2009 is history, and of course the financial media is writing a lot about the “lost decade” of investing. That may be the case for blue chip stocks of the S&P 500 index, which  generated a ten-year negative annualized return of -1.03 percent.  

For investors who embraced a diversified portfolio beyond domestic blue chip stocks, long advocated at the Coffeehouse (first suggested in 1999), the decade was anything but “lost.” 

Below are the numbers that show the returns over various time periods, with the 10-year annualized number coming in at 5.74%.

Investors who completely ignored the daily ups and downs of the market, completely ignored the empty daily chatter of Wall Street, and instead embraced this simple portfolio and got on with their lives, came out ahead once again. 

Is it time for you to finally embrace the Coffeehouse investment philosophy in your life and in your portfolio? 

Don’t let the next decade be another “lost decade” of investing. 

Remember, when it comes to investing, “time” is the most precious asset class of all. 

 

 

 

 

 

ANNUALIZED

 

 

RETURN

 

 

 

 

1991

23.55%

 

1992

9.57%

 

1993

15.65%

 

1994

-0.58%

 

1995

22.90%

 

1996

14.53%

 

1997

17.95%

 

1998

6.89%

 

1999

8.30%

 

2000

7.25%

 

2001

1.88%

 

2002

-5.56%

 

2003

23.54%

 

2004

13.80%

 

2005

6.24%

 

2006

15.15%

 

2007

2.63%

 

2008

-20.21%

 

2009

20.26%

 

 

 

 

 

 

19 YEARS

 

9.10%

 

 

 

10 YEARS

 

5.74%

 

 

 

5 YEARS

 

3.79%

 

 

 

2 YEARS

 

-2.04%

 

 


I want to wish you a Merry Christmas, and hope that you and your families have a fun and relaxing holiday season, and all the best to you in the New Year.

I am always drawn to folks who take the time to share their gifts, no matter how great or small, with the world around us.   

On Monday, I rushed in to the local post office to mail some last minute Christmas cards.  Much to my surprise and delight, a postman was standing off to the side, playing some Holiday tunes on his Kamaka Ukulele.  It was a wonderful experience to enjoy his incredible talent, while waiting in line and getting ready to celebrate the winter solstice that evening.

 

Mr. Postman, thank you for touching the lives and bringing cheer to all of us – and Merry Christmas to you.  


I have always admired folks who can take a rational look at, and clearly articulate, an opposite viewpoint, while still embracing their own beliefs. 

 

Charles Kirk is the creator of “The Kirk Report” one of the nation’s most popular financial web-sites aimed at providing stock market analysis and individual stock recommendations to individual investors.

 

He has been successful by diligently following the stock market and makes a living through the frequent buying and selling of individual stocks. 

 

Investors who embrace The Coffeehouse Investor approach to building wealth know that our philosophy is very much the opposite – the best way to maximize long-term returns in common stocks is to buy and hold a globally diversified portfolio of low-cost index funds.

 

However, I am well-aware that many investors who embrace the Coffeehouse philosophy with the majority of their portfolios at the same time enjoy the challenge of trying to beat the stock market by purchasing individual common stocks.  In fact in my book I wrote one chapter addressing this issue, titled, “Let’s Have Some Fun.” I encourage those investors who do want to trade stocks to allocate a maximum of 5 to 10 percent of their portfolios to active stock selection. 

 

In the book, I write, “And who knows?  Somewhere among the millions and millions of stock pickers you might be the next Warren Buffett. But I am not sure it is worth risking your entire portfolio to find out you aren’t.”

 

Charles Kirk recognizes that following the stock market and actively buying and selling stocks is not for most investors.  As such, he is also a big proponent of the same investment philosophy embraced by Coffeehouse Investors.  Recently he interviewed me and my thoughts on investing, and graciously allowed me to re-print the interview on my web-site. 

 

A big thank-you Charles, for allowing me to highlight the Coffeehouse message to all your faithful followers . . .
 

Read the rest of this entry »


This past week I fielded a phone call from a 55 year old woman who spent quite a bit of time with me on the phone, expressing her bewilderment at what to do with her investment portfolio. 

 

She is a physician and an artist, and throughout the course of our discussion, it became clear that a lot of her mental energy that could be better spent in her career and her passion for art was being spent on questions like,

 

“I am so frustrated, what in the world am I going to do with my portfolio?”  and,

 

“Can I retire on time?” 

 

Which got me to thinking . . .

