Welcome to another edition of Financial Fitness Friday’s my blog where I share a few words of financial wisdom to help put YOU back in the driver’s seat of YOUR financial future.
Frank Maselli
I read a fantastic book over the weekend by an advisor coach named Frank Maselli. He made an observation that really struck a chord with me, and I want to share it with you:
“We do manage money… but what we really manage is clients!”
He points out that over time, all investments have an expected return, and the numbers have been fairly consistent throughout many economic cycles.
Yet consumers, left to their own devices, continually and dramatically UNDER-perform everything!
Consider one of the greatest bull markets in history: 1982 – 2000 (The many reasons for this outstanding period of growth could be a topic for its own blog).
The S & P 500 Index averaged 12% per year, yet the average rate of return for the “no advice” consumer, who was “too smart” for professional advice and did it on their own?
Less than 3%!!
The main reason is emotions.
They bought what was super-hot just before it cooled off.
They sold what was out of favor just before the company turned it around and shot the lights out.
You may have seen charts and graphs showing the inflows of retail investor money into different investments and funds, and it follows a common theme, a lock-step pattern if you will… the only problem is that the money flowed one year later than performance!
Nick Murray
I do not know for sure that it was author Nick Murray who first said this, but I will give him credit here:
“It’s not the performance of the investments that matter… it’s the behavior of the investor!”
Managing client behavior is a big reason as to why we are here, and why the whole field of behavioral investing has exploded in recent years.
That is why having a good consultant that you trust is SO important.
A good consultant can help keep people from making bad decisions, based on excessive greed – or excessive fear.
We can help to mitigate the natural human emotions that can undermine an otherwise sound financial plan.
We protect them from get-rich-quick schemes and the next hot idea that always seems to blow up.
We instill a professional process, guidance, long term planning, and discipline into an otherwise chaotic system, “bombarded by media-sponsored hype and confusion” as Maselli says.
So, our role is a heck of a lot more important than picking the right investments.
Our most important mission is putting together a plan, coaching people to improve and progress over time, and sometimes – 
“to keep them from sinking their own ship in a stormy sea of emotion and irrationality” as Maselli says.
And what is more important than financial knowledge, or sophistication of strategies, or the financial tools at our disposal – is the skill and ability to bond with people, to form a relationship close enough that we can positively influence behavior.
This takes understanding and trust, and both of those take time.
For those clients of mine reading this, I am so thankful that you chose to work with me.
Thank you so much for placing your trust in me. You KNOW I will not let you down.
For prospective clients who may be reading – I am thrilled if you choose to work with me.
If not, that is okay – I would much rather have you work even with one of my competitors than go it alone because you will likely end up much further ahead than doing it yourself.
I would like to wrap up by saying that the value that a financial consultant can bring to someone’s life can help give them SUCH peace of mind.
I have even heard it said that a financial consultant can be the MOST IMPORTANT person in someone’s life – outside of their family and their pastor.
That’s what I strive to do for each and every one of my clients – to take their financial concerns off their plate, so they can completely enjoy all of the things and all of the people that are truly important in life.
That is why I love this business and have such a passion for it.
Thank you for taking the time to read this blog! Please feel free to share your thoughts or feedback.
I hope everyone has a great wrap up to their week, and a fantastic weekend!
P.S. If you haven’t checked it out yet, please stop by my mini online seminar How Retirees and Pre-Retirees Can Potentially Avoid Going Broke While Keeping Their Nest-Egg Secure! Tons of great information and bonus is it is 100% COMPLIMENTARY!
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