Embrace the suck. Military-speak for consciously accepting or appreciating something that is extremely unpleasant but unavoidable. Embrace the suck would be a great approach to the current market volatility. The problem is that for decades investors have been trained by their brokers and advisors to react to market volatility. That usually meant buying or selling a product or trying to time a move in or out of cash. Neither approach truly benefits the investor in the long term, even if it does provide some short-term emotional satisfaction to the investor and a paycheck for the broker.
The long-term problem created by this behavior is a hyper focus on market volatility as a long term negative to be dealt with in the short term as opposed to a short-term opportunity to be addressed over the long term. However, this approach can be remedied by comprehensive financial planning coupled with full investment transparency.
We have found that by beginning our relationship with a client by helping them to uncover the issues and goals that truly matter to them and then implementing that advice on our automated platform has changed the conversations we have with clients over the long run. Now that clients can clearly see what they own, make, and pay, they can easily find the answers to common questions on their own time. Further, because they can see the actual performance of their portfolios in real time, when the inevitable market shock happens they need less handholding. For example, in this recent market pullback, we have not received a single call about portfolio performance. Our clients can see that their portfolios were reacting the way they expected based on their financial plan and so do not feel the need to dwell on the market volatility.
Investment management on automated platforms has become the process by which we implement our advice to clients. It is the commodity portion of what we do for clients. This is a significant break from the industry standard of selling clients on the idea that the value they are paying for is the ability of their broker or advisor to deploy the client’s money in a mutual fund portfolio. The true value, and the value that investors will pay for, however, is to know whether they can maintain their lifestyles for the rest of their lives. By implementing financial advice through an automated platform, we provide clarity of information and transparency that allows clients to stop worrying about the markets and focus on what matters, their future.
Many investors are still getting information and analysis about their financial planning and investment performance through monthly reports and quarterly meetings, so one can see where the pressure is being applied by automation. Our clients often tell us how much they appreciate the ability to remotely follow their accounts and the progress of their financial plans. Having complete and real-time information via an app increases client engagement with the account and increases the likelihood of success. As a result, we are talking with clients more about their life goals and how to achieve them.
It’s your future. Take control. Embrace the suck.