I’ve been asked by a couple clients recently; “What are you invested in?” After all, we would expect a chef is willing to eat their own cooking! This is a reasonable question to ask an advisor and it has come up periodically throughout my career. Here’s my perspective for you to digest.
My first thought is that my objectives are often very different than the client asking me this question. Dawn and I have a five-year old, own businesses, and are possibly a couple decades away from retirement. At PCA, our planning and recommendations are not “one size fits all”. A high percentage of our clients are close to or already in retirement and don’t have dependent children. Different case facts and goals require specifically tailored solutions.
There are many situations in which two clients have approximately the same demographical information (age, income, etc.), yet very different values or very different goals. Therefore my recommended solutions will reflect the best interest of each client individually, based on “hard facts” (numbers) and “soft facts” (goals & values).
All of the above is important, however I’ve thought about this question more and this may help you appreciate the benefit of working with a Fiduciary like PCA. Dawn and I are invested in PCA. Our financial planning practice (PCA) is our primary investment and will fund our retirement as your investments will fund your retirement. So how does my investment (PCA) succeed or fail and why is it relevant to you how I invest and whether it works out or not?
At PCA, I advise people so as to improve their decision-making, manage money and mitigate various types of risk. If our client accounts go up in value, then my investment (PCA) does better! There are two ways PCA client accounts go up; (A) Growth due to positive investment performance or interest earned and (B) Additional account deposits from satisfied clients and new clients. If your account goes down 10% or you transfer your money to another firm, then my investment (PCA) suffers.
You see, every recommendation I make is to serve your best interests and your family’s best interests. This defines a Fiduciary. Dawn and I will not succeed with our investment (PCA) unless we help you and many other clients succeed with their investments and decision-making. Our investment revenue is directly correlated with the performance of your accounts held at TD Ameritrade with PCA.
When you “win”, we “win”. If you “lose”, we “lose”. We don’t earn a penny from trading. We don’t make more money by choosing any particular stock, mutual fund or any other investment.
When I recommend an investment to you, I’m absolutely “eating my own cooking”. I am absolutely invested in the exact same portfolio as I’m recommending to you and our other clients.
Investment returns are always important, but I’ve mentioned “decision-making” a couple times in this article. For most of our clients, the value of our strategic advice has significant value. Retirement and tax planning, risk management, critical thinking and questioning all contribute to your success which then contributes to PCA success because you stay with our firm and share positive results with others that may benefit from working with PCA!
So what am I invested in? I am invested in you, your goals, your dreams and achieving successful outcomes as you define them!