “Are you seeing what I’m seeing?” When we talk about wanting to impact the public debate, to gain credibility, to be viewed as a true profession, shouldn’t it be based on our actual contributions to the financial well-being of all citizens? Did we band together during the technology stock bubble to make a public statement that this was lunacy? It’s what we told our clients. Where was our collective voice? Next time, (and there will be a “next time” -- there always is), I hope we will venture out of our own offices and talk to each other. Bare our wonderings, concerns and uncertainties in service to trying to help avoid a crisis that has not yet come. We truly are the early warning system, the canaries. We may have been the only ones seeing some of this from an array of angles. What if we had sounded the alarm? What if we had spoken up for conscious decision making, named it “greed,” manic crowd behavior or noted that it felt like a trend morphing into a bubble. We hold ourselves out as “planners”, not crisis intervention specialists, but that is what we become, when we don’t speak up. We had large numbers of dots in front of us. Connecting them could have been interesting. © 2008 Elizabeth Jetton. Reprinted with permission. Trackback(0)
Comments (3)
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Well said. As I remember the dot com bubble the financial planning community was connecting the dots and warning about the danger of the irrational rise in the prices of technology. We stuck with our prudent process of diversification and our clients avoided much of the fall out from the collapse of those over priced securities.
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Well said. I think we planers missed the boat on this issue because it went under our radar. The majority of planning firms work with affluent clients who do not require sub prime loans. We also tend to invest our clients assets in high quality securities and are not so involved in speculative investments such as derivatives.
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Well said. We did not respond well to this as a group. Financial Planners did a much better job voicing concern during the tech bubble of 1998-1999. This one seemed to fly under our radar. Perhaps our clients were not in the market for sub prime loans or we were not recommending the pooled mortgage products. |
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