Portfolio Veggies

by | Jun 8, 2022 | Blog, Financial Planning

A post I wrote when my kids were a bit younger…events change but the prescriptions remain intact:


Every advisor wants the same from their clients…save more money, focus on the long-term. And most investors know this is the formula for success. Easy, right?

To me, this is the equivalent of “Eat your veggies”. My kids have heard it enough that I think they actually believe me, but do they embrace it? Do I?

Some of us need a nudge; maybe a health scare or seeing someone we know transform their health through a better diet. As far as kids, I don’t have the answer but it’s funny that the same words result in totally different responses by my two offspring.

What works better for our family is an action plan that accepts natural, sub-optimal behavior as part of being humans. Not mandates, not unrealistic sacrifice, but intentional design that we hope feeds into a better respect for health. And an understanding that temptation will occur, and our focus on “the long term” will sometimes waver.

I’m talking about portfolios now, right? Kind of, yes. I see financial health and physical health as very similar; most of us know we should choose long-term over short-term but unhealthy stimuli creep into our world every day.

It’s common (but rarely effective) to hear “Think long term” or “Don’t Worry”. It’s not efficient to constantly remind clients to ignore the noise. Most of us can’t anyway. And clients often expect most (all?) of the upside and little of the downside, even if their RTQ doesn’t tell us that.

Why not explicitly build for that? Why not lean on the evidence that long-term thinking has historically paid off, but also acknowledge that short-term temptation will always creep in. A few ideas we think make sense:

Rebalance when it feels most painful

Move some money away from cap-weighted funds

Use hedges to soften the downside and create dry powder in selloffs

Explain why these choices can help enhance outcomes

In a nutshell, implement a manageable process that captures the benefits but recognizes the decision fatigue we all face as living, breathing human beings. Those who need your help most may benefit from the proactive nudges you put on their plate.




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