 

One of the primary benefits of building a “Coffeehouse” type portfolio is that it puts the pursuit of “performance” in perspective.  There will always be another fund, another stockpicker, another trading strategy, that outperforms the one you currently embrace. 

 

At what point do you say, “enough is enough.”  At what point do you quit chasing performance? 

 

I have highlighted this decision in a unique little game I devised 12 years ago called “Outfox the Box.”  It is a simple exercise that drives this point home.  Although it is possible to choose the $10,000 box, why do participants always stick with the $8,000 box?  Inevitably they respond, “It isn’t worth the risk!” 

 

In five words, they sum up why it makes sense to own a globally diversified portfolio of low cost index funds, instead of pursuing active management in an attempt to beat the market. 

 

In my opinion, when someone chooses the $8,000 box, or in our case, a benchmark average, they maximize their return potential in the stock market. 

 

 

On top of that, I have long felt that another significant benefit of building a “Coffeehouse” type of portfolio of low cost index funds is the peace-of-mind it offers you that you are doing the right thing with your investments, especially in down markets. 

 

I witnessed this firsthand in my own portfolio (and the clients I work with), during the market decline of 2000-2002, when the S&P 500 index dropped over 43% during that stretch. 

 

During that time period, I didn’t change a thing in my portfolio.  Not only did I not change anything in my portfolio, I didn’t even think about changing anything.  During those three years, even during the market’s steep decline, I knew my investments were positioned as good as they could be. 

 

In light of the fact that I work as a financial advisor, and am constantly fielding calls from investors all over the nation, confused and bewildered, wondering what to do next with their portfolios, in my opinion, this “peace of mind” is priceless. 

 

This “peace-of-mind” has been especially gratifying during the past two years, when we all have had to endure one of the more grueling bear markets in the past 70 years.  During this period we have managed to survive two full blown bull and bear markets.  I can hardly imagine trying to manage a portfolio, and the emotions that are attached, during this time period while trying to stay one step ahead of the thousands of different opinions put forth by financial pundits and stock market gurus.

 

It is a Friday morning, and I am finally catching up from my two-week trip to China.  In the next week, I am going to be offering some reflections on that wonderful trip, both from an investing and non-investing standpoint (and maybe a few pictures!).

 

I am also going to share more reflections on the physician and artist who is still stewing over what to do with her portfolio . . .

 

so stay tuned.  


When it comes to investing, one of my favorite quotes is by John F. Kennedy, who once said “The greatest enemy of truth is very often no the lie – deliberate, contrived and deceitful, it is the myth – persistent, persuasive and unrealistic.”

In my opinion, the two greatest myths of investing are,

 1) great companies make great investments (great companies can also result in  horrible investments), and

 2) stockpicking professionals can consitently pick enough good companies and avoid enough bad companies to outperform the stock market average, which is made up of all the good and not so good companies combined.   

Speaking of investing myths, recently I put in a call to a friend of mine, financial advisor and author Jack Calhoun,  who wrote a great little book on the myriad of investment myths investors have to deal with in trying to build portfolios and reach financial goals. (While you are at it, check out is great web site and learn more about investment myths by reading his recently published book, The 12 Investment Myths)    

This is what he had to say . . .

A few years ago I was meeting with a prospective client of our investment firm in my office. He was a businessman, but he had been a fighter pilot several decades earlier, and he was still possessed of the same sense of confidence and bravado that had served him so well in the days when he was flying F-14s. Unfortunately, his ego was not serving him well when it came to his investments.

“You’re paying way too much in fees for your mutual funds,” I told him, which was an understatement. He had his money with a brokerage firm, and all the funds in his portfolio had management fees of between 2.5% and 3%.

 “I don’t care what the fees are as long as the performance is good!” said the fighter pilot. And indeed the performance of all the funds in his portfolio had been good – just not for him. He had been sold those five-star funds by the broker after they had generated all those gaudy returns, and he was convinced it was his turn to jump on the money train.

“Fees are directly correlated to performance,” I told him. “You can’t expect good performance if you’re paying ridiculously high fees.”

“Then what about the Legg Mason Value Trust Fund?” he challenged me. “They’ve beaten the S&P 500 every year for ten years! Why would I worry about fees if I can get performance like that?”

He looked at me as if he had won the debate. And in a way, he had, but not for the reason he thought. It wasn’t that he had stumped me for an explanation – it was that I knew he was a lost cause. I could tell he hadn’t had enough painful experiences yet to believe me when I told him past performance was the easiest sell in the investment business but was, in fact, completely irrelevant to how a fund would perform going forward. (Suffice it to say, after the Legg Mason fund’s 65% drop in 2008, he knows it now.)

