As I Do

As I Do

It was probably a genuine moment. He was trying to insure the kind of confidence expected of those who are going to handle our money. Afterall, it is a leap of faith. At some point, if you are going to use a financial advisor, you must buy into the person. Honest or not. There are always shortcuts and underhanded moves available to those who don’t have your best interests at hand. And they can spin a complicated web of lies that often is unnoticeable until it’s too late. So it was natural for him to offhandedly say to do as I do.

I hold some of each of these investments in my own brokerage account.

Legitimacy

He meant the words to make me feel better. And, in retrospect, they did. I quietly accepted his advice on which equities to pour my cash into. When an advisor says to “do as I do”, there is a certain amount of legitimacy. Certainly he wouldn’t sink his own investments just to make a little money off of me. These type of statements build camaraderie.

We are in this thing together. He is an advisor handing a precious commodity (my money), and I am a trusting client. But it goes further. It’s like we are cheering for the same team. Not only does he lose professionally if he steers me wrong, he loses personally in his own accounts.

You wouldn’t expect an airline pilot to be careless in flight. Not only does he have to protect my life, but he has his own tail to worry about also.

Makes sense.

The Keyword: Some

It was only after moving my money to a new account, that I realized that I had completely ignored one word hidden in his phrasing. Do what I do with some of my money. Some. It was a little gem hiding in the rough. A needle in the haystack.

It hit me like a ton of bricks. He was completely indexed. His personal portfolio. I could feel it when I discussed with him my exit strategy. He had no counter argument. No rational for why it wouldn’t work. He too understood the boon of low cost, diversified, passively managed index funds.

And he had purposefully taken a small portion of his own investments and sunk them into the instruments his firm was pedaling for show. He didn’t buy their strategy either. He winced at the stock picking strategy that was being pushed by his own firm, and probably blanched at the high expense ratios of the funds they suggested.

As I Say

He never admitted this to my face. It was just a feeling I got. In reality, I was following the outdated medium:

Do as I say, not as I do.

I would have been served much better by following his actual lead. Not sinking my whole portfolio into his firm’s suggestions, but maybe only a small slice if any at all. The lion share of my money should have been indexed.

Probably like he was secretly doing.

Final Thoughts

Maybe financial advisors should put their money where their mouth is. In the future, they should open up their investment accounts and show what they are doing with their own funds. I bet we would be surprised at how many of them are mostly indexed, and don’t follow their own companies advice.

When they say do as I do, I think we should make them prove it.