One Year Later

In our March newsletter exactly 12 months ago we wrote about there being a "sale on the great companies of the world". We knew that not many other advisers would be framing the collapse (temporary decline) in this way, but I suspect you did.

That's not to say that we knew how and when things would get better, but deep down we knew it would - even if we had a few worried days about how to get our clients through the upheaval. The Financial Adviser is often the last line of defence for panicked clients.

As Nick Murray says, "I don't know exactly how things will turn out all right, I just know that they will turn out all right."

However, optimism does not sell newspapers. The two front pages below are from 10 March 2020.

What has transpired since that day? The MSCI World Index is up 31% (75% from the March 23rd 2020 bottom).

The panicked investors who were allowed to sell out of perfectly positioned portfolios to "wait for things to settle" have sacrificed years of dignity and independence. A Financial Adviser who facilitated this has in my opinion committed a financial atrocity. The adviser who successfully held their client's hand has earned their fee for a lifetime. This is the good we do.

I have now worked through two periods of extreme panic. The first one I was wet behind the ears and witnessed it, but didn't live it day-by-day and blow-by-blow. This one I did. The Financial Adviser may only have two or three great panics in their careers. Embrace them, bottle the feelings when they happen, even journal about them. It's during these periods that we earn our golden coins.

The fixed-fee, ESG-focused panicked Financial Adviser is dead in the water to the ad valorem mainstream-equity stoic adviser who told her clients to stay in their seats. It's not the method of how you earn your golden coins, it's what you do for your fee that counts. Arguing over fees, platforms, cashflow tools etc etc is the pursuit of the crazies. You're paid in whatever form you choose to stop your clients from doing anything which is financially self-destructive.

Your wealth will build through global equites and you'll maintain this wealth through good behaviour, it's that simple. Never underestimate human ingenuity, and the market's ability to be forward-looking.

Right now there's optimism in the air, and the dread we felt at the opening of each market day has been forgotten by most. This is unfortunate, as future corrections will have people misbehaving themselves to poverty again. We don't seem to learn.

A wonderful resource on how to deal with scary markets is Carl Richards' set of two videos, which you can find here.

📰 Articles & Blogs

2020 Berkshire Shareholders Letter [30 minutes]. My dream of attending an AGM in Omaha will need to wait a while longer. Here's the latest shareholders' letter from Warren.

Using Transparent Nudges To Drive Action And Education [26 minutes]. Know your nudges!

It's Not Different This Time [2 minutes]. For advisers and clients panicking about a small selloff, here's a reminder of recent events you probably can't even remember.

Four lessons from a British ad man [6 minutes]. Lessons for advisers from Rory Sutherland.

9 Ways to Help Clients Live Richly Instead of Dying Rich [3 minutes]. A good list of non-monetary things we can do for clients.

When Everyone’s a Genius (A Few Thoughts on Speculation) [4 minutes]. It’s only called speculation when you disagree with someone else’s bet.

RIAs Proved Their Worth During March 2020 Meltdown [3 minutes]. It was our Olympics.

Dad, a Death Sentence and the Planner Who Set Us Straight [9 minutes]. We need to hear more of these stories.

🎧 Podcasts

Showing Financial Planning Value On An Ongoing Basis After The First 6 Months [29 minutes]. Your value does not stop after the honeymoon period.

What Is Top Shot‪?‬ [11 minutes]. Want to learn about NFT's? One of the most popular applications to date is the NBA's Top Shot product.

📚 Book Recommendations

Investing for Growth by Terry Smith. A collection of writing by a money manager with strong opinions. A worthwhile read even for those who follow a passive approach.