Is Bad News Sometimes A Good Thing?

When people hire an investment advisor to look after their investments, we often find that they have the mindset that they are going to shift all the responsibility for their money management over to their advisor. But even when you are working with an advisor, there are still some responsibilities that you have as an investor – and a few additional responsibilities that I think advisors should take on.  

1. Clients are responsible for clearly articulating their goals so the advisor can create a plan that suits those goals. They are also responsible for telling their advisor about any changes to their life or goals so the advisor can make sure the plan still suits them. 
2. The advisor has the responsibility of making changes to the strategy based on material changes to the economy, and then creating a wealth strategy that meets the goals and objectives as set out by the client. 

But I believe there is something missing in this set of responsibilities. I believe that as an investment professional, we have a responsibility to tell people not what they want to hear, but what they need to hear. 

Clients rely on us for advice. The most common question that I hear from clients is “can I retire with what I have?” 

As an advisor, I am not actually helping a client if I tell them that their retirement will be achievable, if a plan has been created that raises doubt. 

Math doesn’t lie. Proper financial planning does not misguide us. If there are problems with a plan, we need to know that so that we can figure out a way to overcome those problems. And if the goals and objectives ae simply unrealistic, the client needs to hear that. 

Because at some point, the plan and the lifestyle break down, and that’s a terrible place to get to. 

As a Portfolio Manager, I have a duty to my clients to do what is best for them. Sometimes that requires difficult discussions. But once we have those difficult discussions, we can create a plan that will help the client through the difficulties, rather than simply hoping things work out. And that is far more helpful to a client than simply pretending everything is fine. 

Does your advisor give you the bad news as well as the good?

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc.,