How Do You Make Him Shut Up?

I get asked “money” questions all the time. The most common query by far is: “I have some money in an old 401(k).  Do you think you could do anything with it?  It’s just sitting there and I don’t know what to do with it.”

I hate that question.  I have nothing against the person posing it, of course, but it presumes so many false things about what I do OR what I can do for them.  One wrong-headed notion implicit in that question is the idea that I have some secret winning formula of managing investments.  If I have learned anything after studying and working in the financial world for 18 years, it is this: No one knows what the market is going to do and the best advisors are the ones that can limit losses and ride winners while never getting overly sentimental of either outcome or any particular investment.  For a great explanation of this concept read any of the Market Wizards books.

Yes, I use a model that has a long-term record of success and yes, I have added my own technical indicators to determine entry and exit points for my clients’ investments, but I am no better than anyone else in the investment-management world.  What this means is that the market will take a bite out of my clients’ accounts just as readily as it will any other person’s account.  Know this: No one controls the stock market nor its outcome AND neither can they reliably predict the future.  If they tell you otherwise, run away.

So, you may be asking, what the heck do I need you for?  And if you were going to ask me to ONLY manage your market assets, my answer might very well be: You don’t.  Again, I do believe I have a good system of managing money, but I would be lying to you if I promised superior results to any other strategy…including money “just sitting there.” Sad, but true.

But that is not the ONLY service a good financial advisor can provide.  In fact, a good financial advisor would insist upon addressing a whole host of issues above and beyond your investment accounts like:

• Budgeting
• Savings Programs
• Debt Management
• Emergency Savings and Provisions
• Proper Insurance Coverage and Self-Insurance
• Intrinsic Worth Items
• Alternative Earnings Methods and Passive Income Generators
• Long-range Planning and
• Tax Reduction/Tax Efficiency Strategies

I like to add discussions about the “Cost of Freedom,” “Morally Responsible Investing,” and “Charitable Giving.”

Oddly, this is where the discussion sometimes turns uncomfortable.  As strange as it may seem, many people do not want to take the hard road of genuine financial planning and would prefer to live in the dream world of “invest early and often, buy and hold, and in 30 years everything turns up roses.”  I just happen to believe that such a plan is going to blow up in their faces and, if it were that easy, I certainly would never charge a client to “manage” that program.

Ultimately, I do not expect people to stop asking me what they can do with their investments.  In fact, I welcome the question and the discussion.  But, please know that my answer to those questions is going to be much more challenging and fundamental.  Then, as I delve into the real issues behind sound financial planning, my real hope is that the person does not regret even asking the question.