'Survival' Is Not An Alternative. You're Better Than That.

 
 

Most investment professionals will tell you, “become more conservative as you age”. I agree 100% we should protect a level of assets that ensures quality of life. But what about the assets that exceed that amount? 

The folks that have built significant wealth have learned and developed some interesting skills over their lives. One of the necessities for these folks to survive and prosper was their ability to make good tactical decisions; they identified the better opportunities that others couldn’t, or thought too risky. This isn’t a small group among us. Check out the statistics from Industry Canada, what drives our economy are people who are stepping up all the time, taking their future into their own hands:

  • Small businesses created over 100,000 jobs on average between 2002 and 2012, accounting for almost 78% of all private jobs created.
     
  • 98% of businesses in Canada have 1 to 99 employees.

Source: Statistics Canada

In the financial industry we very often tell very successful people: “Hey, you took the risk in creating your wealth, you should give it to us now to protect and preserve it.” The sales people in our industry can give you an infinite number of reasons why you should stay conservative with your money and why you should accept the marginal results most investment strategies deliver. I think the sales pitch, if it were transparent, would go more like this: “Mr. or Ms. Successful Business Person, my company and I don’t have the skill to actually have confidence in our decisions like the ones that made you wealthy. So in lieu of these skills, we are going to sell you a baskets of products, that combined, should grow your money modestly if the markets rise and shouldn’t fall too much if the market drops. But don’t worry, over time it usually works out. And, because you have lots of money, we can give you a better price on this service compared to Mr. & Mrs. Joe Average.” 

For years I’ve been fascinated by families that have amassed considerable multi-generational wealth. Each successive generation’s goal is to build off of what was entrusted to them by the previous generation.  I’ve wondered why we aren’t taught this in school. I’m just throwing this out there, but how well do you think it would go over with the Rockefellers if their advisors told them to back off and become ultra conservative now that they have considerable wealth?  I’m guessing they don’t deal with the advisors that would give this type of advice. Yet this is the norm for our industry, and it is considered prudent and encouraged. 

... the industry often encourages people to not prosper and gives advice that is about trying to sustain their wealth as opposed to growing it. I believe it is our inability to provide the proper advice that holds us and our clients back.

In this industry, we often refer to ourselves as “Wealth Managers”. Sadly, the industry often encourages people to not prosper and gives advice that is about trying to sustain their wealth as opposed to growing it.   I believe it is our inability to provide the proper advice that holds us and our clients back. We are constrained by our fear and our lack of ability, which we disguise as investment management, selling survival as a good thing.    

For many, if it were a sound business decision and they could keep accelerating their wealth, as opposed to lying down and existing off their assets, how many would choose this route? How many of us in general would choose performance vs. average, if it were known to be a great business decision? For the folks that want to keep their foot on the gas, there are substantial financial and personal rewards. Fortunately, just like what drove success for people in their working careers, these same people can apply the same drive to having their investment portfolios managed, and perpetuate that success for themselves and future generations. 

There is always a catch, and the catch is really quite simple. Like any good business decision, do your homework. Find the wealth managers who are managing investments like a business, as opposed to a commodity or product for the masses. Survival should not be an acceptable alternative, regardless of your current lot in life.  We are better than that.