A discount brokerage is running a television commercial that shows two brothers discussing their investments. During the discussion the younger brother who uses the discount firm asks the older brother a question. ” You’re not still investing with Mom and Dad’s guy, are you?” The message being sent out in this commercial is very one sided with the focus on fees. The reality is that the fees quoted on that discount platform are almost identical to the fees charged on our platform. We will save that argument for a future message when we can dig a little deeper. For today’s discussion we simply want to try and answer the question the commercial discusses about who is Mom and Dad’s guy? To answer that question, we are going to look at the members of our team, The CM Group.
In our group that advisor would on average be fifty years old with twenty-five years of experience. Mom and Dad’s advisor has experience in navigating investments and emotions through difficult times. They are a seasoned advisor with a history of helping clients through numerous bear markets. (A bear market simply being a period of time when the stock market has a decline of twenty percent or more.) The significant bear markets that our team has helped clients navigate include:
- The Asian financial crisis in 1997
- The failure of Long-term Capital and the ensuing bear market in 1998
- The oil price drawdown of 1997-1999
- 9/11 & the bursting of the technology bubble in 2000-2002
- Global Financial Crisis of 2007-2009
- Oil price drawdown of 2014-2015
- Covid-19 pandemic of 2020-?
Here are some other facts about Mom and Dad’s investment professional:
- They continually upgrade their knowledge about investing, financial planning, estate planning etc. through continuing education programs. Some as required by regulatory agencies, and some by their own desire to remain on the leading edge of academic and industry advances. In doing so they attend conferences and educational symposiums, and take certificate courses to continually upgrade their credentials and expertise (at their own expense).
- They understand that setting and achieving financial goals are what matters most to investors. Achieving these goals mean more to investors than how an investment performed relative to an arbitrary benchmark or other alternative. They formalize clients’ goals and document them in writing.
- They pay attention to tax consequences in formulating investment strategies and understands that it’s not only about how much you earn but how much you keep
- They are there to provide advice, where possible, on areas outside of investing – things such as “should we buy this recreational property – can we still meet our long-term goals?”, or “how can we help fund our grandchildren’s education?”
- They are likely the only person outside of your own family who cares as much about your money as you do
- They provide referrals to other professionals. Establishing working relationships with your accountant, to provide tax information to ensure prompt and accurate tax filing. Working directly with your estate lawyer, to ensure that your will and estate planning is accurate.
- They monitor changes in your personal and financial situation
- They monitor your investments and provide regular updates, asset allocation analysis and portfolio rebalancing.
- They avoid high cost investments
- They work with families on intergenerational wealth transfer planning.
There are many other services and activities that ‘Mom and Dad’s guy’ provide. As such, there are clear differences between the services provided by the discount brokerage in the commercial and those provided by The CM Group. Each investor has the full right and discretion to choose the level of service they desire. But in no way are they equal.
(Please note that this discussion focusses around Mom and Dad’s “guy” because that is the way it is presented in the commercial. This is not a gender discussion, we are simply pointing out the message being delivered. There are many people of all ages, gender and back ground in the investment advisory and portfolio management business that provide the same excellent service as that described above.)