The other day, a colleague asked me about my thoughts for a blog he was writing on whether investors were hiring and/or firing advisors, especially during periods like the last three months. The conversation went something like this:
Colleague: “Do you think the current environment causes a lot of investors to switch advisors?
Me: “Yes, and vice versa. I’ll bet there are advisors terminating client relationships.”
Colleague: “Haha, well, maybe that too.”
Me: “You’ll need to define what you mean by the current environment. Are you referring to the current economic environment of slowing growth and inflation or are you referring to the recent and rapid 19% drop off the market’s all time high?”
Colleague: “The market drop.”
Me: “That’s really more of an event than an environment.”
Colleague: “Okay, but you know what I mean.”
Me: “I do, but events tend to surface different emotions which gives me insight into the client’s real expectations. People looking to change advisors because of events like market drops often have unrealistic expectations to begin with.”
Colleague: “Can you explain that?”
Me: “These types of events tend to expose emotions that surface three different types of unhappy people:
- Someone who thinks there is a magic bullet and that advisors should be deft at seeing these situations materialize and get them in and out of the market accordingly.
- Someone who never bought into the investment philosophy of patience and consistency in the first place.
- Someone who has grown unhappy over time with the advisor’s advice or an advisor’s inability to listen to their concerns and make appropriate changes to their long-term plan or strategy.”
Colleague: “So if these emotions are beginning to surface because of an event like a -19% drop, what are you doing about them?”
Me: “Well, the first two emotions are fairly straightforward to address. Advisors should be doing everything possible to educate clients during onboarding and continue to educate them over the course of a relationship. Our job as advisors is to give advice. Inherent in that is proving there is no silver bullet, there is no way to effectively time the market, and there is no substitute for patience, discipline and consistency. If clients don’t ever come to this conclusion, they will eventually fire an advisor or vice versa. The problem is that the net result for this type of situation will be the same.”
Me: “That the investor will become their own worst enemy. They will likely fall for a sales pitch that promises to deliver them exactly what they seek…a unicorn.”
Colleague: “Meaning they’ll never find what they’re looking for?”
Me: “Correct. There is no substitute for patience, consistency and discipline.”
Colleague: “Explain that.”
Me: “The problem is that our brains are not wired for patience, consistency and discipline; our brains are wired for action. People who fire their advisors are not really addressing the problem—they are only taking action…which makes them feel good. It’s much like moving a boat from one marina to another because of the tide…the view changes but the boat still goes up and down no matter what. These kinds of people are not looking for advice; they are looking for products that use all kinds of “voodoo” backtesting and other bullshit to appeal to their perceived needs. They are a salesperson’s dream.”
Colleague: “That kind of comes off a little ‘preachy.’”
Me: “I say the same thing to my trainer when she tells me there is no substitute for tracking what I eat and exercising regularly… If I stay consistent and disciplined, I’ll achieve my goals. She’s always preaching to me and I hate it. I suppose I could quit her and try some fad Keto diet or the Whole30 diet…”
Me: “I could, but you know what? She’d still be right, and I’d be chasing some fad, ending up 10 pounds heavier than I am now and ready to call her back up.”
Me: “Ummmm…because there is no silver bullet for any problem that requires patience, consistency and discipline.”
Colleague: “Still preachy…Okay, how about the third emotion, where advisors get fired because the investor does not like their advice or the advisor is not listening and making adjustments?”
Me: “Now that’s different. That is an issue of communication. If clients are bringing problems, concerns, issues, and changes to the attention of an advisor and the advisor is not listening or is too entrenched in some sort of process to make the adjustments necessary then that warrants a change by the investor.”
Colleague: “Like the beginning of that Guns N’ Roses song, ‘Civil War‘…‘What we’ve got here is a failure to communicate…’”
Me: “Actually that was from Cool Hand Luke. But yes, plans are never set in stone and they need to be adjusted from time to time. Plans are designed to keep people focused on what’s important – growing wealth in a patient, consistent and disciplined way takes time. Like Buffett said, ‘Nobody wants to get rich slow.’ So you have to have a plan and make it work.”
Colleague: “Are you sure that was Cool Hand Luke?”
Colleague: “The movie with Paul Newman as the rebellious prisoner in a chain camp prison in the South?”
Me: “That’s the one!”
Colleague: “Where he eats the 50 eggs! What happens at the end?”
Me: “I think he decides he can’t get with the system and escapes in a truck. Then he gets shot and dies at the end of the movie.”
Colleague: “Preachy…but thanks for your time, I really appreciate it.”
Me: “Yeah, it is…but I’ll never claim to be able to eat 50 eggs.”
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These days, financial services are commodified, cookie cutter and chock-a-block, and financial advisors are often looked at with suspicion, doubt, and distrust. It’s unfortunate that the people doing right by their clients don’t get nearly as much attention as the ones who do not.
The industry has allowed financial planning to become an ill-defined, catch-all term. People who most stand to benefit from really solid advice risk being confused and kept in the dark about what works, what doesn’t, and why good planning is critical—and different from what they “think” they already have.
At Monument, we see ourselves as the furthest thing from standard-issue financial advisors. We trust what works, are wary of gimmicks and trends, while at the same time questioning the way things have “always been done.” We eschew B.S. marketing terms that the financial services industry spews at a disturbing rate in an attempt to differentiate their offerings, when usually it’s just more of the same.
We believe in real service—not lip service. There are plenty of trendy terms being thrown around the financial services industry, that, at first glance, sound pretty good: Comprehensive wealth management. Holistic financial planning.
Anyone can use these terms…so everyone does.
If you ask us, though, that’s a lot of word salad—without any real protein. It’s little more than an effort to make cookie-cutter planning look like customized service. That’s like selling someone a suit off a rack and calling it bespoke.
Don’t be fooled. There is simply no substitute for sitting down with people who know how to listen, and can help you co-create a plan that’s yours and yours alone. We don’t pay lip service to what sounds good. We go with what works for you.
Keep looking forward,
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