Well readers. Hope you enjoyed the first segment of this interview. Saly was gracious enough to really put some thought and time into these responses. It’s great how ready and willing these authors are willing to dive into their books – you don’t get this level of detail from Oprah’s book club! :)
FE: Cross-referencing sources can be one way to promote honesty. It’s harder to standby something as truth when others are claiming it false. In the book, you speak in depth about selecting the right financial advisor. Would there be any reason not to use multiple individuals? While potentially redundant (and costly), wouldn’t having multiple sources promote honesty and act as another way to reduce risk, similar to a company’s Board of Trustees?
SG: I think it makes much more sense to invest the time and effort to find the right advisor from the beginning. Think of it this way: Who are the other professionals in your life that you trust and depend on? Do you have many accountants, multiple landscapers, lots of different housecleaners? Why not? It’s because you have found honorable professionals who provide the ideal service at the best value. Having multiple advisors is confusing, costly and complicated, and your strategy will ultimate get compromised. You should not need to use competition to promote honesty and transparency—these are permanent requirements of any meaningful professional relationship.
FE: Of course, many people will want to know, “If you’re giving us all this advice – how have YOU been doing throughout these market gyrations”. Probably more important than how we got there would be if we accomplished our financial goals. So a better question would be, “how successful have you been in helping your clients achieve their financial goals”?
SG: My success as an advisor is easy to measure, as my compensation is tied directly to my clients’ investment performance. Everyone who knows me is aware that I am not a good loser! I keep things simple and straightforward, and I avoid investment distractions and tangents. I am more preoccupied with not losing money than I am with any other investment goals. When clients entrust me with their money, they are saying, “Keep it safe, because I don’t want to do this all over again.”
FE: From your biography, I see you graduated from Cornell with a degree in psychology. Do you think this background has expanded your abilities and made you a better advisor than if you had graduated with a degree in economics or finance? At a minimum, I’m sure it’s given you a much better perspective on the idea of “behavioral finance”.
SG: Absolutely, I use my psychology training every day. I can’t say enough about the value of a liberal arts education. To be successful in financial services, you need three critical skills: the ability to think, speak, and write. My investment in a well rounded education was my best investment, and every day I continue to benefit from my liberal arts degree at Cornell.
FE: A nice place to switch gears, let’s discuss something along the same lines but a little more personal. How exactly did you land at Merrill Lynch anyhow? Were you specifically looking into the financial industry upon graduation, or did you happen to fall into it? And if you hadn’t ended up an advisor, what do you think you’d have pursued?
SG: When I graduated from college in 1980, there were no jobs available, and no one cared that I had an Ivy League education! I had no career direction and I was worried about my future. While in college, I worked in various sales jobs—at the student union, the local record store, the stereo store. I had a natural ability to guide people who wanted advice about products, but I did not realize it at the time. To me, these positions were just sales jobs! Later, after graduation, my father told me “You clearly belong in a brokerage house, and I think you should call Merrill Lynch.” What did I have to lose? I had no other options. I was intimidated because I had no economic course experience, and I certainly knew nothing about investing. My father has given me lots of great advice over the years, but this was his best! I feel so fortunate to have spent my professional career in what is clearly the ideal place for me!
FE: It looks like we’ve got some common ground! After writing about Financial Lessons from Running, I realized how directly related fitness was to financial well-being & success. You also seem to believe this, so much so, that you created a 128-acre training facility, Kindle Hill Farm. What traits from your own athletic pursuits have transferred over into your financial dealings?
SG: I think there are many parallels between financial well being and personal wellness. To be successful in athletics, you need a master plan, along with discipline and principles to support your vision of what you can accomplish. You have to go out every day and track all the little pieces that form the base of your training. You must be steady and reliable in your mission, but you also need a contingency plan, in case unexpected events arise. You must study your craft, and breathe it, sleep it, 24/7. If you are at the top of your game, you are likely to have a coach who has once been where you are seeking to go. This model applies to athletics, finance, or any other goals you value in your life.
FE: Wrapping up, what suggestions do you have for those of us starting out? We’ve been thrown into a financial market fraught with mixed signals. Like scientists mixing chemicals, we’re trying out new techniques alongside old ones, yet are unsure of the expected results. If you were just starting out now, how would you build your own portfolio?
SG: Start from the beginning! What is most important to you in your life? First, build a master plan for what you want your life to be. Establish your priorities, and rank them. Now, what do they cost? What are your resources, temperament, and time frame? Are there any conflicts among the goals that you place at the top of the list? The results of this exercise should be the foundation of your strategy. Selecting investment products is easier than you think, if you have done the challenging work at the start. Make smaller investments at first in areas where you lack familiarity. Keep the consequences low so you can study the results rationally. Seek the advice of a qualified professional who you have personally investigated and interviewed.
Do your decisions control your life, or do you control your decisions?
Thanks for the great interview Sally!
@ Jenna:
Glad you enjoyed the posts. I’ve got to get more responses on these so feel free to share with friends and family!