• Matt Morizio

Behind the scenes of financial advising: What I learned in 2018, part 2


Personal health is always a back burner item…even financial health

How often do you bring up exercise with someone and they respond, “I need to get back to the gym.” And then they do nothing about it.

Personal health is easily de-prioritized. And believe me, I get it. I have 5 kids at home all under the age of 7…and we homeschool….and I’m growing my practice at work…and I want to be a loving husband….and a present father…and…and…

Life doesn’t slow down for any of us. If I don’t make time for diet and exercise, it won’t happen.

And guess what?

I’ve learned that financial health is no different than physical health. I get the same, “I need to do something about that” response when I ask about personal finances, too.

And to make matters worse, ignoring your investments is even easier than ignoring your physical health. Nobody sees your money, but they can see if you put on weight.

But I’ve also learned that the most successful people I know/read about/listen to all take a proactive approach to both their physical and financial health. To them, personal health isn't a back burner item.

You can’t sell performance when the market drops

In 2017, I had a lot of “yeah but everyone is making money,” conversations.

In Q4 of 2018, I had a lot of, “I have no idea how my money is being managed but I’m losing a lot of it and need to figure out what’s happening” conversations.

Last year, 2018, was the worst year since the financial crisis of 2008-2009, and December was the worst December since the Great Depression. When the market corrects, aka drops between 10-20%, you can’t sell performance anymore.

What I learned is that when performance declines, you better have a proven process you can lean on. If you don’t have clearly defined reasons to buy, sell, and reinvest, then you are hoping things will turn around one day, and hope is not a strategy.

The most savvy investors I meet don’t use trust as their only decision making criteria when hiring an advisor

Too many people use trust as their only decision making criteria when hiring an advisor.

“My close friend uses the same advisor and referred me.”

While I agree that trust is the most important element to a successful relationship with your financial advisor, it shouldn’t be the only reason you choose to work with your advisor.

Think of it this way: Would you ever give your money to someone you didn’t trust? Of course not, so trust will always be part of the decision.

Find out what they are actually doing with your money to make it grow.

Paying someone 1% to put your million dollars in a bunch of low cost index funds makes no sense to me. That advisor literally doesn’t do anything with that money for the next 12 months until you meet again for your annual review.

Most index funds are considered passive investments, meaning they keep the holdings in the fund for a long time without making any changes in an effort to track a specific index. The S&P index fund will have the same holdings as the S&P index, and the performance will follow in lock step.

You’re essentially paying $10,000 for an hour long conversation.

Use a roboadvisor or put your money in a couple index funds on your own if that’s your game plan. It will cost you way less money and achieve the same results.

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Investment advice offered through Beck Bode, LLC, a fee-only Registered Investment Advisor in the Greater Boston area.