Sadly, I have found this man’s mindset to be more the rule than the exception when it comes to individual investors. And it’s not just the singular misconception that past performance is a good way to pick investments – it is, in fact, a variety of wrong ideas that plague investors and cause them to experience all of the downside and very little of the upside of stock investing. Complicit in this are Wall Street and the media, both of which have a vested interest in perpetuating these misconceptions.

After being confronted with these mistaken beliefs – these myths – enough times, I finally had an epiphany of sorts. I wrote down all the wrong ideas that investors had challenged me with over the years, in all their variations and forms. And I realized that, when you boiled it down, there was really a core group of a dozen of these myths that really were the main culprits in locking investors into the never ending cycle of buying high and selling low.

Thus was born “The 12 Investment Myths.”

 

 

The thing about these mistaken ideas that makes them so compelling is that they seem so right. It seems like just good ol’ commonsense that the best and brightest minds in finance should be able to beat the market on a regular basis. Or that “buying good companies” is the best way to invest. Or that “staying on the sidelines until things calm down” is not really market timing, just being sensible in a volatile market.

For the investment advisor, this is where the road diverges. The path of least resistance – the one taken by the transactional side of the investment industry – is to sell these myths to investors. It is easy to do – just run a screen in Morningstar for five-star funds over a five- or ten-year time horizon and, there you have it: Your sales story. “Advisors” who take this path will no doubt watch the money roll in as investors clamor to get in on the five-star fund action. And then those “advisors” will watch that money roll right back out again once those investors realize they’ve been sold a bill of goods that “advisor” can’t deliver.

The much harder path is the one that involves preaching against these myths –  that a small minority of financial advisors in the industry endeavor to do. It isn’t easy, because you have to convince people to put aside the notion that investing is exciting, in favor of an unemotional, zen-like approach to investing that just isn’t as fun as watching Jim Cramer on CNBC’s Mad Money.  You have to promote the fruit-and-vegetables to CNBC’s cotton candy, and you have to do it everyday.

What happens to the cotton candy crowd? They are the ones who likely locked in their losses in March, and then watched the market gain 50% these past five months before they even realized it, while they were earning 0.5% in cash. They are the ones who perpetually buy into all those myths that Wall Street and the media keep telling them to believe.

In short, they are the folks who experience the downside and little of the upside of investing in the stock market.


 

 

“Target-Date” mutual funds are a natural progression in the Coffeehouse world of bringing simple investment ideas to investors across the country. 

 

Along with index mutual funds and exchange traded funds, “Target-Date” mutual funds are one of the more intriguing investing innovations to appear in a long time.  

 

These investments are “all-in-one funds” that consist of a broadly diversified holding of common stocks and bonds. What makes these investments so unique is that the bond allocation automatically increases over time as the investor’s need and ability to take market risk diminishes. 

 

The upside to these funds is that it is incredibly easy to have a diversified portfolio with one simple mutual fund, with an allocation that automatically changes over time. 

 

 

 

The downside is that the fund might have an allocation different than what you expected, or is appropriate for the risk you want to take, as many investors who invested in these funds have found out over the past two years. 

 

To get a better understanding of the issues surrounding Target-Date funds, Mel Lindauer, a founding member of the Vanguard “Diehards” discussion board wrote an excellent column on Morningstar’s web site to shed some light on these controversial mutual funds.   


 

 

There has been a lot written the past six months about what went wrong with our financial markets and what we need to do to correct them. 

 

How did the financial crisis unfold?  How could markets possibly be efficient in the wake extreme volatility of stock and real estate markets? Some articles have even suggested that modern portfolio theory is dead and the “buy and hold” philosophy of investing is obsolete.   

 

 For instance, recently an article appeared in The Wall Street Journal, titled, “Failure of a Fail-Safe Strategy Sends Investors Scrambling.  , criticizing this thing called “modern portfolio theory” which states that if you combine several asset classes that move dissimilar to each other in the short run, portfolio volatility can be reduced without a decrease in portfolio return. 

