Tweet When I walked into Foundation, The Rolling Stones’ 1971 album “Sticky Fingers” was playing in the background. Peter and Alex Cohen, brothers and owners of the shop, lounged on chairs as they chatted with two customers who were flipping through their newest shipment. “We started to sell records on Instagram to fund the other stuff […]
Aren’t dogs fun? You can teach them to do amazing stuff: roll over, fetch a paper and (with coaxing) bite your obnoxious brother-in-law. When I was young, house-training a dog involved a newspaper and a stern voice. Today, training a financial advisor is much the same. You heard me. You’re “advisor trainers.”
Although many of us are neither as smart nor as attractive as your labradoodle, we are trainable, and my clients have taught me to react to certain situations in certain ways. Often, this is great: “Scott, we’re happy when the market’s up and sad when it’s down.” (Even a dachshund could figure that out — no offense to our short-legged friends.) Sometimes, however, what you teach us can work against you.
Recently, a client and I parted ways after about ten years. The decision was, for the most part, mutual. The reason for our breakup? He’d trained me to be a bad advisor, and I’d let it happen. In the beginning, he’d made it clear he didn’t want to take risk and would be content with returns in low, single digits — as long as his portfolio was safe and secure. He’d give up hitting home runs in return for getting home safely.
It seemed like a money manager’s dream scenario. But, like any prudent money guy, I suggested he’d be wise to add some of his hard-earned dough to stocks as a fighting chance against inflation. He reluctantly agreed, so we placed most of his money in boring, fixed-income stuff and a nominal amount in stocks.
This is where it gets interesting. (I swear.)
My client liked to travel — a lot. The problem was, every time he left town, he called and berated me into pulling his stock positions out and moving them to cash. For the next year or two, each time I argued less and less, thinking he just wasn’t cut out for the risk, and I shouldn’t fight city hall. Over time, I moved him more and more away from stock-based investments toward those with low volatility — and limited upsides.
My client had taken the newspaper to my nose one too many times, and I’d capitulated.
Cut to 2017. My client started getting agitated again. He was beside himself that he wasn’t keeping up with (drum roll, please) the stock indexes. What was I thinking, he asked, having him in mostly conservative, bond-based investments?
It didn’t matter to him that he’d taught me he hated volatility. I’d allowed that education, against my better judgment, to influence how I invested his money. In short, I’d let the tail wag the dog, and we’d both paid for it. I’m not sure who was more at fault in this cautionary “tail.”
If you second-guess and beat your trusted partners with the newspaper, expect them to wince when they shouldn’t. This is true of any professional in the advice business, whether they be doctor, lawyer or financial advisor. Like any dog, we are trainable. Just be careful what you’re teaching us.
“Outside a dog, a book is man’s best friend. Inside a dog, it’s too dark to read.” — Groucho Marx
Scott Brown, Financial Advisor
Keiron Partners, 720 Rugby Street, Suite 200, Orlando, FL 32804
407-648-1881, CollegePark@RaymondJames.com, KeironPartners.com
Securities offered through Raymond James Financial Services Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors Inc.
Keiron Partners is not a registered broker/dealer and is independent of Raymond James Financial Services. Any opinions are those of Scott Brown and not necessarily those of RJFS or Raymond James.