It’s natural to feel some degree of concern about your financial future. But industry professionals know that a client's worries gives them a certain amount of power. Instead of helping clients overcome their fears, investment advisors often take advantage of the misconception that the work they do is too difficult to understand. Like a doctors'. And, like a patient would, the public believes an investment manager’s job (as they understand it) guarantees trustworthy patterns of behavior. But it doesn’t.
It’s very common for managers to consistently underperform market benchmarks, yet clients pay the steepest fees in the industry for the perceived benefit of a personal investment manager. The idea is that a "gifted" expert is skillfully working the market to your personal advantage. But what actually happens is much different. Clients pay the high fees for investment managers only to routinely miss out on market performance. We've watched it happen, and tracked the data. But clients don’t know what's happening (though sometimes they sense it, and then doubt themselves). And so the pattern keeps repeating itself.
Regan Ervin was the chief operational officer at an investment management firm when he first felt the urge to address the industry-wide problem of poor portfolio performance.
Across the country, clients were paying a premium for a service that was failing them, he said, but it wasn’t because of the unpredictability of the stock market.
Studies by DALBAR, SPIVA and Morningstar all confirm that investment professionals underperform benchmarks.
And while the firm he worked for at the time held itself to fiduciary standards—the highest in the industry— even they couldn't avoid underperformance.
"It hit me one day in a staff meeting," Ervin said. "The traditional practices of investment management tend to cause underperformance, and are more about professional image than client outcomes."
"I looked around me and I knew there was a better way," he said.
Investors can and should understand not just their investment options, but what's behind them. Once shareholders know more about investing and industry culture, they can hold our industry accountable. They'll see greater returns. And our industry will benefit because of it.
Performance is the sole objective of investing, so it's fair to insist it should drive the industry. Two ways performance should be prioritized but isn't: factor-based investing (relies on data, not discretion) and exclusively fee-based services (no conflict of interest). Data overwhelmingly proves changes in both areas make a really big difference in portfolio growth.
We believe we can prove that investors don't need a intuitive stock trader who works the market for them on a daily basis. But what they do need is someone to direct their wealth to accomplish their goals. Through the investment direction methodology and framework, clients and directors build a relationship and shared language for targeted and unique outcomes. Clients get a strategy informed by their personal interests, and they're free to enjoy the benefits.
We get together and hear your story. What are your goals? What do you need help with? Where are your assets currently invested? After we meet, you decide if it's a fit.
Once we look into your wealth management status, we educate you on our findings. Next, we simplify your financial tasks and get to work on future goals.
Without commission-based products or any charges besides our asset-based annual fee, we’re free to work together indefinitely towards our mutual best interests.