Benjamin Beck, CFP®“We must manage our behavior to meet our objectives. Excellence is not an act, but a habit. We are what we repeatedly do. We must manage our behavior to meet our objectives. Excellence is not an act, but a habit. We are what we repeatedly do.”
These words were printed on the piece of paper pinned to the bulletin board in the football locker room of my high school by John Wolfgram, the head coach of the Red Riots in South Portland, Maine. The idea that excellence is not an act but a continued behavior is attributed to Aristotle. From the first time I walked into that locker room until the last time I walked out, those words were front and center, and I find them quite relevant to my work as a financial advisor.
The Biggest Investment Mistake to Avoid
Speaking of football, I’m reminded of another legendary coach — Lou Holtz from Notre Dame — who said, “You don't need big plays to win; you just have to eliminate the dumb ones year in and year out.”
That’s another truth to live by, especially in our work as financial advisors. Is this not the very essence of our value proposition? To have the willingness and the ability to save our clients from making a horrendous mistake. That is our guiding principle, followed closely by the desire to boisterously express our faith in financial planning rather than in forecasting the economy, trying to time the market, or convincing someone based on performance.
Our clients must actively accept this as our role, right? They must accept that if they are looking to hire us, our first job is to prevent them from making a huge financial mistake. They must also accept that the financial plan is a living, breathing organism that shows the way to reaching their objectives.
How many people log into our planning platform to check and see how they are doing? Quite a few. Clients routinely tell us that they like to visit their plan whenever they want, that they want to watch their assets grow over time and to experience their goals getting closer and closer to reality. Despite the setbacks that we occasionally experience — and that are always temporary — people who stay on their plan end up staying on the path to their goals.
Understanding the Value of a Financial Advisor
The value that we provide as advisors who protect clients from some terrible financial mistake is hard to capture.
Think about all the forms of insurance we purchase to protect our homes from damage, our cars, and even our lives. We hope that the premiums we pay on these insurances will be wasted. We don’t want the catastrophe to happen, and yet we want to know that if it does, we have something in place to protect us. The more time goes by without collecting on the insurance, the happier we are.
When it comes to the value of a financial advisor, the insurance that we provide by helping prevent financially disastrous moves is invaluable.
Acting Only In Your Interest
As a client of Beck Bode, you can be assured that we will act only in your best interest. Let me illustrate with an example.
A client comes to mind who tended to get nervous every time the market moved down. When he was within two years of retirement, he was particularly on edge. His nervousness was finally to a point where I had to decide, preemptively, to tell him it was time to move on — he was no longer a client.
It wasn’t because he was nervous — to be nervous about the markets is human and understandable. It was also not about our fee; he was happy to pay it.
What pushed me to decide our relationship had to end was that he wanted to dictate how we invest his money, and I didn’t agree that what he wanted was the best course of action for him. I knew he was making an investment mistake that would be a disservice to him long term.
For that reason, we had to part ways. It was a tough decision for me, but all of our investment guidance revolves around the fact that volatile periods are temporary and insignificant when compared to the long-term return of equities and the compounding effect of dividends.
At Beck Bode, we will discuss topics that may cause clients anxiety. Although this may be uncomfortable, we’ll have these tough conversations to ensure that we act ONLY in our clients’ best interests.
Have a Proper Diversification Strategy
If we are systematically educating clients, reminding them of all the ways they may be tempted to veer off course, our value isn't diminishing. If anything, our value is growing, and the premium they're paying us is well-earned.
In any given year there's a lot going on — with the economy, geopolitically, and in everyone’s personal life. Despite all the things that have caused stress, our clients have benefited substantially from the plans that we have put in place for them. In fact, knowing that one has a plan in place helps counteract some of the stress that arises from those other things that are out of our control.
At Beck Bode, our financial plans are fueled by a portfolio of equities. I had a conversation with a client whose portfolio is 100% invested in equities (as are all our portfolios), who said that despite the market volatility, “Geez. I don’t know what kind of gymnastics you guys are doing over there in my portfolio, but it’s working!”
I took the opportunity to remind him and his wife that this is exactly what they pay us for. It’s not gymnastics but rather our constant pointing to the necessity to stay in investments that have the best opportunity to grow their purchasing power over time.
Successful Investing Is a Long-Term Game
Our job at Beck Bode is to not let anyone soften your anxieties about “down” markets by recommending a reallocation designed to temper volatility. Why? We know that tempering volatility means tempering long-term returns.
We won’t let you make common investment mistakes. We won’t make a one-time excellent recommendation, a one-time presentation, or put together the “perfect” portfolio.
Once a year (or more), perhaps in the most rigorous meeting of the year, in an annual review, we will remind you, “No, I will not let you do that!” You will hear that from us anytime you want to do something that will throw you off course. We won’t say it in passing, either. It will be straightforward and clear.
If Aristotle’s words are true, and “we are what we repeatedly do,” then as financial advisors, we are the barrier that stands in the way of catastrophic financial decision-making.
When we do that repeatedly, we become excellent and help you avoid a potentially harmful financial move.
Ben Beck is Managing Partner & Chief Investment Officer at Beck Bode, a deliberately different wealth management firm with a unique view on investing, business and life.
