Change vs. Meaningful Change
By: Tim Butt
Being an investment coach and talking to investors on a daily basis, one thing I enjoy understanding is their investment journeys and how they’ve tried to maximize returns on their investment dollars. Here are the two most common journeys:
- Passive Journey – Investor stays with the same financial advisor, sticking with him/her through good times and bad, allowing the advisor to frequently change investment strategies while trying to beat the market by chasing ‘hot’ funds, stocks, or fund managers.
- Active Journey – Investor changes financial advisors from time to time, chasing the ‘hot advisor’ that supposedly has the next winning strategy…only to find out this ‘hot’ advisor quickly cools off, just like previous advisors.
Both journeys leverage a common thread, CHANGE. Change that chases the latest ‘hot’ fund, stock, fund manager or advisor. When I ask how these changes have helped them, I hear on a consistent basis that these investors are NOT satisfied with the returns on their investments and are concerned about achieving future financial goals. To confirm this continual trend of change, consider these past and present ‘hot’ sectors:
- Technology stocks during the Dot-Com bubble (which burst)…and we know those results!
- Mortgage backed securities, credit default swaps, auction rate securities and derivative products during the Housing bubble (which burst)…and we know those results!
- Gold and precious metals during the current global debt crises (bubble that is growing)…and time will tell the result of this bubble.
Here’s what makes me Mad-as-Hell: These same investors that are NOT satisfied and concerned, will jump at that next ‘hot’ tip their advisor recommends…like today’s gold-rush!
Why have previous experiences and history not changed their investment philosophy? It’s because the CHANGE that these investors have made, and are making, is NOT meaningful change! Investors continue to play the same game, unknowingly. As long as they’re playing the financial service industry’s game, investors will continue to be dissatisfied and have good reason to be concerned about their financial futures. Ask yourself this question: Is my financial advisor losing sleep after looking at his/her portfolio…or…are they sleeping soundly at my expense?
So what is considered MEANINGFUL CHANGE and how can it provide improved results? Find out the answer tomorrow in our ‘Do This, Not That!’ blog. Stay connected to our daily educational blogs to learn more about change that is truly meaningful.