Scams, Schemes, and Rip-offs

I don’t know why I’m still a bit surprised every time I read about an advisor stealing from clients. I suppose it’s because I’m “in the business” and I can’t fathom anyone falling for the lines these advisors use. I forget that a smooth talking advisor can make just about any “investment opportunity” sound great and coupled with the abuse of trust they’ve established, the client is often beyond saving.

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Due Diligence

Due diligence. We hear this term all the time in our industry and I’m sure other industries use it as well. Here in our headquarters that houses our two firms, Symmetry Partners and Apella Capital, we host due diligence visits frequently. Visitors are independent financial advisors learning about our offering or our own advisors bringing their clients and prospective clients to learn more about the firm(s). We schedule a half or full day of presentations and meetings with department heads and key personnel. The goal is to demonstrate our capabilities in investment management, financial planning, and associated services we offer.

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How To Be A Successful Investor

I’ve spent the better part of 23 years teaching people how to be better investors. I do it through educating and coaching. In hindsight it seems easy, common sense really. But when I speak to investors, I realize all over again how badly our educational system failed them. Not in a classic liberal arts or the sciences way but in how to be a financially literate functioning adult. I think the world of teachers. I have a sister who teaches and my father was a teacher before getting into finance. It comes quite naturally to me. I enjoy being in front of an audience and sharing what I’ve learned with them. If there’s one thing I do well, it’s communicate often complex topics in understandable ways. But our educational system fails us in preparing young adults to handle the money they are about to start earning as they embark on a career or trade.

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The Timeline of Terrible Things

What a great title for a marketing piece. I’m not sure who came up with the name, but it’s direct and to-the-point, is it not? It’s a simple concept really: create a timeline over the past few decades or so and point out those events that frighten people along the way. For example, WWII, the Cuban missile crisis, inflation in the ‘70’s, the crash of ’87, the Asian contagion, the crash of 2000-2002, the ’08 crash and so on. These are but a few examples of events that caused investors concern, and who can blame them? This particular timeline isn’t a straight line however. These events are superimposed on the Dow Jones Industrial Average or the S&P 500 to illustrate one message: that despite the constant presence of reasons NOT to invest, markets have gone in one direction over time, up. Why is that?

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Computers, Algorithms, Robots!

Self-driving cars, automated assembly lines, roombas(!), robo-advisors…where will it all end? I actually saw a national news story this week about robotic pets. Robot dogs to be precise. Talk about a responsibility-free relationship! (Don’t you wish everyone had an on/off switch?)

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Performance

I have discussions with advisors all the time about portfolio performance – more specifically about recent portfolio performance. I almost never have conversations (longer than five minutes) with clients about recent portfolio performance.

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Common Sense

I've spent a lot of time in the business of managing portfolios, making investments, trading securities, researching strategies, etc...over 34 years now. And it can be made into the most confusing, esoteric, and complex process imaginable. For nearly a decade, I was sucked into this world of esoterica. I was impressed by how complicated an investment strategy could be. Then I had a conversation with a man named Paul Sarnoff. He was a very highly respected commodities trader in the '70's and '80's. I was a floor trader for a major brokerage firm at the time - I was one of those people that stood in a trading pit and yelled at the top of my lungs trading gold and copper for the firm's brokers and clients. Paul ran commodities funds and he would frequently call us on the floor to get a feel for how the trading day was going. On one particular occasion, he sighed and lamented the tough market he was in at the time. He had been doing poorly (as all traders do from time to time) and he was near the end of his career I think. In a moment of candor, he said to me that it was all a crap shoot...and that he didn't understand "the market" anymore. By that, he was referring to the gold market. 

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Shelf Space

When you go grocery shopping at your local supermarket, chances are the products you see on the shelves paid for that space. And those products at eye level paid a premium. It's called a slotting fee. What usually comes as a surprise to investors is that the investment product being pitched to them by their financial advisor typically pays this fee. Some larger investment firms sell proprietary products through their advisors. These are also pushed hard because the firm makes more money off of them than when using a third party solution.  

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A Sacred Trust

My sister, Robin Sweeny, saw Dan Wheeler speak many years ago and this stuck in her memory. She reminded me of it recently and said I should write about it to communicate how we see the advisor/client relationship. Dan calls it "A Sacred Trust." The industry has suffered a poor reputation for so long, I feel, because this is never made clear to prospective employees much less to the investing public. Unfortunately, the reason many young people originally got into this business was to make a lot of money. The fact that you potentially get to make a positive impact on people's lives never entered the equation. The running joke when I was interviewing on Wall Street in the early 80's was just say that you were "hungry" to the interviewer to score points.

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Inaugural Post

"Write a blog!", they said. "It'll be great!" So here it is, my inaugural post. This would be a good time to educate readers about my perspective, my biases. Our past experiences need not define us, but probably shape who we are, who we become.

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