 

Over the years, the financial industry started using more and more big words like covariance, correlation, and standard deviations, offering up complex equations in an effort to hype the notion that investors could get great returns with minimal amount of risk.   Then they started adding important sounding investments like hedge funds, alternative investments, gold, and commodity futures to portfolios that had traditionally consisted of two primary asset classes; stocks and bonds. The Wall Street crowd was intent on making this investing thing as complicated as ever in an effort to assuage investors’ emotions of fear and greed.

 

As Warren Buffett famously said, “Beware of Geeks bearing formulas.” 

 

 

 

While Wall Street stands knee-deep in complex equations of commodities and covariance, the average investor barely knows the difference between a stock and bond fund, has no concept what asset allocation means, and has absolutely no idea how to create a simple financial plan.   

 

But before I start in on Geeks, correlations, commodities, I want to talk a little bit about the Coffeehouse Wars that have erupted in my neighborhood. 

 

 

 

I live in a little town called Kirkland, nestled on the east side of Lake Washington, across from Seattle.  You might recognize the name of my town as the same name that Costco labels all its in-house products, but that is beside the point.  Downtown Kirkland is a sleepy little place, caught up in a power struggle between developers who want to bring some life to downtown Kirkland and condo dwellers who don’t want their views of Lake Washington obstructed.  So far the condo dwellers are winning, which means that the downtown drag continues to be a drag, full of dowdy, dreary little businesses that can’t seem to make it past a three month lease at any location. 

 

 

Except for Coffeehouses. We have a Coffeehouse War going on in downtown Kirkland, and it is getting nasty. A couple of years ago Starbucks muscled its way into a local spot to set up shop.  Barely one block away, in between Starbucks and Tully’s Coffee, a popular little espresso joint, Kahili Coffee, put down roots. One year ago, just down the street and around the corner, Seattle’s hip Café Ladro opened its doors, and I just found out last week that another big-time Seattle Coffeehouse hangout, Zoka, is moving in on the corner  between Café Ladro all those other Coffeehouses.

 

 

 

Right about now you are probably wondering where I am going with this blog. 

 

After reading countless finance articles over the past six months that try to explain covariance, correlation, standard deviation and modern portfolio theory to investors who are more in tune with a single or double latte, it has reinforced my conviction that Wall Street just doesn’t get it. The financial industry is incredibly out of touch with the investment comprehension and concerns of the average investor. 

 

It is not that the folks who stop in at these Coffeehouses are dumb.  On the contrary, I suspect most are on their way to work in the morning, needing a jolt of java before settling in for a day’s work at successful careers. 

 

They might not understand covariance and correlations, but as Wall Street has proven over the past eighteen months, the financial industry doesn’t either.  The Coffeehouse crowd, like millions of other investors out there, is probably saving a little money in a 401k plan or IRA that has dropped in value from one year ago.  All they want to know is what, if anything, they need to be doing today to get back on track of achieving their financial goals of tomorrow. 

 

 

So, in the next few weeks I am going to do a little investigative reporting.  I am going to go down to some of those Kirkland Coffeehouses and interview folks to get a better handle on what their questions and concerns are. I want to see if they are listening to the chatter of Wall Street, or tuning it out.  I want to see how confident they are, not only of building a successful portfolio today, but reaching their financial goals tomorrow.  I am putting together a list of questions, and will report back.  Right now, I need your input.  Post a comment and let me know what questions I should be asking to see if the reality of the working world matches the windbags on Wall Street. 

 


 

 

A month ago I decided to climb Mt. Rainier with a couple of friends. 

 

Because the mountain is almost in my back yard, I try to hike or climb it a couple of times a year.  This time we planned on leaving early Sunday morning to begin our climb, hoping to summit on Tuesday and return Wednesday evening. 

 

My Sunday morning alarm rang at 4:30 a.m.  After one of the longest stretches of sunny, early summer weather that I can remember in the 26 years of living in Seattle, I woke up to thunderstorms and pouring rain as I loaded my car with climbing gear for the two hour drive to Paradise.

 

  

Driving south on Interstate-5 in the driving rain, I muttered, “Boy, have I got a long, miserable, wet climb ahead of me.”  But I reminded myself not to get too far ahead of things, and just enjoy the scenery and drive down to Mt. Rainier. 

 

 

 

 

 

By the time I got to Paradise, the staging area for the climb, the rain had almost stopped, and after registering at the ranger station, I slung my 50-pound pack on my back and started off on the climb to Anvil Rock, just below Camp Muir, where I connected with my two friends and spent the first night. 

