5 Reasons to Have an Investment Philosophy

5 Reasons to Have an Investment Philosophy

David Booth, co-founder and executive chairman of Dimensional Fund Advisors, has said, “The most important thing about an investment philosophy is that you have one.”
Do you have one? And if you do, does anyone else know about it? Is it on your website, in your marketing materials and part of your prospect/client conversations?
Here are five ways an investment philosophy can impact your practice:

  1. Efficiency
    Once you have a set of guiding principles that don’t change when the market changes, everything you do aligns with those principles. It may be easier to figure out what to spend time on — and what not to.
  2. Client Experience
    You can’t provide a good client experience to someone looking for something you don’t offer. Having an investment philosophy — and being up front about it — may help you find clients who are a good fit, and avoid those who aren’t. Better to find out at the beginning than spend time cultivating a relationship that won’t last long term. And having one clear investment philosophy may allow you to be more efficient in working with clients and helps you deliver a more consistent experience.
  3. Better chance of consistent investment results
    Changing investment philosophies every time the market changes is a bit like the driver who keeps changing lanes on a crowded highway. We’ve all done this before: The cars in the next lane keep passing you, so you change lanes…only to find that now the lane you were just in is moving and you’re stuck again. Choose a philosophy you can believe in, and stick with it.
  4. Differentiation
    Having a clear and public investment philosophy may help you stand out from advisors who do not. You may also attract centers of influence who can help you build your expert team.
  5. Client conversations
    Your investment philosophy provides a foundation for client meetings and conversations. Once your clients understand and believe in your philosophy, you can spend more time talking about their goals and how to reach them, and less time on what markets are doing.

“When you’re about to do something small, you need a reason. When you’re about to do something big, you need a plan. When you’re about to do something life-changing, you need a philosophy.”1
Taking the time to determine your investment philosophy forms the foundation for your practice, and makes it possible to do something potentially life-changing for your clients.

1“How to Formulate an Investment Philosophy,” Investopedia, Zina Kumok, June 17, 2016.

Your Clients’ Retirement — More Than Just Money!

William and Sharon were driving home from a meeting with Alan, their financial advisor to talk about their retirement plans. William had decided that he would leave his work next year and Sharon would continue to work for another couple of years. The couple had been diligently saving for “the big day” when they could consider themselves fully retired and now they had actual dates in mind.
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6 Ways We’ve Just Enhanced Loring Ward’s Blog

In January of 2014 we introduced our Advisor Insights Blog with the goal of providing financial advisors and their clients with timely and timeless financial education and insights.
Since then, we’ve published more than 200 articles — with 85,000+ views — on a wide variety of topics, from Asset Class investing to financial planning, retirement, behavioral finance, practice management and marketing. We’ve even included a few recipes from employees along the way.
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Happy Pi Day (Cherry Pie Included)!

In case you are feeling short of things to celebrate, there is always Pi Day – March 14 (3/14).
As you remember from high school math, Pi (Greek letter “π”) is a mathematical symbol representing the ratio of a circle’s circumference to its diameter — which is approximately 3.14159.
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It’s Always a Good Time to Talk About Risk and Volatility

In the 68 trading days in the U.S. stock market from 11/11/16 to 2/17/17, the Dow Jones Industrial Average (DJIA) set new all-time high records on 26 of those days. In the last seven consecutive days over the same period, the Dow closed at a new record every day. Continue reading

Why Uncertainty Might Just Be an Investor’s Best Friend

This blog is from the March issue of Portfolio Perspectives.
With many stock market indices at all-time highs, Washington awash in political turmoil and unsettling news around the globe, many investors may be unsure what to do next.
And we believe that is a good thing.
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