December 15, 2010

It Is Simple…

That fact is I’ve spent most of my life talking to people with the respect that they intellectually deserved. But all along the way I've been told that I needed to “dumb down” (a vile term if I do say so myself). And while I’ve resisted the temptation of simplify my writing I have recently come to the conclusion that my clients deserve two tings:
1. Keep it simple, because it usually is.
2. Unless it’s not.
I’m not trying to undermine the necessary intellectual discipline when provide investment advice, although I’ve never been much for intellectual anything. The discipline is what allows the student of thoughtful knowledge to gain an edge in providing clear investment advice.
Why is this important? Because no consultant can afford to plan for a client without the understanding that living within ones means is the first step in planning and investment is the vehicle that funds that plan. Simple right? So how come there is an army of advisors who insist on deemphasizing investment advice in favor of planning? The answer is (you guessed it) simple. It’s because planning require nothing more than sound software and some experience using it and investment advice requires a knowledge base which can only be fed by experience.
I think that people deserve nothing less than the honest truth regarding the probabilities of wealth accumulation and the realities facing a home balance sheet burdened by debt and a confusing understanding of how it happened. The latter often the highest hurdle when creating a budget and placing faith in a solution as simple as living smaller at best or having to sell the second home in an uncertain market at worst. Not impossible since no one really knows what the future of housing might bring but almost certainly an outcome that needs to be considered.
This brings me to a conclusion. That the simplicity of a solution is conceptually never far from our collective minds. It’s always easier knowing what we did wrong than recalling what we did right. Hence, we often confuse the occasionally skillful outcome of a successful endeavor as luck, or even faith.