Find a Trusted Advisor and Avoid Salespeople

“Honesty brings responsibility” – that’s what I heard on the radio today!  And as I thought about that saying on my way into the office, I realized that too many salespeople saturates the financial services industry.   Don’t get me wrong, I think salespeople are an essential part of any organization, but at the same time, the question in my mind is “what’s in it for them?”

If you’re going to disclose your entire financial picture, including your values, goals, assets and liabilities and delegate the creation and implementation of a tailored financial plan, you want to work with someone you can trust. 

Someone who is both competent and caring, professional and proficient.  Someone who wants more than to sell you a mutual fund, an insurance policy, or investment management services.  Someone you can count on to keep the big picture in mind, the needs of you and your loved ones foremost, and the details of your personal finances confidential.  What you want is a Trusted Advisor or an Investment Management Team that values honesty and moral integrity.

In your search for the right person, you may encounter three types of individuals:  the “scientific” salesperson, the so-called consultant (who is actually a salesperson pretending to be a financial planner), and the genuine kind: the trustworthy and competent advisor.  It’s unfortunate that they don’t hang a sign on their backs to let us know which group they fall into.  Their titles are no indication, either.  Stockbroker, insurance agent, financial planner, financial advisor, financial consultant, estate counselor, CFP, CFS, CIMC, CLU, ChFC: none of these labels is a clue.  Neither is the big-name company they might represent.  So you must assess each individual based on a set of characteristics and, ideally, recommendations from a friend, family member, or another advisor.  The Trusted Advisor rarely advertises, makes cold calls, or direct markets, so you are most likely to find one by referral. 

Oh, but they do write on blogs, to help you make an educated decision! 

Believing in Your Product or Service

All too often, Financial Advisors who are just starting out (and some veterans, too), get stuck promoting a product or service they know is a dog.  I know this sounds harsh, but lots of people have earned a living simply by taking the money and checking out at the end of the day.  But I promise you this:  If you don’t believe in what you’re doing, you won’t have the energy it takes to find out what you need to understand your customers and the value of your product to them. You won’t want to do whatever it takes to make your idea a success.  And if you’re a “Samurai Worrier,” you probably need a strong belief in your product just to drag yourself into work each day, let alone be successful at promoting it.

The Financial Services industry has the second highest employee turn over rate in the nation!  Second, only to Real Estate sales.  Why?  Because many people find that, while the money and income can be good, the product or service they are required to sell to get to that certain comfort level requires true passion and belief.  Many people get into Real Estate sales because they are on one of these three stages in life.  They were laid off or fired from their jobs, retired, or they have the entrepreneur spirit and wanted to be on their own.

I’ll admit it, I too, got foolish and got into Real Estate sales.  I was 28 at the time, and retired from my full time employment.  CAM Trading was self-sufficient enough and generated passive income for me, so I was able to take some of my time and money to pursue that.  Plus, I had seen an infomercial one late night and thought, “wow, I could be sitting in my own private island right now, wearing a buttoned-down floral shirt, but only if I call right now and order, operators are standing by!”

Two weeks after I made my first real estate sale (and a total time investment of 2 months), I decided that my passion wasn’t there.  I couldn’t get myself out of the house and into that drab Realty office to sit there for an hour answering phones.  I enjoyed the training and learning about real estate law, but it was a means to an end (getting to buy my private island to sip some fruity drink).   I ultimately wanted to relate to, talk to, and manage other people’s investments.  Being a Realtor didn’t allow for that.

Unlike my real estate sales experience, I’m in this business because I know we can do better for people regarding their investment choices, in fact, we have in the 5 short years of going pro.

So, when you do what your inner calling directs you to do, you’re more comfortable, happier, more energized, more focused.  And those qualities bring success, whatever success means for you.

Top 5 Economic Indicators that Affect Your Investment Portfolio

When it comes to noise, these five indicators create the loudest.  They could sway the markets to make drastically irrational price moves.  So, it’s probably worth noting their release time and date (which, can be found here: http://www.bloomberg.com/markets/economic-calendar/)

 

CPI:  Consumer Price Index
The CPI is the most widely cited inflation indicator and is used as a measure of the price levels of goods and services purchased by consumers.  The CPI is considered by industry experts as the best measure of the underlying inflation rate in the US Economy.

 

The Employment Report
Made up of two separate surveys, the Household Survey (60,000 households) and the Establishment Survey (373,000 businesses), the Employment report produces the unemployment rate figures.

 

Gross Domestic Product (GDP)
The components of GDP includes, consumption, investment, net exports, government acquisitions, and inventories.

 

Housing Starts and Building Permits
Housing Starts are a measure of the number of residential units on which construction has begun each month.  A start is defined as the beginning of excavation of the foundation for the building.  Housing starts are led by building permits, but permits are not required in all regions of the country, therefore, Starts figure is more telling.

Retail Sales
If your basket of stocks contain Dow Industrial bell weathers, then you might want to pay attention to this figure.  This is a measure of the total receipts of retail stores.  Often analyzed excluding figures for automobiles, food and gasoline, it’s the changes from month to month here that we’re looking for to identify shifts in consumer product demand.  The figure exclude sales of services.

