To hug and to hold

I’ve survived the party season here in London. The kidlets are excitedly counting down the days to Christmas. Accepting email invitations popping up in my inbox was a good idea as I’m in a positive mood. I can’t say the same about the people I’ve been chatting to. Definitely economic negativity in the air.

For my penultimate post of 2018, I wanted to remind people to think for themselves and not just rely blindly on us finance professionals.

Whether you use a financial advisor, wealth manager or private banker the promise they make to you is to hug and to hold until death (or a market crash) do you part. It’s not to keep you thoroughly informed or to give you anything other than the company line.

To Hug

The main strategy of most asset managers is to not get fired. So they “hug” the benchmark index giving you an approximately average market return. If the market falls 20% and your portfolio falls only 15%, that is a success the way most risk management systems work.

To Hold

Based on the level of fees they charge, the job of your financial advisor/ wealth manager/ private banker is to hold your hand for the ride. If you’re flying from London to San Francisco an Economy flight is about $1000. Let’s call this the financial advisor equivalent. A business class ticket is about $4000, the wealth manager option. A first-class ticket is about $6000, that only private bankers can afford. They hold your hand at different levels of service for the same exact flight. The economy passenger is squashed in cattle class, the first class passenger enjoys being wined and dined. If the plane hits turbulence though, every passenger is on the same ride plunging downwards.

Don’t get mad at your financial services provider, they are just doing their job and fulfilling their “to hug and to hold” end of the deal.

Caveat emptor and all that.

Not investing related but wanted to share this picture. My paternal uncle (and godfather) had his military-themed paintings chosen to be turned into metal bas-relief and installed near India Gate in Delhi to commemorate fallen soldiers. For non-Indians, this is the equivalent of the Vietnam war wall-of-names in Washington DC or the Cenotaph and surroundings in London.


Now that’s something that will last for a few more centuries.