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How Does Your Door Fit?

Is by "design" or by "default?"

As I was reading Simon Sinek's recent offering, "Start With Why," a story he told early on in the book resonated with me, not only from the standpoint of entrepreneur/business owner but also from the perspective of wealth manager/advisor. 

It seems that a ways back,  some U.S. car manufacturers had visited a Japanese auto manufacturer and were watching the various tasks that were performed along the Japanese assembly line.  While much of the work was the same as "back home,"  the one thing the U.S.  delegation noticed that was missing,  was that in the U.S. there was a last person at the very end of the line who was tasked with whacking each car door with a rubber mallet to get the door to sit properly and line up with the overall body contour. 

When questioned about why step didn't exist in Japan,  the American's Japanese counterpart noted that "we design the doors to fit from the beginning, that's the difference." 

Many people treat their efforts at achieving financial success and as a result the life that they truly desire, in the same way as the American auto assembly line; they treat each and every financial transaction, be it, picking a money market account or deciding on an investment allocation for their 401k plan, about like a U.S. car door; whack it till it ultimately fits, even if it doesn't.

The "piecemeal"  approach is seldom ever going to be efficient and like the U.S. auto builders who had to pay a union worker to swing the mallet and purchase lots of rubber mallets for them to swing, generally, in the long run to be sure, it's going to be more much more expensive. 

Because we fail to choose a path to take, cobbling together financial assets and financial decisions seems the norm.  Without a well thought out plan, we have little context to balance our decisions against. Absent a well defined standard, almost everything is going to fit more-or-less, even if we have to hit it with a mallet to make it so. But the reality remains that it didn't really fit at all did it?

To be sure, it's one more thing checked off the list. But that doesn't make it either effective or right, does it?

The fact is, that on its surface, you'd have a hard time telling the folks with a well thought out plan and path from the ones without one. But, over time, as calamity and change have their influence, it wouldn't be hard to tell at all.  If you never had a plan, it'd be awful hard to stick to it. 

Set a course for your financial future and stick to it. Decide what you'll need to live the life you truly believe that you're entitled to based on a lifetime of work, then figure out how to get there.  There are steps, pragmatic and calculable ones, that put you on the right course. 

Find them. 

Generation "Why?"

Hangovers are tough.

All too often we forget that different people, raised at different times and in different ways see things entirely differently than others might.  I wonder what Generation "Y" thinks about our recent financial history and how their understanding of the facts that brought about the worst financial crisis of our time will impact their actions as they move forward in life?

What would your view of the banking sector be if you were at the precipice of your financial life in 2007-2009?  I wonder how much faith and comfort you'd have as you viewed your future financial landscape and considered the role that the banking and brokerage industry would play in your goal planning? My bet is that you'd be skeptical at best and skepticism typically leads to avoidance. 

Skepticism in finance is almost never a good thing. There's already enough "built in" propensities to avoid matters of personal finance, adding to the pile of impediments is not a good thing. 

And how do we propose to alleviate the problem before it snowballs into other ones? I'm not sure that we've thought that one threw have we?

What if an entire generation has lost it's faith in "investing" and "banking" seeing them both as self absorbed sectors, bent on greed, unfairness and lack of transparency?

What will that portend for the housing market?

What will that portend for retirement for a generation afraid to trust anyone with just about anything having to do with their life's savings?

What will that portend for social programs, already straining to provide for people?

Many outcomes are unintended. The lack of intention however has no direct corollary to the disruption it causes.

What we better start getting right in our thinking is this: Our actions send a wave of information forward and that wave, like the ripples on a pond reach all points. Understanding that the impact of and implications of that ripple last long after we've last seen it traverse the surface is something that we seem to keep missing. 

To this day, I meet with both existing and prospective Client's of a certain age who also don't trust "investing" or "ETF's" or "advisors" or much of anything else, absent dirt, a purposely built home and cash. 

Their starting point; the Great Depression. 

Bottom line is that "it" lasts longer than we think, takes more of a toll than we realize and consumes the thoughts of a generation. 

The failure of the Financial Crisis and the havoc it caused might need to be measured for the rest of most of our lives. 





Is This The Next Advisor

Robo-Advisors are a class of financial advisor that provides portfolio management services online with a minimal amount of human intervention. Wikipedia contends, that "It's the financial equivalent of booking an Uber on your phone versus standing in the cab line at the hotel." 

