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“I hear what you’re saying, and you’re probably right, but…”

Money is personal. Your relationship with your advisor is supposed to be personal. And if ultimately that personal relationship isn’t built on truth & trust — well, then what kind of relationship is that? But sometimes, as you may see in some of these posts, the truth can hit home & hard.

You may be one of these clients or advisors. It’s supposed to be funny not because I’m really making fun of you. I’m making fun of the perceptions we’ve all been taught by the incumbent Wall Street firms. So, without further ado…

Sh#t My Clients Say

“I hear what you’re saying, and you’re probably right, but…. “

What I’m thinking:

What if they’re right (about me maybe not being right)?? I mean, I could be wrong, right? Wait- grow a pair, this is your job. They pay YOU to make these decisions for THEM. You can’t hem-and-haw. You’ll never get it exactly right, there will be an element of ‘wrong’ in every trade you ever make. That’s the risk, that’s your JOB. Do it. DO IT!!

What I want to say:

Ok, first let’s review — You hired me to manage your money for one or more of the following reasons:

  1. You don’t know how to do it yourself.
  2. You don’t want to do it yourself; you prefer to have a professional (or me) make these decisions & take some of the onus off of you.
  3. You want someone to blame when things are choppy.
1. You don’t know how to do-it-yourself.

This would be like going to a strip club & suggesting that you are the one to disrobe and insisting you pay the young woman to watch you do so. (I have done this, by the way) [Editor’s Note: That’s a true story]

2. You don’t want to do it yourself.

This is sort of like when my girlfriend asks me what she should order at a restaurant. She might even narrow the choice down to two options for me, making my job that much easier. I choose one of the two and, invariably, her response is “Really? Are you sure you don’t want [the other choice]??”

3. You want someone to blame when things are choppy.

Did you hear the story about the girl who graduated from Monroe College a few years back and wasn’t able to find a job? She felt justified in suing her alma mater for the entirety of her tuition costs, $72,000. I wonder if, conversely, she would have made a large donation if she had graduated during an economic boom and secured a large starting salary.

What I actually say:

“I really want you to consider this change. Take a day or two to think about it. If you insist we leave things as they are, ultimately it is your money and your decision. You’re the CEO, I’m just trying to give you the best advice I can as your professional. Remember, I only earn more when your account value goes up — I don’t have a hidden agenda — we are in this together (unlike your retail broker).

I’ll give you a call tomorrow to review again, how does that sound?”

2 thoughts on ““I hear what you’re saying, and you’re probably right, but…”

  1. Dean Witter

    Great post. As an advisor I have been wrestling with this idea that my firm has made me out to be a portfolio manager and not an advisor. I shouldn’t be talking about performance numbers versus benchmarks. I appreciate what you said about being on the same page without a hidden agenda.

    Bottom line most clients stay, some leave. My role has changed. I don’t view myself as a portfolio manager. I am truly a coach whose job it is to keep you from blowing up.

  2. iheartWallSt

    I disagree, you are a portfolio manager. That’s part of it. But if you’re indexing you need to be talking about benchmarks in the light in which they were meant — as a point to gather your bearings, like the shore when a boat is at sea. Being further or closer has no meaning if you don’t have a destination. Helping a client to know what to expect is the most value an advisor can add to the relationship. So, that means getting honest & real about risk and return projections, with a craftsman’s knowledge. 

    What most of the online wealth manager offerings are missing is, technology isn’t creative alone. It takes a human mind to do that. Technology is the “bicycle for the mind” as Steve Jobs liked to say & technology enhances the experience of the advisor… and therefore being advised. That’s going to be its limitation for a while longer —  but by then Siri will be replacing everyone. 🙂

    Today at work, hypothetically a client needed $100k from an account that wasn’t liquid. I had a decision to make: high beta, dividend, international, bonds, gains/losses, etc. 

    A computer can run all of those decisions faster than me, do simple logic, and even algorithmically weighted decisions, but making the right one for the person– that’s personal. That’s being their portfolio manager. And maybe you already are.
    Here’s the thing– being a benchmark without any sort of thought about what the cost/benefit of “being that benchmark” is… that’s where you add value.  That’s what separates the advisers from the sales people full of talking points — knowledge. Indexing helps reframe the conversation, because ultimately you are “the market” with everything you’re investing. The conversation isn’t about “am I beating the market?” then, –You’ve taken that conversation away by indexing, instead it’s about what is the portfolio return doing for the client & their plans. It’s a much more civilized discussion too. It’s involves simpler decisions in some ways. In the case of the $100k, I know “income” is the single most important thing right now — we kept the dividend stocks & sold international. I actually think international will do better short-term, but Income is the single most important driver for this person. (And eventually dividend stocks will probably catch up).Of course, as with human nature your client will someday ask, “Why didn’t we own Venezuela last quarter?” Maybe that should be Adam’s next post. 

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