Letters to Our Clients
Some of us are bigger worriers than others. I worry over a very long list of things that mostly concern my son Carter. He currently has a lot of enthusiasm for cars. Sadly for me though, his most opportunistic hands-on car experiences involve parking lots. I worry a lot for Carter in parking lots, because of cars! I think most days his four-year-old enthusiasm is greater than my old dad chasing muscles. But I compensate for that worry with extra attention and that is the end of it.
Twenty years ago I entered my first multi-day motorcycle endurance competition. It began and ended in Columbus Ohio. I had entered this event without any previous knowledge of what it would take to ride a motorcycle for five days in a row averaging a little over 1,000 miles per day. Looking back, I should have sought some advice from a few experienced endurance riders. Instead I just jumped on my trusty Kawasaki Concours with a stack of AAA road maps and headed to Ohio.
Old Big Red sprung a leak a while back. Many of you are familiar with Big Red, but there are a few of you who might need an introduction. Big Red is my 18-year-old Chevy Silverado 2500 HD. I realize this may not be the type of vehicle driven by the majority of bankers, money managers, financial advisors, or brokers, but for me he is comfortable, and for the most part very reliable. Besides, I grew up in farm country and quickly learned the value of a pickup.
In today’s world, where politics take up the majority of news cycles and there is an ongoing war of words between the two major political parties, I decided for this letter to replace our often used phrase “conservative investor” with “cautious investor.” I believe this is a good description for the majority of affluent investors, those who have accumulated a larger sum of money through savings and investments over the years. For this majority, the preservation of wealth is a priority. However, these investors are also looking to increase their wealth. The primary method for meeting this dual desire is asset allocation.
The boring truth of financial analysis and portfolio management is that the majority of our days are spent visiting with clients, reading, reading, reading, and when required, making decisions. Years ago it would have included quite a bit of time on a calculator, but thanks to the low cost of computers and software, most of the number crunching can now be completed with the push of button.
The first time we meet with an individual or couple to begin discussing their investment needs, more often than not they will say something along the lines of, “we should understand this stuff better, but we don't." People across the board, regardless of age, amount of savings, or professional expertise, are embarrassed that they aren’t also investment experts. This is despite the fact that unless you've gone to college for it, you likely received no teaching on the subject in school. If you are lucky enough to be employed by a company that offers retirement benefits, what should be an educational workshop or handout introducing you to their plan instead ends up being a confusing, and often times worrisome, reminder that you weren’t taught any of this stuff in school.
Kendall J. Anderson, CFA