These are important indicators to consider when you are trading on your own and more can be found on the site provided.

The Inability to Predict Future Events

I was listening to an Audio Book called “The Black Swan” by Nassim Taleb this weekend and found the topic of predicting future events through historical events fascinating. 

Summarizing his main point on the topic as it relates to trading and investing is we believe that we can somehow predict future price outcomes by simply studying the past price movements.  It’s as if you were to buy 10 previous copies of the New York Post and with what you’ve learned from those articles, you’ll somehow predict the next few days’ news stories. 

We often get trapped into that thinking when it comes to our investments.  We see a certain high performing mutual fund that is offered in our 401k plan for example and we believe it will continue forever, only to trap us several years later when we realize we got in at the absolute peak price. 

This doesn’t mean we should disregard price charts, and other historical evidence altogether.  But, instead we should consider the probable outcome and include those unpredictable events within our portfolio.  

Affirmations to Help Improve Our State of Mind

Personally, I’ve had little trouble with the subject of affirmation for many years.  When I first began looking for ways to improve my trading outside of market-related factors in my college years, I initially found affirmations somewhat silly.  However, affirmations are a form of meditation and visualization and can help us to see our true potential.  Affirmations are vitally important to become successful in all areas of our lives.  I now believe that almost every successful person has some sort of affirmation tool that they use on a daily basis, even if they don’t call it “affirmation.”

Affirmations are a pep talk of self-esteem to help keep stress in check, allow us greater emotional intelligence and awareness, and ultimately result in a healthy ego.

This morning, on my way to the office, the radio station I like to listen to had on a little contest where they took random callers and they would ask them to give a “pep” talk to a team.  This isn’t just one of those, “Let’s be positive, go get ‘em Tigers chant.”  No, it’s more like, “Ray Lewis of the Baltimore Ravens is injured and he has been put on the bench the entire season,” and the caller is the person replacing Ray Lewis!  So in 15 seconds or less, say what you need to say to the Ravens, just as Ray Lewis would!

I’ve only gotten a chance to hear one caller, an elderly woman from Baltimore, and the call when something like this:

Radio DJ:  “You have 15 seconds to get the Ravens ready for the Pittsburgh Steelers!, Ready, Set Go"!”

Caller:  “Okay…team.  Let’s get ready, we have to win…um…”

And, before she could calmly produce the next word, a loud buzz came on followed by laughter in the background!

Radio DJ: “If that’s what Ray Lewis says to the Ravens, I’d move to Pittsburgh and be a Steelers fan!”

The woman only wanted to win the Ravens tickets they were giving away, and I doubt she did with that monotone pep talk.  But, all of us often give ourselves uninspiring, energy-less self-talk.  Or worse, negative self-talk.  So, like Ray Lewis of the Baltimore Ravens, put some oomph behind those words and follow it up with a massive hit to the upper body area!

Avoid Forecasting - Learn to Recognize What's Happening Around You

Many people will try to see what they want to see and not necessarily what is actually going on.  Don't fall into that trap.  Be aware of indicators that suggest things may change, but do not get into forecasting.  The greatest investor of them all, Warren Buffett, has saying, "Forecasting tells you how much about the forecaster and nothing about the future!"

If the year 2008 told you anything, it should have told you that there is no such thing as an ever-growing economy.  If you believed that real estate properties will continue to rise because "they're not making more Real Estate," then please read the book, Extraordinary Popular Delusions and the Madness of Crowds (Mackay, 1980), and you'll see that hype existed long before our current "economic recovery," all the previous economies before that and will continue to exist well into future economies!

Ultimately, company values will depend on their financial performance in the long term.  Sure, there are wild short-term swings and great opportunities in the immediate term.  Sure, there were some amazing opportunities during the early part of 2009 (bargain basement prices abound!).  CAM Trading participated in those crazy days too.  But, eventually when the market wakes up, guess what happens to those synthetic prices?  History repeats itself time and again, especially where the stock market is concerned.

Client Services and Financial Advisor Teams

Advisors who work in a team generally do better than those who work on their own.  Many financial services firms have over 50 percent of of their advisors in teams.  At CAM Trading, we too, work in a team environment as we feel that the only way to succeed for our clients is to work together at it.  The team structure works well in large part because of the productivity and client-service improvements they afford. 

Advantages of Teams

Teams often specialize so that each team member can be an expert in something without needing to be an expert in everything.  This specialization can be in a particular practice area (trading, portfolio management, communications or some other element).

Clients can appreciate their advisor being part of a team because they feel that with a team, there is always someone there to take care of them who is familiar with their situation.  This gives clients a sense of community should something happen to their advisor. 

Financial services can be a competitive business, and advisors can be very protective of their best practices and reluctant to share them with potential competitors, even within the same firm.  Sharing ideas among and getting input from all members of the team is invaluable.  As such CAM Trading and its team members are very careful with its proprietary trading models.