1) You are going to lose money
If you are investing in stocks, statistically one year out of every three is going to be a down year. It’s great to be an investor during the two positive years and you may well forget the slow, unrelenting burning sensation experienced when you watch the value of your portfolio go down month after month after month. Suffice to say, not a lot of time is spent talking about just how bad the down years can be when looking to motivate new clients to put their capital to work. Fundamentally, if you cannot imagine losing 40% of the value of your investment during a calendar year then you are not cut out for investing in equities. There is no sugar-coating it. Investment returns are not linear.
2) Mistakes are going to be made
The admin team tasked with sending out your buy-order are going to send your dealing instruction to their aunt Deirdre instead of “Dealing” because their email account auto-filled the address. Your buy order is going to be submitted two days later than planned and the value of the security you were going to buy has shot up. This stuff will happen. It will. It will be infuriating. There may be issues with the online valuation system showing incorrect pricing for certain securities. I once had a client call me in hysterics because the valuation system showed a 40% draw-down in her portfolio overnight. False alarm. Nonetheless, mistakes will happen. It is a human industry, despite the reliance we have on machines, us fleshy bi-peds are in the driving seat and we occasionally make errors. Ensure that your advisor is forthcoming about their ball-drops and pro-active in cleaning up the resulting mess!
3) Financial Advisers are people too
Your financial advisor is a person. He or she has friends, family, likes, dislikes and opinions. Although they have a fiduciary responsibility to you as a client (which hopefully, your advisor will fulfill without question) they do have feelings. If you are consistently late to meetings, are notoriously hard to get hold of, uncommunicative, aggressive or unkind we will absolutely remember it and you will inadvertently slip down the invisible priority ranks. Servicing a client account requires commitment to process. If you have made yourself miserable to deal with, then it is only natural that the advisor will feel less inclined to stick to the soul-destroying regimen that happens behind closed doors, away from prying eyes, to make sure that your investments are giving 100%. Respect goes a long way.
4) Conversations about flavor of the month cause us physical pain
Should I buy an Air BnB property? Should I put some money into BitCoin? I heard that I can borrow 120% of the value of a building and get free money from the bank? My friend told me that Tesla stock is going to breakout, how do I buy shares? If it sounds too good to be true, it probably is. If its a great investment idea, and you are hearing about it from a peer who is not professionally involved in investment business, then you are -categorically- too late to the party. If you are asking questions about a “get rich quick” investment or business model then please take note of the small light in your advisor’s eyes extinguishing as he loses all hope that you will ever stick to a long-term investment plan that requires patience and discipline. “Quick” and “Easy” are not in a professional investors vocabulary.
5) Unless you don’t mind being destitute in old age, your spending priorities are all wrong
You are in your thirties, or worse yet, your forties. You believe that you are “still young”, have “enough time” and “are not thinking about retirement”. You are one data point in the excel file of life, outlining how an entire generation of retirees have insufficient funds to support themselves in later life. You spend your money before you save it. If you save at all, it is by default the money you have left over after bingeing and consumption. Nobody has the right to tell you what you should spend your money on, but perhaps as people we are given too much credit in the presumption that we understand that we have to save a portion of that money for the future -before- we engage in spending. If you are unwilling to engage in spending for you then you are doomed. The government will not support you and financial advisors and magicians alike are unable to help those who do not help themselves.