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From Mark Ford, editor, Creating Wealth: Some readers—especially those with significant wealth—may be wondering if they should hire a professional to make asset allocation decisions… and even select particular investments within each asset class.
I wondered the same thing for several years before I began writing for PBRG.
I interviewed two firms. One was a boutique business based in New York City. A friend had recommended it. The other was a private banking facility for one of the world’s largest brokerages.
The boutique firm was happy to take $100,000 of my money to get started. The other company wanted a minimum of $10 million. They both had fancy offices and pretty marketing brochures. But such impressive details always scare me.
I couldn’t stop thinking: Boy, these guys must be making big margins to buy all this fancy stuff.
Despite my trepidations, I worked with both of them for about six months. I answered their questions about my tolerance for risk (little to none) and listened to their presentations. And then I did something most of their clients don’t do.
I started asking them questions. I asked the simple questions I always ask before I acquire a private business. What happened next surprised me.
I expected to learn something from their responses. I believed they’d either answer my questions brilliantly or show me how my questions were misdirected or naïve.
I expected them to persuade me their strategies were better than mine. (I really did. These guys were smart. They’d gone to great schools. They had graduate degrees. And they seemed so… inside the game.)
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More importantly, I wanted them to be better than me.
Managing my own money, while not laborious, took effort. If they could do the hard thinking and give me better returns, why not?
At the end of the six months, I concluded that none of these professionals knew more about how I should invest my money than I did. They knew less.
They knew less than I do about how businesses really work. They knew less than I do about how to evaluate businesses. And they showed no common sense when it came to making asset allocation decisions.
I also came away with the distinct feeling they really didn’t care whether I was going to get richer at the end of the year. All they seemed to care about was getting richer themselves.
 I know this account will upset some people in the professional financial planning community. So I want to clarify what I’m saying.
There are thousands of brokers and advisers out there who know more about the mechanics of investing than I do. There are also thousands of CPAs and college finance teachers who know more about theory. And there are plenty of brokers and advisers who do care about how their clients fare. (I ultimately found my broker, Dominick. I trust him instinctively. He listens to me. He’s risk averse. And most importantly, he always remembers he’s working for me.) |
In terms of managing my money and making the important decisions—asset allocation decisions—my experience was this: Neither of the two “big shot” firms I worked with could make the decisions better than I could.
I told both of these elite financial planners to take a hike. And I went back to managing my money myself. With the full-spectrum financial education we provide at PBRG, you’re empowered to do the same, if you so choose.