3 Critical Questions About Your Investment Strategy

by Benjamin Beck, CFP® Benjamin Beck, CFP® | March 8, 2023

When a client is introduced to us and says they want to work toward a successful retirement, we naturally ask them about their goals. A primary stated goal is retirement income. Secondary goals include a wide range of things – from funding grandchildren’s college education to family vacations, or a vacation home where memories can be created.

I often think about our impact on people’s lives, because impact is at the core of our work here at Beck Bode. Recently I have been asking, what is the aspect of our work that is most impactful to the successful achievement of financial independence for our clients?

A quick and easy answer would be to say it’s a specific return on investment, a superior real-life return achieved by an investment process. But that would be only partly accurate, and it wouldn’t reveal the true root of the impact that we have on our clients. 


3 Questions Your Financial Advisor Should Answer 

In our practice, we ask (and answer!) three critical questions

  1. What to buy 
  2. When to sell
  3. How to reinvest the proceeds

We do this with transparency and discipline. These three questions provide a framework to the management of our clients’ otherwise emotional reactions. Absent these questions, our clients are even more prone to react to outside forces – like wanting to do what their neighbor recommended, buying meme stocks, or going to cash in a bear market. 

So, when I think about the aspect of our work that is most impactful to the successful achievement of financial independence, I come back to this: it is helping folks answer the three questions which in turn allows us to interrupt their entirely human behavior. These three questions stop our clients’ reactivity, thereby allowing them to achieve superior lifelong returns. They also help with the following: 


Curbing Emotional Investing 

You may wonder, what is the relevance of our investment strategy then? We are quite passionate about our investment strategy, because of its simplicity, transparency, and time-tested effectiveness. But it’s those three questions that allow us to keep human emotion in check. Without them, our clients wouldn’t be able to stay invested in any strategies, regardless of whether they are Beck Bode Strategies or someone else’s.

Why do people panic out of the market during periods of intense volatility? On some level they feel like they have lost control. They feel like they must do something about it, and the one thing they can do is to get out, because there’s nothing else preventing them from doing that. Except for us. We can. We can stand between them and their potential failure with our three questions. With the help of the three questions, we can guide people to follow a methodology that is time-tested; it doesn't prevent them from going through volatile periods, but it does allow them to stay in the equity markets so that they can reap its long-term rewards.

As you may well know by now, not only is a client’s determination constantly being undermined by the gyrations of the markets and the state of the economy, but their ability to stay on the path is tested every single day by everything they hear and read, the constant comparison to whatever financial index is being hyped on a cable news channel by some pundit, and so on.


Tuning Out Noise From the Financial Media 

We talk a lot about human behavior being the big determinant of financial performance over long periods of time. Of course, there are other factors, but in my mind everything else is ancillary. In our line of work, there is a huge amount of information available to advisors and consumers. While all this data can be helpful, it can also get in the way of people achieving their goals. This massive amount of information on the one hand helps us -- as portfolio managers – to do our work to fund our client’s financial plans. On the other hand, the data, amplified by the news media and other communications, generates an impression of randomness to the undertaking of accomplishing one’s financial goals. All the different messages coming at people from different directions makes them susceptible to thinking that success in the stock market is indeed about timing or luck, which we know is absolutely not the case.

So yes, our investment strategy has relevance because its single purpose is to fund the financial plan, and our Strategies offer a proven methodology to do exactly that. Our investment strategy is, however, simply the mechanism through which we manage portfolios. Personally, I love portfolio management, I’m tremendously passionate about it and it is incredibly energizing to me. But portfolio management is just another tool. Not to belittle its importance, but all portfolio management can do is put a client in front of opportunities that could benefit them in the long term. What portfolio management can’t do is shield people from the next market correction, the next news cycle, or their fears about inflation. Because these are the things that can derail the most carefully designed portfolio in no time. What use is a strategy if you can’t adhere to it? Therefore, we must admit that if there is a higher function to our company, to our work, to my existence as an advisor, it is financial planning. Financial planning is the key to helping our clients achieve their financial goals.


Focusing On Long-Term Goals 

If portfolio management is dominating the conversations you are having with clients you will inevitably run into trouble. Because portfolio management has to do with the future. I can say with certainty that there are no facts about the future. But if you’re focusing on the client’s plan, their goals and objectives, and you are acknowledging that the portfolio is simply the funding mechanism for everything; then you are keeping the client focused on their personal motivations. A client’s personal motivations have everything to do with their most cherished goals in life, and nothing to do with whether the S&P is up or down today.

The more we stay focused on the client’s goals, the more we can keep our clients focused on their goals. This reduces their susceptibility to comparing themselves to any other benchmark except for the accomplishment of their goal. Similarly, when you – the advisor - can let go of the comparison to the S&P in your own mind, you can talk to clients with ease about the kinds of behaviors that support long-term success and gently but firmly point out the behaviors that don’t.

I know that this shift in your thinking and communication will also attract the right clients. Naturally, prospective clients will want to know that we are competent when it comes to portfolio management. But the idea that will stay with them is that by keeping them focused on their financial plan, and by using the three questions to keep their behavior in check, we will help them avoid the big financial mistake that could cost them their dreams. Once they really understand that they will require very little maintenance and handholding, you will see that they will begin to refer other good people to us.

Learn more about our Investment Management Strategy

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

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