“The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other person's mistakes of judgement.”
- Benjamin Graham
We have no problem ascribing value to tangible goods. But it's not that easy when it comes to the more intangible, like expertise or knowledge. Why?
by Alan Friedman
There was a time when the only way an investor could buy and sell stocks was through a stockbroker who was, in effect, a gatekeeper.
It didn’t matter which broker you used. The only time you paid anything, was when you bought or sold a stock. That’s the way it was done. And it was easy for investors to reconcile.
From the investors’ perspective it was quick, straightforward and immediate. But maybe, because our focus was on transactions, the positive impact “advice" has on investors’ long term success wasn’t totally apparent — and by that I mean, it’s value.
The intangible, incalculable value of advice.
What is it worth? What should it cost?
Hard to know, when even the concept of value is so abstract, investors have trouble defining it.
Which doesn’t mean the matter should just end there—or that it should be left to our clients to figure out. No, on the contrary, I believe it’s our responsibility—advisors and the industry itself—to give true meaning to what we offer and explain how and why the value we provide goes way beyond the returns investors tend to focus on (which in itself warrants a discussion).
To make it tangible, in other words.
Which is the very reason I’m writing this blog post—and why, over the coming weeks, there will be even more of them, where I will go into greater detail.
Because without having that understanding, without an appreciation of the “return” investors get from the advice, the depth and breadth of knowledge and resources we offer (all of which contribute to the financial returns investors want)—the intrinsic value we provide, in other words—it shouldn’t surprise anyone when clients evaluate what we do based on the “buy,” the “sell” and what they pay—and question fees and commissions.
When what they should be evaluating is the value of what we do and what we offer, all it encompasses and why it has merit and worth
Let’s start with the value of not just good advice, but strategic advice
For instance, no one questions the significance of investment selection and asset allocation on returns. But investment professionals—advisors and tax specialists—place just as much importance on tax efficient strategies. And rightly so.
That’s how successful investors can end up saving hundreds and hundreds of thousands of dollars. Money you get to keep, instead of losing it to taxes. Money that can, instead, be re-invested, money that ends up earning more money. Alternative investments are another example. They offer investors opportunities to diversify away from equities, fixed income and cash investments and the benefits are many: Reduced volatility and risk, capital preservation and hedging against rising interest rates or inflation, to name just a few.
And it doesn’t end there
In fact it’s just the beginning, because as critically important as all that is to an investor’s success, Friedman Investment Group clients also have automatic and unlimited access to a whole host of specialists — all of whom are here to help ensure our clients’ financial wellbeing — today, tomorrow and years from now. Whenever the extraordinary talent, expertise, knowledge and resources available within the extended CIBC family is needed.
It’s all just part and parcel of what we offer you. Above and beyond the advice, the guidance, the counsel, the strategic thinking, the recommendations, the portfolio construction and management we already provide everyday.
And, as I think about it, I realize that I’ve been guilty of not including all of this in my ongoing conversations with clients. Not intentionally, negligently, or because of a lack of passion — but because I’m guided by what my clients need. At the time we’re meeting, my clients may not need any of the extraordinary resources available through the extended CIBC family and so I may not elaborate on what they are and just how my clients can benefit.
Which, however, I can now see, is both a mistake and a lost opportunity.
An opportunity to have the “value beyond” conversation. An opportunity to talk about the importance of thinking ahead, planning for all eventualities, making sure you’re informed and ready for what could come down the road.
An opportunity to either literally or figuratively introduce you to the experts and specialists who can advise, explain and share custom tailored solutions on everything from financial planning to insurance (the importance of which I discussed not too long ago in the blog post I wrote, about how I invest my own money).
From explaining how much money you can save with the right tax efficient strategies… to ensuring your family is properly protected from any eventuality by working with specialists in estate planning and preservation to business succession and transition planning.
From providing advice and guidance on how you can make sure your children and grandchildren are financially fluent (and secure after you’re gone)… to how you can make the most (and get the most) from your charitable giving.
From taking full advantage of your relationship with CIBC, even as it relates to everyday banking services… to how—with customized lending—you never have to miss out on an opportunity… to ensuring you’re maximizing the amount of liquid funds on hand so any cash shortfalls are minimized and you have more cash available whenever you might need it. And even more.
Any or all of which is literally a phone call or email away, simply by virtue of your being my client. Because for us, it’s all about ensuring successful outcomes for our clients. When you’re successful, we’re successful.
Our extended CIBC family reminds me of an African proverb, “it takes a village to raise a child”
Its meaning is unmistakable: An entire community of people must interact with children for them to experience and grow in a safe and healthy environment. To get the most out of their lives. To be the best they can be. I believe that very same principle also applies to successful investing. So, needless to say, being able to provide my clients with that metaphorical “village” is something I’m proud of and excited about.
To me, it is one of the most significant benefits my clients get by working with me. I truly believe it adds tremendous value to our relationships; and, more specifically, to my clients’ success as investors. So much so, that over the coming weeks I’ll be writing, in more detail, about why I am so excited to be able to offer these services to my clients. Why I believe so passionately that while good, sound advice, portfolio construction and management is essential, it is not solely responsible for an investor’s success. Because “it takes a village.”
Make sure you don’t miss any of my posts. Follow the blog and you’ll receive email notifications every time a new post is published. See you soon!
Alan Friedman is an Investment Advisor with CIBC Wood Gundy in Toronto. The views of Alan Friedman do not necessarily reflect those of CIBC World Markets Inc. CIBC Wood Gundy is a division of CIBC World Markets Inc., a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Regulatory Organization of Canada. If you are currently a CIBC Wood Gundy please contact your Investment Advisor. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.
Insurance services are available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are available through CIBC Wood Gundy Financial Services (Quebec) Inc.
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