#72 S2N: Financial Advisors: Yes or No?

S2N Spotlight

It’s Friday; you know the drill. I like to let my bald hair down and think a little more broadly.

Yesterday, I had a meeting with our financial advisor. I hate the thought of these meetings, as I find them quite confronting. I am not at the financial level of independence my wife and I would like to be at. Therefore, these meetings make me anxious, insecure, and judged. Wealth is a relative concept that needs its own space to explore, not today. I didn’t call the meeting; my wife did. My wife is a businesswomen in her own rights and someone I have deep respect and admiration for. However, for most of our married life, I handled the finances, and she never got involved. She is now the boss of the house in more ways than I care to admit. Flip, these transfers of power often happen so subtly. The kids grow up, and bam, before I knew it, I had a new boss.

Martin, I know you are reading this, but it is important that I speak my truth. I have always been reluctant to have a financial advisor. Damn, I am in the markets daily, probably following and researching ways to achieve above average risk-adjusted returns compared to 99% of financial advisors. What can they tell me about investments that I don’t already know? I am sure a lot, but regarding macro I am not so sure.

Yesterday’s meeting once again confirmed what I have only learned over the last few years, that having the right financial advisor is not only necessary but a must. I stress that I say this with the proviso that you find the right financial advisor for you. It is very much the same as when you seek out a therapist.

Yes I have been seeing a handful of different psycho analysts for the past 30 years. I wear this as a badge of honour, not embarrassment. There is no other way to do deep inner work without an impartial professional who you click with. Once again, this is a whole subject on its own and will be discussed in more detail when I officially launch the coaching side of Signal2Noise. Back to the subject, we go.

Our financial advisor is cut from a very similar cloth to me in the sense that he too is committed to personal and financial growth and, believe it or not, has his own financial advisor. Yes, you read that correctly. He does not handle his own finances. So let me share the qualities I find most useful in a financial advisor. I am not listing the obvious ones.

A good financial advisor is one who can see and understand way more than the actual finances. He or she needs to be able to understand the dynamics of the family and their financial needs and wants. The financial advisor needs to understand what is realistically achievable given the client’s abilities and circumstances. The financial advisor is not there to judge what has happened in the past or what is happening in the present. The role is to share the good and the bad and to suggest realistic ways to head towards a suitable plan. So the financial advisor is very much a coach, looking in from the outside with experience across multiple clients to draw from and to help advise.

A good financial advisor is able to act like a marriage counsellor and provide an unbiased perspective to give each partner the platform to voice concerns or questions and have a voice. I tried everything to get out of yesterday’s meeting. I said I had a post-nasal drip and didn’t think I could make it. I said I had an appointment with the hairdresser; ok, that one was just stupid. Martin, thanks; it was a great meeting. Yes, I am still not as financially independent as I would like, but my wife and I are both feeling okay. Happy wife, happy life.

S2N Observations

I woke up to some big news: Donald Trump was found guilty of felony charges. I have told many people that I am pretty sure he will come into power as long as he is able to stay out of jail. I stand by that; the fact that he is a convicted criminal might strangely increase the sympathy vote for him. These are pretty fascinating times.

You guys pay me the big bucks to keep an eye on the Feds Balance Sheet and its liquidity drawdown.

There is still excess liquidity in the system. One more chart to sum it up. As you can see, there is still more than $3 trillion of excess liquidity in the system, which is inflationary. I just don’t see any rate cuts coming any time soon.

Anyone keen on some OJ? I never realised how expensive orange juice has become.

China is desperate to juice its economy. The manufacturing purchasing managers index fell to 49.5 in May from 50.4 in April, the National Bureau of Statistics said Friday. That put the index below the 50 mark that separates growth in activity from contraction.

Following the western worlds playbook of lower rates to incentivise spending and investment, you can see record withdrawals from the Chinese banking system. If this strategy works then this is further evidence that monetary authorities have their work cut out for them to reign in inflation.

I know the US reported GDP yesterday lower than expected, but the truth is, I haven’t studied the numbers and would rather not comment today, as I have to sign off in a few minutes for the Sabbath.

Finally, one story and chart caught my eye and that was Salesforce. My word -20% on the day. The chart looks really ugly. Not too sure what to make of this. See you next week.

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