In particular, our very temperament, which makes us ferocious, highly successful traders in our day jobs, becomes a stumbling block for our role as investors of our personal wealth. By our very nature, we are quick-witted risk-takers; we’re ingrained to equate indecision with a death spiral, at least as far as our careers are concerned.
As investors, the circumstances shift. We must impartially view our own wealth and make deliberate decisions by building a portfolio based on the factors we can control and then — in the face of constant, uncontrollable market volatility — doing what can feel like nothing (beyond disciplined tax- loss harvesting and periodic rebalancing to control costs and maintain the portfolio in line with its original goals). Traders don’t take well to this sort of “inactivity.”
Beyond requiring new language-, mind- and skill-sets, there’s also the critical, more practical question: Don’t you have better things to do with your time? After long, energizing, stressful, challenging, invigorating, demoralizing, exciting days of trading, how many of us really want to devote our leisure time to contemplating overarching life goals, managing interrelated wealth concerns and remaining abreast with the latest thinking on sound portfolio construction? Wouldn’t most of us rather achieve something a little finer with our hard- earned wealth? Just as it makes sense to delegate duties as often as possible in your professional life, so too does it make sense for your personal wealth — for reasons both financial and emotional.
That said, since it’s your life savings we’re talking about, the delegation must be done with utmost care. To become more fluent in the language of wealth management, let’s first explore some of the most common, trader-centric behaviors that detract from our efforts to convert our income stream as financial professionals into lasting wealth for ourselves and our family. In Traits #10-#11 (Rugged Individualism and Heeding Forecasts), we’ll also address qualities to seek in a wealth management alliance. In our opinion, it’s most important to ensure that your advisor has accepted the fiduciary duty to always serve your highest interests, with minimized conflicts of interest. This seems like it should be a given, but it’s surprisingly often not the case, and thus a vital question during due diligence in considering any new or existing relationship.
