Why Financial Advisors Need Relationship Alpha

As the saying goes, ‘hindsight is 20/20.’ How many advisors have had conversations with clients summarizing 2013, only to find them disappointed that they did not participate fully in the strengthening equity markets? These were the same clients that were (perhaps still are) reluctant to take on the additional risk because they were still smarting from the real and psychological damage wrought by the experience of 2008. Their actions and defenses were predicated on the outcome of the most recent harrowing experience; thus, their portfolios were allocated to provide ballast – reinforced with ‘belt and suspenders’ – to keep them engaged in the capital markets. Prior to the end of 2013, the trade-off for a high ‘sleep at night’ factor was lower return expectations. Now, in hindsight, these well-rested clients are experiencing, as the kids today say —FOMO — “fear of missing out!”

Challenging Markets Challenge Your Mettle
It takes a delicate mixture of compassion, knowledge and courage to provide direction to clients during uncertain or confusing markets. All markets are perplexing to some degree. This is the irony of investing . . . we trade actual capital today for the possibility of future returns. As wise and well equipped as any of us all are, we cannot predict the future with any degree of certainty. The legendary money manager, Peter Lynch, once said something to the effect that investing allows us to build a bridge of well-thought out and time-tested assumptions, but we always need to take a ‘leap of faith’ between what is known and what will actually come to be.

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What Do Diets and Investing Have in Common?

As we step into the holiday season, it’s always interesting (or perhaps painful) to recall those New Year’s resolutions – particularly about diet and exercise. I read somewhere that health clubs pick up more than 50% of their new members in January. Business for weight loss programs and products is also robust – the proliferation of Jenny Craig and Weight Watcher commercials will astound you at the turn of the New Year. Sadly, most of those new health club members visit less than five times in a month, and never return. Many who join weight loss programs don’t commit long enough to get those “Jennifer Hudson” results.

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Advanced Studies: Avoiding College ‘Sticker Shock’

At the end of the summer, my sister dropped off her triplets to start their separate academic journeys through the hallowed halls of three different private universities. As those of you who have endured (or at least borne witness to) the college application process understand, it is a very stressful time. In addition to the peer and cultural pressure of applying to the right schools and finding the right fit, there is also the financial reality that the final decision may simply come down to affordability.

My sister, during the process: “Do you know how much this is going to cost us? We are sending three kids to school all at the same time!”

Me: “When did it hit you that the triplets would be going to college at the same time … yesterday? Or did it maybe dawn on you 18 years ago?”

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How to Catch an Investment ‘Wave’? Get in the Water!

At the beginning of the summer, I always start singing (or humming) some Beach Boys song as my own personal soundtrack to this glorious and seemingly carefree season. The song “Catch a Wave” has particular significance – not because I’m a surfer, but because one of my investing mentors once used surfing as analogy for me.

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