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…
“Why didn’t we own Venezuela last quarter?”
Sh#t My Clients Say
Of course what my client is referring to, in this instance, is the Venezuelan Stock Market outperforming all others in the first quarter of this year.
“That’s actually a great question. Isn’t my job to see where the best opportunities are and ensure my clients have exposure to them? Why didn’t I invest at least a little of their money in Venezuela?? Isn’t it always good to have a small amount of capital invested as a sort of “swing-for-the-fences” bet? Isn’t that the FUN part of what I do for a living?? Adam….stop it. That is NOT your job. Your job is to protect your clients from themselves and manage their expectations. Your job is to assist your clients in quantifying their respective financial objectives and then to help them meet those objectives. Your job is to educate your clients about the market so they can involve themselves in the process of risk management and blah blah blah….. Dammit — I should have had at least a couple percent invested in Venezuela.”
What I want to say:
“What if I was to tell you that you could buy an investment for $140,000 and someday it would be worth $13 million? Now, is that something you might be interested in?”
What I actually say:
“It is impossible to predict at the start of a week, quarter, or year which asset class will perform best (or worst). My job is to actively ensure your portfolio is prepared to handle the most likely chain of events given the current economic environment. Meeting your long-term investment objectives will require that we don’t get caught up in the short-term fluctuations of the market or get greedy, chasing returns. We are going to miss out on opportunities like this once in a while but I think it’s more important that we don’t get caught with our pants down spending time looking for them. Wouldn’t you agree?”