Issue 6


In 1995, Charlie Munger gave a speech at Harvard about how the human mind tricks itself into making poor decisions, called The Psychology of Human Misjudgment. This abridged and animated version is an excellent introduction to the ideas contained in that speech. The full version is well worth reading and can easily be found on the internet.


Most advisers will tell you that the majority of their clients only want to know one thing: Am I going to be okay? The study looked at in this article provides shocking evidence that many clients are not being told whether they will indeed be able to achieve their goals, and also highlights the lack of trust in our “profession”. This is a good reminder of what should be the end goal of our work.

The author, Michael Batnick, puts it well: “We need to do a better job. Hard stop. If you’re not tracking an investor’s goals, I can’t imagine what value you’re providing, because, and forgive me for being cynical, I highly doubt you’re the Jim Simons of financial advisors. Clients pay us for reassurance, and if they don’t trust that you’re acting in their best interest, or that the information you’re providing to them is accurate, you deserve the client exodus that’s coming your way.”


The most common piece of advice given by great advisers is this: Ask great questions and let the client talk.

Here’s an article suggesting questions you might not currently be asking.


How transparent is your business? Sophie Bakalar argues that as consumers demand more from brands than ever before, being transparent about everything is critical to the success of your business. This might be your biggest weapon in competing against big brands.


With increased regulation, pressure on fees, and online alternatives, many have questioned whether lifestyle practices can survive. This article suggests that they can. The study looked at suggests focusing on four “essential components” that can realise the most potential for a firm: people, value proposition, investment philosophy and technology.


With the passing of Dick Wagner earlier this year, now is a good time to read his paper “To Think… Like a CFP” which might be one of the most influential pieces of writing in the history of financial planning. Written in 1990, it argues for the changes that need to be made for our work to be considered a “profession”.