The world needs “story stocks.” It’s 2021, so we can engage in some forward thinking. Imagine a world were all investors fit into one of five asset allocation models. The “buckets” were filled with index tracker funds and ETFs. The advisor (or a computer) rebalanced when necessary. Everyone gets the same of one yearly performance outcome, because everyone basically owns the same thing. It would be difficult to explain to a client why they need to pay full fees instead of the lowest price out there. How is the advisor adding value?

Let’s Talk About Story Stocks
Time to talk about champagne. My wine guy sent out an email about a champagne that’s grand cru status. The property changed hands several years ago. The previous owners sold their grapes to be used in Dom Perignon. The new owners decided to produce their own champagne instead. Dom Perignon sells for about $ 170 a bottle. This champagne costs $35 a bottle on sale. It’s the wine world’s equivalent of a story stock.

Would you buy that champagne? Sure. Would you serve it to your friends? Absolutely. Would you bring it up in conversation? You bet. Would you send your friends to your wine guy? Of course.

Most of a client’s money might be invested with professional money managers. There’s still a place for individual stocks, something they can brag about to friends on Zoom calls and socially distanced encounters. As their advisor, you are accomplishing several things to your benefit:

1. You understand them. Your client loves gourmet cooking. Every hobby has a few public companies selling stuff in the background. You mention the name of a well-known store and the parent company. Fortunately, your firm likes the company.

Client benefit: They tell friends: “I own a piece of that.”

Advisor benefit: You demonstrate you know what’s important to them.

2. Buying and selling. Stocks have two decision points. When to get in and when to get out. They might figure get a tip from their barber, but they probably aren’t told when to sell.

Client benefit: They feel in control. They have the thrill of buying and selling.

Advisor benefit: They need you to advise them when to “hold ‘em and fold ‘em.”

3. Social responsibility. Your client doesn’t have an interest in stocks. They are concerned about social responsibility, making the world a better place and giving back to the community. You find companies that fit those criteria.

Client benefit: Telling friends their investments are consistent with their own values.

Advisor benefit: The client knows you took the time to learn what’s important to them.

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