In reality though, the Wikipedia comparison fails at a couple of things. First, it's the notion that I could be sitting at a sidewalk table in the afternoon sun sipping a beverage of my choosing whilst I Uber up a ride from my iPhone vs. standing in the summer heat, sweating out the lineage waiting for the under-air conditioned cab to arrive.  I get it, that doesn't sound like a better deal than Uber'ing up my cab. 

But, here's the analogy reality.....the difference between your Robo-choice and an actual advisor is really more like using Uber to get your cab or just asking the Ritz Carlton Concierge to get a cab for you isn't it? If it isn't, then the problems not that Uber'ing up your cab is better, its that you've got get a better Concierge. 

The contention is that Robo-Advisors provide some real advantages to Consumers; 

1. They use essentially the same tools that Real-Advisors use, and; 

2. They can serve the underserved masses who either [a] don't meet the account minimums of Real-Advisors or, [b] can't afford the typically high fee structures of Real-Advisors

So, let's look at those two things. 

First, they don't come close to using the same tools are Real-Advisors any more than neurosurgeons use the same tools as auto mechanics. (You know, that tool that "removes something.") At point of fact, they might use the same "analytical tools" as Real-Advisors, but not the same tools. Making the contention that the same tools are used is inaccurate at best, lest we consider that "conversation", "goal setting" or "understanding your risk tolerance",  or "your feelings about money" or "your past behaviors and your predilections and behavioral biases" can simply be ignored. Reduced to it's simplest component parts,  an interior designer is going to use the same tools no matter who you pick right? It's more or less going to come down to, paint, rugs, curtains or window coverings and furniture isn't it?  Why muddy the waters by asking you how you feel about a certain style of furniture or paint color? 

Removing personal bias isn't good work, it's just simpler work. 

Secondarily, real-advice is expensive at really-expensive advisors, not at all advisors. Not at this advisor. And, not every advisor has an account minimum. The notion that only high-priced services result in effective outcomes is bogus, but that's in essence what you're doing when your contention is that there's only two flavors of advisors, Robo and High Priced.  If the price of things was the sole determinant of much of anything, then every golfer out there would be swinging the most expensive clubs they could find and they'd all be on the PGA tour, because of course price and success are inexorably tied to each other. Bottom line is that you're either good at what you do or you're not. Your fee schedule (while often way too high) is a marketing decision in response to market factors, not an indicator of intelligence or ability. 

There are many things surrounding the birth of the Robo-Advisor that I do agree with. I do think that as a rule, investment management fees in most instances are way too high, non-transparent and a bit over the top.  I also agree that account minimums are problematic. 

At Barry Capital we've solved the conundrum of pricing advice.  And we can prove that "Robo" is a "no-no" for most people, and clearly not your only viable pricing or advice option. 

The 4 Ways to Successfully Adopt New Habits

Adopting new ideas, or methods is difficult to do, just ask anyone trying to start an ongoing exercise program or diet. 

And, there are work habits (can I possibly NOT spend most of my day dealing with emails?) and scheduling issues (can I live untethered to my smartphone for an evening or a day) as well. 

Here's some insight on how you can increase the likelihood of successfully adopting some of those new habits.

And please if you find this helpful, Pass It On, somewhere out there there's someone who's looking for advice just like the video below. 

Inaction vs. Wrong Action

I can't take responsibility or credit for the title of this blog post. 

So let's give credit where credit is due. 

Inaction leads to failure more often than wrong action.
— Morgan Newman at Inc.'s GrowCo Conference

No matter what it was that lead to Mr. Newman's profound perception, the application of his perception to Wealth Management is unmistakable. 

To be sure, there are many people who have justified their inaction by telling themselves and others, that their inaction is a direct attempt to avoid the wrong action. 

It's not can make a mistake by doing nothing, simply because doing nothing is an active decision whether you think it is or not. 

You know what else is not true?

  • There'll alway be time
  • The best is yet to come
  • That'll never happen to you
  • You did it once you can do it again
  • Build a better mouse trap and they will come
  • It won't look anything like that when you get there
  • It won't matter anyway
  • It's never too late to start

Should we go on?  Hardly. 

Waiting to get it "just right" most likely means that what you've gotten just right is your ability to get it mostly wrong. 

Pass It On Series: A Getting Better Mindset

Pass It On Minimal.png

We're all guilty of being hard on ourselves. 

Is it possible that being too hard on yourself can actually be deterimental?

Based on this presentation from Heidi Grant Halvorson, if we'd just focus on getting better and not being "best" we'd have a greater chance of an expansive life of personal and professional growth.