January 2021
New Year, Same Truths
We're only 2 weeks in and most of us have already given up on 2021 being "normal". The pandemic is still with us, with the end only barely in sight.
While this time of year is typically about making resolutions to start new things and give up long-standing vices, for the behavioural adviser it's a time to remind ourselves of the eternal truths of financial planning.
If you're in any way occupied with helping families to attain financial independence, I encourage you to keep the following close to you as you journey through this year.
1. The only sane definition of money is purchasing power.
2. Therefore, the client's greatest challenge is not in preserving capital but in preserving purchasing power.
3. The greatest enemy in this battle is inflation, the slow and steady erosion of purchasing power.
4. Historically, equities (ownership in the great businesses of the world) have been the best asset class in helping to fight the destructive power of inflation.
5. To earn these enemy-defeating returns, the investor has to pay a price of admission: market volatility.
6. On average, the market declines from top to bottom by about -15% every year. Roughly every 3-5 years the investor can expect a decline of at least -30%.
7. The timing, and reason for, these market drawdowns cannot be predicted and do not coincide with economic trends.
8. This volatility can only be avoided by sacrificing real-life long-term returns.
9. As such, the investor is trading temporary volatility for permanent returns.
10. Without a caring behavioural adviser, most clients are unable to understand, accept, and endure the above cost of investing.
11. For this work, we can do well whilst doing good.
📰 Articles & Blogs
The Financial Advice Profession: Are we there yet? [7 minutes]. Both the profession and the industry does, and will continue to, exist.
Should You Buy An All-Time High? [8 minutes]. Another example of why you should ignore the media.
My Top Two Research Breakthroughs for Advisors [3 minutes]. A foolproof way to have your client fully engaged.
Why Too Many Advisors Fail at Sales [4 minutes]. Are you bringing energy to the conversation?
I’ll show you mine (my value-added I mean) [6 minutes]. Don't hide what you're doing for clients.
20 Rules for Markets and Investing [10 minutes]. A great reminder for all advisers.
My mother, my hair and your digital experience [5 minutes]. The debate is over - digital is here to stay.
🎧 Podcasts
David Booth: The First Index Fund, Competing Fiercely, and Keeping it Simple [69 minutes]. A great conversation with a giant in our world.
The Future of Client Experience: a Wake-Up Call for Financial Advisors [47 minutes]. If you're not thinking about this you'll be left behind.
📚 Book Recommendations
The Passion Economy: Nine Rules for Thriving in the Twenty-First Century by Adam Davidson. A great book full of examples of people doing what they love for a specific group of people. This is what the future looks like.
🍿 Videos
A Conversation with Charlie Munger
The man gets wiser every year. An astonishing mind for 97!
👏 Encore
The 11 Best Business Books of 2020 for Financial Advisors [3 minutes]
The $71,000 email and the art and science of client retention [10 minutes]
Marketing: Why You Need Both a Plan and a Strategy [2 minutes]
Six Reasons Your 2021 Marketing Plan Will Fail [6 minutes]
How to Gather Client Feedback [4 minutes]
