Eight things a brutally honest investment advisor would tell you about fees, returns and more

Discussing your investment year with your advisor is a lot more fun than it was 12 months ago. Want to take notes to prepare for a talk? In honor of Financial Literacy Month 2022, here’s a list of eight things a brutally honest investment advisor would tell you about fees, returns and more:

Some of your clients should stop investing for 12 months to pay off their debt

Investment companies like us make money by applying fees and commissions to funds in client accounts. With interest rates rising, debt reduction should be the No. 1 financial priority for people with high levels of household debt. Do you see the problem? Debt reduction we recommend money to us, even though it brings guaranteed financial benefits to heavily indebted clients and relieves one of the biggest sources of stress in their lives.

We don’t have answers for years like 2022

You know how we told you that thoughtful portfolio diversification is the way to long-term investment success? A funny story. Those bonds and bond funds we put in your portfolio for stability dropped like a stone. Sorry, Chief. Investing means getting hit in the face from time to time, even if you’re making progress toward your long-term financial goals.

Forget investments; The value of our operation is in the planning

Frankly, it’s doubtful that any of the returns we recommend will consistently outperform a portfolio of low-cost index-tracking exchange-traded funds. Sorry for pretending otherwise, as our business is still largely built on the outdated idea that financial success is about choosing the right investments. Our time is most effectively spent figuring out your financial goals and achieving them through a combination of planning and ongoing coaching. Try selling it on a billboard.

Don’t worry about us – yes we will be fine

As surely as night follows day, our advisory fee will be deducted from your account on schedule. The investment company always gets paid – now that’s a rule you can count on.

Middle class and lower income people are wonderful people to us

We may tolerate clients with lower five-figure investment amounts, but they are frankly a nuisance because they don’t generate enough fee and commission income. Now don’t expect us to say so outright and post minimum account sizes prominently on our website. That would be tasteless. Instead, we rely on signaling, such as repeated use of the word “wealth.” Forget advice – our business really is wealth management. If you don’t have a lot of wealth, try your bank’s mutual fund counter.

Junk investments enter our portfolios

expensive mutual funds? Yes, we have been known to use them in client portfolios. In-house funds that compare poorly to third-party offerings? Blush. Fashionable new products to take advantage of trends where easy money has already been made? Maybe, honey. The investment advisory business is show business. Keep your customers entertained.

We are good at talking to investors, not to them

You say you’re losing money, we say the market is volatile. You say your interest fund has been slaughtered, we say interest income is facing challenges. Talking about platitudes and jargon helps us blur the chaotic side of investing and make us seem like we have things under control. We don’t – that’s what financial planning is for.

You’re a bit lazy yourself

I, your diligent advisor, put together a financial plan for you after many hours of work, and you attach it to the slides from your 1975 vacation in the Catskills. I tell you it’s a good time to invest because stocks are down, and you say you’re waiting for the market to bottom. I’m asking you to keep in touch with what’s going on in your life and you neglected to mention that you’re divorced, you tapped into your retirement savings to give your teenage child a down payment, and your boss has been avoiding you for months. You should be the co-pilot in your household, not the passenger.

Brutal honest banking

Check out last year’s list of six things a brutally honest banker would tell you about mortgages, home equity loans and market-linked guaranteed investment certificates.

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