Believe it or not, sometimes it is possible for advisors and their clients to be working at cross purposes. Clients often want to focus on the tangible, such as portfolio returns. Advisors, on the other hand, may tend to focus on the purpose of those returns – in other words, what you plan to do with the money. If this sounds a little confusing, let me explain.
Making money is a means to an end. It is not an end in itself. It can be seductively easy to forget this in the midst of our busy lives. All too often, we see clients focusing on the return on their money, rather than the return on their lives. Invariably, when we broach the subject, they look at us quizzically. We can easily calculate the return on a portfolio over any period of time. It is not so easy to reflect on one’s life, and to determine whether the return you are getting on your life is satisfying to you.
It can be difficult, and even painful, to assess not only where we have been with our lives, but perhaps more importantly, where we should be going in the future. Money is obviously an important component in the equation, but it’s not the sole component. It is our responsibility as advisors to help you to question your assumptions.
For example, a few weeks ago we met with a client who has a very technical job. He is getting to the end of his career, partly due to working conditions, as well as an interest in doing something else – perhaps something entirely different than he is doing right now. When quizzed about his intentions, he said that he thought working in a hardware store would interest him. I know this guy. He is very sharp, and I could see him lasting about three days in the hardware store before he would be climbing the walls, or reorganizing the entire place. I told him so.
A week or so ago, I bumped into our client. He mentioned that he had thought about our conversation and had just bought a book on a specific area of interest. He is now thinking of starting his own business. He realized that the anticipated return on his human capital was way too low for him working in a hardware store.
What is meaningful to each of us can change with time. Part of our job as your advisor is to help you to stay in tune with the things that are really important to you, and not let money dominate the conversation. Having the financial underpinnings to realize your ambitions is of course important. Just recognize that anytime you review your portfolio returns, remember to also look at the return you are achieving on your life. As we like to say, how you invest your time is as important as how you invest your money.