 

For some folks, hiking up a steep snow hill for six hours with a heavy back-pack and 4500 foot elevation gain wouldn’t seem like much fun.  For me, it is the best form of meditation I could experience.  I love it.  It had been a while since I had been climbing, and my thoughts, as they usually do, turned to the Coffeehouse Investor, and how I could be more effective in getting the message out to investors across the country. 

 

 

 

 

 

I remember beginning the Coffeehouse journey back in 1993, when I wrote a few sample chapters and sent them off to several publishers across the nation, hoping to interest them in a book deal. 

 

Over the following sixteen years my goal has always been straightforward:  Introduce the book’s message to every investor in the country who is responsible for building a portfolio for their retirement years. 

 

I have approached this journey with the same way I approach mountain climbing; one step at a time, never getting too disappointed or elated with the inevitable setbacks and accomplishments of the journey. 

 

Every step of the way, I have always felt that The Coffeehouse Investor could play a critical role in offering intelligent, creative education to the millions of investors who have taken on the responsibility of saving and investing for their retirement years.  And if I could explain it in simple terms, enough people would take it upon themselves not only to embrace it, but to share this same philosophy with others in their lives who could benefit just the same. 

 

 

At the same time, I have always been extremely vocal of the many shortcomings and pitfalls of self-directed, workplace sponsored 401k plans.  For instance, way back on December 19, 1999, in the midst of a red-hot stock market and a time when everyone was in love with their retirement accounts that seemed to double each month, in my weekly column I predicted that someday 401k plans would become an investing debacle, the likes of which this country has never seen.  Fees are too high, investment choices are abysmal, investor education is nearly worthless, and too many employees were loading up on too much company stock. 

 

There are a couple of things that happened last week that made this journey noteworthy for me. 

 

First, we didn’t make it to the top of Mt. Rainier.  We got as high as 11,500 feet, and with my right ankle killing me and one of my climbing partners feeling the affects of altitude, we decided to stay put and have a two-day party instead of heading for the summit.   

 

 

 

 

When I got home on Wednesday night, I had received a few e mails from friends and clients across the country, alerting me to a prominent book review of The New Coffeehouse Investor that appeared in Sunday’s New York Times.  For the past ten years, I had been working on getting a review in this national daily, not because I wanted the attention, but because I am obsessed with getting the book’s message out.  The author of the article couldn’t have said it better; it is time to get back to the fundamentals of investing.   

 

Then, one week later, an article appeared in The Wall Street Journal, titled, “More Index Funds sought for 401(k)s”. The WSJ columnist discusses the overwhelming benefits of including a diversified lineup of low-cost index funds within a 401(k) plan.  Despite that, nearly 90% of 401(k) money is invested in actively managed funds. 

 

 

 

Ever so slowly people are getting the message; low cost index funds are the intelligent way to invest in common stocks.  A side benefit to this strategy is that it allows you to focus your entire attention on investing principles that matter most of all;  your long term financial plan and asset allocation.

 

When I started out 16 years ago, my goal was to introduce this message to every investor in the country who is responsible for saving for their retirement years.  Last week was just another step in that journey. 

 


 

 

I don’t know if it is just me, or if the activities within our day to day experiences are becoming more complex.

 

For example, we recently installed a new Cient Relationship Management (CRM) tool at work on our computers, and I have to learn a whole new system for recording my communications with clients.  The program overwhelms me with its complexity.  I am slowly learning all its functions, but it is a slow process. 

 

Oh, how I long for the simple CRM I used 10 years ago.  It was easy, provided all the functions I wanted, and was very intuitive in the way one navigated around the program to utilize all its functions.

 

But as our company expanded, while at the same time the CRM of 10 years ago updated its software, it became unwieldy, which is why we eventually switched to the complicated new CRM software we are using today. 

 

Or how about trying to sort through a medical or dental insurance bill?  Last week I received a summary from my dental carrier about the services it would and wouldn’t cover resulting from a recent checkup. The summary was so darned complicated that I ended up calling the insurance provider for an explanation.  Even that process was complicated, as I was led through a maize of automated push-button options in order to (finally!) connect with someone who could answer my questions.

 

Are our lives becoming easier as a result of technology, or more complex? 
..

 

 

 

 

 

I was browsing through an old book of mine by John Main on meditation, which, according to the author, is all about simplicity. A few passages from his book caught my attention in my yearning for a more simple way of doing things amid our complex world.

 

“The process of meditation is absolute simplicity.  In general, we are obsessed with the idea of techniques, methods, methodologies, and so on. . .”

