What 35 Years in Wealth Management Has Taught Me About Investors

Markets change constantly. Human behavior changes far less than most investors would like to believe.

When I entered the financial services business in 1991, I was young and just finishing college. I grew up in New Jersey, close enough to New York City that Wall Street was always part of the landscape. My father worked in the business. Many of his friends worked on Wall Street, and many of my friends had fathers who did too. The lights of Manhattan, the movies and the stories all made the industry look exciting, glamorous and, frankly, like a place where success was measured by money.

Thirty-five years later, I measure success very differently.

The part of this career that means the most to me is not a market prediction or an individual transaction. It is being invited to a client's birthday party or anniversary dinner. It is watching a client's first child arrive, then eventually hearing about a grandchild. It is helping families buy homes, educate children, retire with confidence, support a family member or create a legacy that will continue after they are gone.

Over time, I have come to see my role as a steward. Clients have spent years creating their wealth. I have the privilege and responsibility of helping them make decisions about what that wealth needs to do for them and for the people they care about.

The world always gives investors a reason to worry

My career has included the end of the Cold War, wars in the Middle East, the technology bubble, September 11, the collapse of Lehman Brothers, the global financial crisis, devastating natural disasters, the COVID lockdown and countless political and economic scares. Alongside those events, we have seen extraordinary innovation, new industries and technological changes that would have been difficult to imagine when I started.

At practically every point, an investor could find a persuasive reason to believe that the future was too dangerous to remain invested. The headlines change, but the emotional cycle is familiar: uncertainty creates fear, fear creates urgency, and urgency makes people want to do something immediately.

One of the things I often tell a worried client is to put an X on the calendar for that day.

"Put an X on your calendar today. Six months from now, or a year from now, I'm going to ask you what that X represented."

By the end of a year, the calendar may contain several Xs. At the time, each one felt important enough to question the entire portfolio. Months later, clients often cannot remember what most of them represented. That does not mean the concerns were foolish. It means temporary fear can feel permanent while we are experiencing it.

Successful long-term investing requires learning to distinguish between information that changes the financial plan and noise that merely makes us uncomfortable.

Discipline does not mean doing nothing

There have been moments when an X on the calendar deserved a much deeper response. September 11 and the COVID lockdown stand out because both presented circumstances unlike anything I had previously managed through.

After September 11, the markets were closed for several days. There was no opportunity, and no reason, to make impulsive trades. When the markets reopened, we reviewed client liquidity and selectively increased cash or fixed income where greater stability was appropriate. We did not engage in wholesale selling. We made sure clients were positioned to endure uncertainty.

COVID required a different analysis. The concern was not limited to the market. Large parts of the economy were being shut down. We examined the sectors clients owned, the financial strength of companies and the ability of different industries to withstand an extended disruption. We looked at balance sheets, liquidity and whether the reasons for owning each investment still held up under radically different conditions.

That is what experience provides. It does not provide a crystal ball. It provides a process for evaluating something nobody has seen before.

Clients should understand what they own

A sound investment may decline. A thoughtfully built portfolio can still experience uncomfortable periods. The goal is not to eliminate every loss or surprise. The goal is to make sure the client understands why an investment is owned, what risks accompany it and what role it plays in the larger plan.

If the investment horizon, liquidity needs, family situation or risk tolerance changes, the portfolio may need to change. If the underlying business or investment thesis has deteriorated, we should not use 'long term' as an excuse to avoid a difficult decision. But if the plan remains sound and the investments remain appropriate, reacting to every headline can do more damage than the headline itself.

The real work is relational

After 35 years, I believe investor behavior matters at least as much as investment selection. Clients do not need an advisor merely to tell them what happened in the market. They need someone who understands their family, recognizes when fear is driving the conversation and can help them return to the reasons the portfolio was built in the first place.

The glitz and glamour that attracted me when I was young faded a long time ago. What replaced it is considerably more meaningful: relationships that have lasted through markets, recessions, family changes, births, deaths, retirements and new generations.

That is how I measure success today: by what my clients and their families have been able to accomplish, and by the trust they placed in me along the way.