I had known the old man for more than 10 years before he became my client. He is a bachelor, never married and a World War II veteran who flew on B-17 missions over Europe.
I buy restored lawnmowers from him. He picks up old ones that have been tossed out and rebuilds them. Every year I pay him $25, give him back the one I bought last year and get another one that works as good as new.
Well into his 80's, he stopped operating his truck last year, mostly, he told me, because the insurance was too high. Anyway, he doesn't sell much firewood or haul topsoil these days, so the '59 Dodge dump truck sits in the garage. He might sell it. His car, a 1962 Chevrolet, is left out in the elements.
For the past couple of years, I've been bringing him meals. When my kids visit (I'm divorced), I cook because they like Daddy's cooking. There are usually leftovers, so we bring over a plate.
“What's this?” he always asks, and smiles. Once he asked me not to bring so much food because he was getting fat. His usual diet is blueberries or strawberries and applesauce, he said. He consumes a “couple hundred” quarts of berries a year.
He rarely has visitors. Those who do visit come to buy rebuilt lawnmowers. I went into his house for the first time last year, bearing a plate of roast chicken with gravy, mashed potatoes and peas. I was surprised to see a bed in the kitchen. The pillow had no pillowcase and the sheets really didn't cover the worn and sagging mattress. A kitchen table was the only other notable piece of furniture in the room.
A while back, he asked me if I knew anything about annuities. I told him I did and asked what did he want to know? He said his were losing money. I thought it odd that a man his age owned a variable annuity and the red flag went up. I asked him to gather his documentation and I'd sit down with him.
His holdings belied his lifestyle. His net worth was about $1.6 million, with a few annuities and other assets, mostly bonds and UITs. Most surprising to me was that he named no beneficiary and had no will, omissions that would give any financial advisor the shakes.
I pointed this out to him. He was unmoved. I suggested a long-term care policy — “in case.” He was not interested. He has relatives in another state, he said, but no desire to leave them anything. So, taxes or the nursing home will take the greatest share of his estate. I told him the rest could end up with the state. He remained indifferent. He has no identifiable goals.
This raised a number of questions on my part. Why would someone spend a lifetime acquiring wealth, live like a pauper and then make no provision to protect it or pass it on? Who would put someone his age in variable annuities? And how did he get so much money in the first place?
Apparently, he never spent any. His largest outlay of cash in the past 40 years was for that old dump truck. He worked as a laborer and invested primarily in bonds, including some Puerto Rico issues that paid well.
He has been working with a financial advisor for years. Until I saw in detail the extent of his assets, I thought whoever put him into the variables was at least opportunistic. However, since he doesn't care about estate planning and has substantial additional and somewhat diversified assets, a variable annuity isn't unreasonable.
I do think his advisor should have moved him into one of the variable annuity's fixed-bucket options, which could have saved him a couple hundred thousand dollars during the recent downturn. Moving assets inside a variable annuity without cost or penalty is an attractive feature of those products, and I would have advised him to sit things out at some point. Time is not on his side.
This year, I brought some of his resources over to my practice. I always ask if he made a will yet. Except for the lawnmowers and leftovers, I document everything we talk about.
Sometimes, you just have to accept clients as they are, even as they keep you wondering. I sent him some meat loaf yesterday. He has his own applesauce.
Writer's BIO:
John Puzzo is a branch manager and registered principal with Money Concepts, a financial planning company in Hartford, Conn.
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