One of the most valuable aspects of our long-term advisory relationship is the “space” that we provide between our clients and their emotions; between clients and their investments. While at first this may not be intuitive, managing emotions with “dispassionate discipline” creates substantial value for our clients.
Look to the Horizon
Year after year, study after study demonstrates with resounding consistency that most investors fall prey to their emotions and have real difficulty staying the course when the inevitable rough seas approach. The home page of our new website (which should be live very soon) carries this phrase: “Let Markets Work For You; Don’t Let Emotions Derail You”.
The overarching reason we believe in “financial planning first” is that this provides a concrete set of goals which help inoculate you from the bad days; weeks; months; years that will occur at some point. Much like the horizon helps guide mariners, a financial planning “horizon” focuses the gaze beyond where you are now to where you want to go.
Are You on the Right Path?
The central theme of the traditional brokerage, insurance and financial services firms is, “we have the perfect investments”. Of course, this is untrue. These firms are skilled at packaging and promoting, and far less adept at delivering long-term value. High costs and complexity stand in the way.
The opportunity lies within the sometimes large gap between what the market provides and what most investors (without un-conflicted planning and advice) obtain. In reality, for many this equates into the difference between resources out-living them or them outliving their resources. Our approach focuses on acting by developing specific goals rather than reacting to whatever is happening at the time.
The most important factors in real life investment returns are really but two: time in the market (as opposed to timing) and your behavior. All the other factors: exact allocations; specific investments; tax efficiency; etc., pale in comparison. If you are on the right path (towards your goals), everything does not have to be perfect in order to work out. Conversely, if you are not on the right path, even perfect investments/timing won’t help. Which do you choose? Can you really do it alone?
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