One of the most pervasive human emotions (or a characteristic if not a true emotion), is inertia – “Indisposition to motion, exertion, or change” (Merriam-Webster’s Dictionary). Closely related might be the attitude expressed by the single word “whatever”. I recently heard a Sunday homily where the priest exclaimed that “whatever” might be the single most dangerous word in our language. It carries with it so many negative attributes. It does damage without really trying.
Working towards long term financial goals can be a difficult task. The first few steps in the right direction can often be key. I am continually surprised at how hard it is for some clients to propel through the “indisposition to motion” that is perhaps their natural state. Maybe we will get around to moving the account or maybe not; whatever.
We routinely see clients with outside investment accounts. Maybe the account is being “managed” by a family member or old friend. We usually try to incorporate those investment holdings into our overall asset allocation advice. Sometimes, the account can be melded into the plan and sometimes not. It is common to see accounts with only a handful of individual stocks and a few high expense mutual funds that have several dozen trades each year. Is this in the client’s best interest? Maybe not; it’s inertia.
In most instances, clients have already made an intellectual decision to close or move the old account but there is a second component, an emotional commitment that is also required. Inertia takes hold once again. As many of you know, I started out 34 years ago as a stockbroker with a large national firm. I have seen that side of the investment business. I am aware what it looks like. Remarkably little has changed from then until now. Big firm brokers push their favorite stocks, which happen to be the same for an 85 year old as they might be for a 35 year old. The aim is to “out-select” the market. It was rare then and is still rare today; whatever.
To become truly successful investors we have to avoid the state of inertia and the attitude of “whatever”. If we do, we will indeed be well on our way.