Click the link below to view the 2009 Advisor Edition of the annually updated DALBAR Quantitative Analysis of Investor Behavior (QAIB).
DALBAR QAIB 2009
This is always an informative read as it highlights the “Behavior Gap” that investors struggle with over time.
A couple of things I’d like to bring to your attention:
- On pages 3 & 4, you’ll see the comparison of investments versus investors. For instance, for the 20 year period ended 12/31/2008, the S&P 500 posted a return of 8.35% while the average “equity investor” (as measured by actual mutual fund inflows and outflows) experienced a return of 1.87%. Ouch. Read More »
From time to time, I find it valuable to seek the opinions and expertise of other professionals around the financial planning industry.
Today, I’d like to share some of the information I’ve found recently that I think you might benefit from.
First, let’s start with Curtis A. Smith, CFP®, based in Sugar Land, Texas. He wrote a recent blog post “Are you Prepared for the Nine Minute Phone Call?” in which he tackles an important and increasingly widespread need — preparing for the potential need to care for elderly family members. Here’s an excerpt:
Think about it, you have nine-months to prepare for a new child to be born. With elder care, you may get nine minutes during a phone call. How can you be prepared for those nine minutes? That is why it’s so important for adult children and younger relatives to gather the courage and preparation to begin a series of important conversations when elders are healthy.
Read more of this post from Curtis here. And you can follow Curtis on Twitter, too.
Read More »
Many financial professionals are always at the ready with their “elevator speech” or their “value proposition” about why you should hire them. I have what I consider a strong value proposition, but I want to talk about something else today.
Inspired by Sarah Bray’s website footer “10 Reasons Not To Hire Me”, I thought instead of telling you why you should hire me, I’ll instead offer 5 reasons why you shouldn’t.
Here’s goes:
Number 5
You’re a huge Bon Jovi fan and really want to make “Livin’ On A Prayer” your theme song across all areas of your life, including your finances.
Read More »
A large part of my work with clients is helping them explore what’s important to them and then working to align their finances to support their life.
A byproduct of this important process is a better understanding of the trade offs involved with their financial decisions. If they want to spend X dollars in retirement, what are the financial decisions and habits we need to establish today. Of if they want to retire at age Y, what do they need to do to get there and have confidence that it’s an achievable goal.
What’s interesting is that even though all the work I do is completely personalized and customized to an individual’s situation, I’m regularly asked something along the lines of “how do I compare to your other clients” or ” how do I stack up versus others”. In the past, my answer has always been to explain that the strategy we develop and regularly monitor is personalized to their situation and it wouldn’t be valuable to compare yourself to others because they could (and likely will) have completely different goals, priorities and financial resources to work with. Read More »
Many of you might have heard of the term “portfolio optimization.” It’s another one of those financial industry buzzwords that gets thrown around rather casually, but do you know what it is? Should you care?
Put simply, portfolio optimization is a process of calculating the ideal investment mix from a menu of investments and their risk and return characteristics. Also, many professionals add “contraints” to the portfolio optimization process so they don’t wind up with a portfolio that’s too heavily weighted in any one or two investments or asset classes.
Many investment professionals and financial advisors rely upon portfolio optimization to deliver the “best” portfolio to their clients. In fact, there is a small cottage industry that has sprouted up around the concept of portfolio optimization. There is everything from portfolio optimization software to full day courses to learn how to use the software. I’ve met a few financial professionals that include portfolio optimization as a centerpiece of their value proposition to their clients.
But I think there’s a fundamental flaw in this whole portfolio optimization process. It’s based completely on assumptions about what will happen in the future. And as I’ve discussed before, I think it’s a fools game to try to predict an unknowable future. Read More »