 

“As a goal simplicity is something very unfamiliar to us.  Most of us are carefully trained to see that only complexity is really worthy of respect.” 

 

“In the world we live in we are so used to placing our hope and our faith in complexity.  But I think all of us know, at a deeper level of our being, that real peace is to be found in profound simplicity.” 

 

Profound simplicity.  Maybe that is one of the reasons why so many Wall Street types despise the simple Coffeehouse Investor approach to building portfolios.  Many people in the financial industry spend incredible amounts of time, money, and mental energy to devise complex research and trading methods in order to beat the market.  They simply cannot accept the fact that a simple portfolio of 3 to 7 index funds will likely outperform their actively managed accounts.

 

Ironically, an article by Craig Karmin in the Wall Street Journal earlier this week revealed that sophisticated investing strategies of large endowment funds aren’t all they are cracked up to be.  To quote,

The largest college endowments, long the envy of their smaller rivals for their sophisticated and profitable investment strategies, were left behind over the past year by the performance of smaller schools with far simpler approaches.

But forget about Wall Street for a moment.  How do you, an investor who is managing your own portfolio to sustain you throughout your retirement years, look at the issue of complexity versus simplicity in building a portfolio?  I have met with enough people in my lifetime to know that many can’t handle the wisdom of simplicity in portfolios. For some, it is an ego thing. Others are brainwashed by Wall Street.  But whatever the reason, too many investors are too easily impressed with complex formulas that include beta and alpha and standard deviation and co-variance that include sophisticated looking charts and graphs than they are with my simple game of “Outfox the Box.”   

 

For investors who embrace the profound simplicity of the Coffeehouse investing philosophy, the benefits are twofold.  First, you maximize your return potential in each asset class.  Secondly, and more important, you bring an abundance of simplicity into one component of your life where the experts are telling you that complexity is the answer.    

 

I finish off my book with the following. . .  “When we unclutter one part of our life, we enrich another part, and that is what this investment journey is all about.  When we simplify investing, we take another step toward discovering our contagious spirit and our unique energy in such a way that we impact our world, making this a better place for everyone.” 

 

 


Last week I sat down with a gentleman, an old friend of mine, who wanted some advice.

 

First, a brief history . . .

 

Many years ago I had offered him some suggestions on how to allocate his Vanguard funds within his 401k plan.  He ended up owning a Coffeehouse type diversified portfolio of low-cost index funds. 

 

During our recent meeting he informed me he is switching jobs and thinking of rolling his 401k into an IRA.  He had met with a financial advisor who wanted his business and had presented to him a proposal similar to his current allocation.  However, this financial advisor didn’t recommend low cost index funds, but a line-up of 5 to 7 actively managed funds, all ranked 4 or 5 stars by Morningstar’s rating service. 

 

So I offered my friend some advice:  Stick with the low cost index funds and get on with your life.  After our meeting, I got to thinking . . .

 

  • Why aren’t there more financial advisors out there who embrace the simple Coffeehouse Investor philosophy when constructing diversified portfolios for their clients?  Why are they all so obsessed with “beating the market?”

     

  • When a financial advisor/stockbroker recommends actively managed 5-star mutual funds, they are setting themselves up for a fall, because the client is then inclined to judge the advisor on his or her ability to pick the top performing funds.  What does the advisor do 3 years from now when a 5 star fund turns out to be a dog? Switching to another 5-star fund is what most advisors do, even though this strategy kills long term performance. 

 

  • Unfortunately, most advisors think that they bring value to a client by picking top-performing stocks and mutual funds.  That is a big mistake, in fact it is ridiculous. The real value an advisor brings to a client is to help clients clarify financial goals, and then implement a plan, build a portfolio, and work with a client to achieve those goals over time through life changes and market changes. 

 

  • When a client and/or advisor start focusing on top performing funds, they focus their attention on something that is largely irrelevant, if not counterproductive to building wealth; one’s ability to beat the market.  Instead, both client and advisor should be attending to financial planning issues that matter most of all, like building a tax efficient portfolio, like rebalancing and risk-monitoring, and discovering whether or not one’s saving and spending are on track to reach short and long term goals. 

 

Sadly, I don’t think we are going to see much change in the dynamics of a client/advisor relationship anytime soon, which is too bad, because more folks than ever before could benefit from some common sense financial guidance. 

 

Have you had any experiences like the one mentioned above when seeking out financial advice?  If so, post a comment, and let the readers know how you stand on this topic.