We are in the process of “refreshing” our firm website (the new site should be done in a few weeks, which has led me to look at dozens of other advisors’ sites. For the main, I can attest that most “wealth management” firms are focused on the wrong things. Perhaps 80% of the images and words on these websites are about investments and more particularly, how their approach can help you “beat the market”.
A number of biases lead firms to portray investments as the key, when in reality more comprehensive financial life planning is much more important. Of course chief among these biases is that most” advisors “(not us) are compensated in whole or part from investment sales.
Another bias is what we might call the “activity bias”. That is, many advisors and their clients think that they can beat the market by constantly moving around, asset class to asset class and into and out of the market. There is substantial evidence that suggests this is false.
Multiple studies have demonstrated, time and again, that the main bias is not fully appreciating the role of emotions in making financial decisions. Advisor discipline can be as important as client discipline.
So, if investments are not “what matters most” what does matter most? In our view, the planning process trumps all else. Proactive advice derived from the planning process can help avoid costly missteps. Planning for retirement, or anything of significance, is a fluid, dynamic process, not an investment product. Keeping you focused on your long-term goals means helping you avoid short-term distractions. This is part of the planning process. Ready for a real conversation?