Lies, damned lies, and statistics.
Some interesting data came out the other day that got me thinking. According to research out from the American Customer Satisfaction Index, client satisfaction with financial advisors is very high relative to all of the industries the group monitors – averaging 81 on a 0 to 100 scale.
In other words, at the moment financial advisors come out very high on everyone’s Christmas list. The trouble with taking the information at face value is that it doesn’t really talk about the underlying story (in my view).
We are not in normal times. We have been in the mother of all bull markets, where a blind baboon, riding a unicycle, could have thrown a dart and still picked a winning investment. Financial advisors have, relatively speaking, had it pretty easy. Little in the way of crappy investment calls, no mass redemptions, not a lot in the way of liquidity squeezes. The market has pretty much done a lot of their work for them.
That’s not to say they haven’t had value. They provide a structure that most of us simply can’t put together by ourselves. Unfortunately, we’re in an environment where a lot of investors have started to believe their own press, where people have been taking out mortgages to throw money at a cryptocurrency they don’t understand, and where stock markets have simply ignored the rhyme and reason of traditional cycles.
Will the music stop soon? Don’t know. Will it stop at some point? Definitely. Those that are managing their money in a way that suggests never-ending milk and honey had better keep their eyes open. This game is as much about risk management as it is return.
So keep managing yourself and your money for whatever will be. In the words of Warren Buffett, “Only when the tide goes out do you discover who’s been swimming naked”. Or in the immortal words of Public Enemy, “Don’t Believe the Hype.”