Issue 16


Cutting costs seems to be everyone’s focus these days. Brett Davidson argues for why this shouldn’t be your business’ top priority.

To quote Seth Godin:

“Organisations that add just a little bit every day always defeat those that are in the subtraction business.”


Nick Maggiulli, who regularly puts out good content, does an excellent job in explaining why behavior beats analytics in the investment world by talking through his thought process in deciding to remove gold from his portfolio. The important part is the process he went through. Do your clients understand the possible consequences of their holdings, or should certain changes be made to manage the behavioural sustainability of the portfolio?


Many believe that the financial advice industry is on the cusp of a paradigm shift and that to have a thriving business in 10 years, certain changes need to be made. I included an article by David Haintz last week, co-author of “The Life-First Advisor”. Here his fellow co-author, Barry LaValley, hints at the future of financial advice. I’m planning to read the book on my holiday this week.


Meir Statman, a professor of finance, takes a detailed look at some of the questions regularly asked in a risk profiling questionnaire. Does your advice process depend on the answers to these questions?

“Risk, in other words, is the payment we make for a chance to reach our aspirations.”


Most advice businesses have a way of screening prospective clients for fit. In most cases, the only screen is asset size. Angie Herbers explains some of the unintended consequences of using this screen.

“According to my advisor client, this simple technique completely eliminated any need for marketing, while enabling him to grow the business beyond his goals. Following his advice, I’ve been able to surpass my own business goals, as well.”


Advisors worried about the threat that companies like Vanguard pose will need to focus on providing a service that bigger organizations will struggle to emulate. Joe Duran, the founder of United Capital, argues that this service should be life coaching.

“Rather than competing in a price war, advisors should charge what clients value, which is life guidance and planning.”