Ever get a call from a former client? I left production in 1994 when I entered management. For years I’ve been keeping in touch with several former clients with Christmas cards. One called recently, saying “Do you remember when you bought me (stock) in 1982? I have a problem...” Obviously, I did what we all do. I helped her. Afterwards, she asked if I managed my own money. I said “No, I have a financial advisor who does that.” I could tell she thought that was ridiculous.
Let’s list the reasons why I don’t manage our money myself.
- Earning a living. I need to be doing something else to pay the bills. Years ago, I saw an ad for a money manager. It made the point: “Earning money and managing money are two different skills.”
- I have a good advisor. She or her assistant call occasionally. We meet for a face to face annual review. They see the big picture. When I call, regardless how frantic the market might be, I’m treated as if I’m their most important client. I think all her clients are treated the same way.
- Retirement planning. We all look towards the day when continuing to work is a choice, not a necessity. She (my advisor) focuses on maintaining our current lifestyle in retirement. I’m cheered by the news she has us living to 100 and 107 respectively.
- Emotional detachment. The stock market has been volatile. Could I get any other work done if I spent the day watching the market and worrying about our own holdings?
- Professional money management. We use managed money. Several managers without the emotional attachment that comes with “your own money” are making buy and sell decisions for us. I see the trade confirmations come by e-mail and know they are taking action.
- Asset allocation. I love equities. She bangs the drum about taking money off the table and moving it into fixed income.
- Overweighting. She talks about why we need to lighten up on holdings, even if they have done well for years and years.
- Investments I would never think about. You get comfortable with familiar investments. She makes the case why certain new products would be a good fit.
- They anticipate problems. If we travel on vacation, she gets an itinerary with contact information in case of emergency. She sees the debit cards will work overseas.
- Saving money. She keeps an eye on what we are paying on debt. In addition to saying it must be chipped away and paid down, she recommends ways to carry it at reduced rates of interest.
Here’s a final note to add. My advisor is paid well. We have a 26-year relationship. I don’t ask for discounts. I believe you can’t expect exceptional service for free. I have a problem with people who don’t want to pay for anything, then wonder why they aren’t getting the service they expect.
Related: Why Investors Should Pay for Advice