Word's for the week consistency and conviction.
"There must be consistency in direction." W. Edwards Deming
"If you're not consistently carrying out your plan ninety percent of the time, you really don't have a plan at all." Alwyn Cosgrove
"Small disciplines repeated with consistency every day lead to great achievements gained slowly over time." John C. Maxwell
"Core passions and aspirations should be consistent and in sync." Lorii Myers,
"Work on your goals, one step at a time. Remain focused and do not stop. You will be amazed how much you can accomplish over the years. In most things in life, it is not the speed but the consistency that matters." Roopleen
"Conviction is worthless unless it is converted into conduct." Thomas Carlyle
"You cannot build a dream on a foundation of sand. To weather the test of storms, it must be cemented in the heart with uncompromising conviction." T.F. Hodge
"To yield readily--easily--to the persuasion of a friend is no merit.... To yield without conviction is no compliment to the understanding of either." Jane Austen
"Internal conviction drives external action." Todd Stocker
"Growth of consciousness does not depend on the might of the intellect but on the conviction of the heart." Wayne Gerard Trotman
I could call this discipline revisited. (See the update from last week)
Discipline in Wealth Management involves a consistency in methodology along with a conviction to maintain processes and strategies of implementation.
There are basics of financial planning.
- Cash Flow Structure- Income, Fixed Expenses, Discretionary Expenses, Savings Needs/Goals. Etc.
- Protection from catastrophic loss with low cost insurance solutions.
- Short term savings first; checking plus savings account. Twelve to eighteen months of fixed expense.
- Medium Term Savings; Money Market, Short Term Bonds, two to three year Certificates. Liquid for an emergency, or goal within 4 years.
- Investments; long term savings beyond five years.
- Beneficiary, aging, longevity, gift and legacy planning.
These are the areas of expertise of a Financial Planner. Financial Planners often can be your representative and consultant for you to interact with other professionals such as attorneys, accountants, insurance professionals, investment advisors and accountants.
Investment Advisors (Not Brokers) are experts in managing investment portfolios; analyzing investment allocations, selecting investments, investment strategies or investment managers.
Investment Advisors are consultants not sales people. Investment Advisors chiefly manage investment assets for fee, they should not be taking commissions or selling products.
The selling of products by collecting compensation from the product vendor or earning commissions based on the product sold produces a conflict of interest.
Brokers as product distributors have a different role than an Investment Advisor.
Wealth Managers essentially take on the role of both Financial Planner and Investment Advisor. (Beware names can be deceiving)
True Wealth Managers gain expertise in both world's Financial Planning and Investment Advisory.
Wealth Managers have designations such as CFP® Certified Financial Planner or CHFC® Chartered Financial Consultant plus CIMA® Certified Investment Management Consultant®, AWMA® Accredited Wealth Management Advisor and AIF® Accredited Investment Fiduciary.
Wealth Managers demonstrate expertise both as a Financial Planner and an Investment Advisor.
I am going to pick back up with the basics of the Investment Advisor Role next week and continue with my theme of consistency and conviction next week.
For now I feel like I am getting a little long winded on this front.
I want to conclude by highlighting the area of saving!
Craig Israelsen has put together data in the latest Financial Planning Magazine that highlights the deficit in Financial Planning by many, they save very little or begin saving late.
com/news/investment_insights/ 20-percent-rule-how-much- should-clients-be-saving- 2690037-1.html
The point is, if you need to live off your investments for twenty to thirty years during retirement, you may need significant help in both areas Financial Planning and Investment Advisory.
More on discipline, consistency and conviction next week.
The S and P 500 index trended up last week. + 1.22
The 10 year Treasury Yield index trended down last week.
The US Dollar index ended even to where it started last week.
The CRB Commodities index trended down last week. - .85
The Gold Index trended down last week - .39%
Inflation Linked Bonds trended down last week - 1.94%
The US Aggregate Bond Index trended up last week + .48%
The International Aggregate Bond Index ended even to where it started last week.
The New York Composite Index trended up last week. +.98
The Dow Jones World Index trended up last week - 1.67%
The NCREIF Index is aggregated and reported quarterly and is a total return broad representation including rents and appraisal of non-traded Commercial Real Estate.
2014 2nd qtr + 2.91%
Year to date gold and real estate lead. The yield on the ten year treasury is down 22% year to date.
Many investors take the wrong approach looking primarily at recent return and average percentage rates. Overall risk measures and managing downside risk play an increasing role in end results.
Investors instead should be focused on managing Dynamic Beta exposure, evaluation Active Share, Sharpe ratios, Treynor ratios, Sortino ratios and Alpha.
The above is for informational purposes only and not an offer or recommendation to buy or sell. Past performance is no guarantee of future return. All decisions about investments should be made within parameters of risk, time frame, financial position and overall asset allocation.