According to a Timex survey reported in Shape magazine, 73% of Americans work out. At least they say they do. As a financial advisor, you are making the case why investors need professional advice. Some people work with a personal trainer, others go it alone. You run into the same people when you prospect. Are you better off working with a trainer? An advisor? I think the answer is yes.
Why do some people join a gym and “go it alone?” Probably for the same reasons they think: “Investing is easy. Anyone can do it.” They attended gym class in high school. They think they know the basics. They watch how other people exercise and copy them, just like investors ask their barber for stock tips. Let’s look at why a structured approach is better.
1. Goals. You’ve heard: “If you don’t know where you are going, any road will take you there.” You’ve seen people in the gym who work our regularly, yet have bad form and rarely show much improvement.
Trainers: They learn what you want to accomplish. They let you know if it’s a realistic goal.
Advisors: They learn about you. What’s important to you? You aren’t investing for entertainment. You have long-term goals, like retirement.
2. Planning. You need a roadmap to get you there. Progress needs to be measurable vs. goals. This requires a plan.
Trainers: The plan they develop includes diet, cardio, weight training and rest. It’s not just “go to the gym” but do everything else the way you used to.
Advisors: The financial plan involves looking at all assets held everywhere. It involves saving and tax planning.
3. Licensing and credentials. They aren’t just someone off the street. They have been trained and certified. They likely have experience.
Trainers: They probably came highly recommended. Their professional credentials are one of the first things they talk about.
Advisors: They are licensed. They need to work in the industry before they can sit for the exam. They likely have additional professional certifications.
4. Focus: It’s easy to get distracted. I think I’ll talk to my gym friends about their weekend plans today. The market was down; I’m not going to look at my account statement this month.
Trainers: You are paying someone to help you work out. They move you from exercise to exercise. There’s resting too, but only the minimum, to maximize your progress.
Advisors: Although they help, the client’s portfolio is ultimately their responsibility. Poor performance isn’t someone else’s problem. It’s not about “set it and forget it.” There’s frequent contact and periodic reviews.
5. Avoiding distraction. People obsess. Focusing on the short term can negatively impact long-term results.
Trainers: Lots of people weigh themselves daily. This can drive you nuts, wondering why you aren’t seeing progress. Your trainer has you weighing in less frequently.
Advisors: Some people have cable TV financial news channels on constantly. They are elated or depressed daily. They want to get in. They want to get out. Advisors keep you focused on the long term.
6. Discourage stupid decisions. People often try lifting too much weight. They see someone else “taking this pill” and decide they will try it too. They look good and apparently, there’s this guy in the locker room... Investors buy products they don’t understand because their friend did.
Trainers: They closely monitor your form. They gradually increase the amount of weight you lift. They are not recommending illegal drugs and keep you away from people who use them.
Advisors: They will listen carefully to “ideas” clients have heard, determining if it merits a place in the portfolio. They are familiar with scams and products advertised on TV where the information given is incomplete.
7. No pain, no gain. You can’t make progress without expending effort or assuming some risk. This needs to be explained in a way the client finds acceptable.
Trainers: They explain you aren’t raising your heart rate or burning calories if you walk slowly on the treadmill or swing around the lightest weights.
Advisors: If you need a certain rate of growth to reach your retirement goals, you need to save a lot more if you insist in staying in money funds or consider investments with a higher possible return, mindful of the risks.
8. Plateauing. Sometimes you don’t see progress. You get impatient. “Maybe I'm doing the wrong thing. Let me try something different.”
Trainers: They can keep you on track, yet vary your exercise routine slightly to make it more interesting. They are confident you will power through this plateau.
Advisors: You might own investments that aren’t going anywhere. “Lets sell them and buy something else.” Advisors explain why the fundamentals are good. Patience is a virtue.