Teach Your Clients to Focus on the Destination, Not the Journey

Teach Your Clients to Focus on the Destination, Not the Journey

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As an Advisor, you are perpetually caught in a paradox.  You want your clients to focus down the road on the outcome, while you, in fact, can’t do that.  You are bound to focus on the process of investing; because the process is all you can control.  You certainly can’t control outcomes.

You rebalance in order to take advantage of market anomalies.

So, in an ideal world, a client looks down the road at the destination, while you drive the train.  Unfortunately, clients are all too caught up in day-to-day pricing.  In the long run, results are what matter.  Intellectually, most people would agree with that sentiment.  But it’s not the head that controls an investor’s behavior.  It’s the stomach.  That’s especially true with equity investing.

In equity investing, clients are transfixed with the process for two reasons.

First of all, of course, is the fascination with risk.  Investors feel bound to watch over the portfolio the way a nervous mother hen watches over her brood.  Secondly, investing is a long, often arduous process.  With no apparent end in sight, clients focus on what’s happening right now.

A client can control the risk he takes to a large extent.  A client can control his or her costs.  A client cannot control performance, so you know exactly what they are going to focus on.  Anxious people always focus on what worries them.

Both client and Advisor would feel less frustration if all clients just focused on the outcome, not the experience.  Therefore, it’s up to us to always refer back to the outcome.

Keep reminding your clients that what they truly want lies down the road, not at hand.

They hired you to worry about their money and you’ll do just that.  Explain the division of duty.  You’ll focus on the short term while they focus on the long term.

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