There are some days you will always remember: your wedding day, the day a child is born, the death of a loved one, exam results, a divorce decree.
Whatever it is, they are remembered because they are all life changing events.
And there are other days that may not hold such momentous events but you remember them very clearly regardless.
For me there are two occasions that I can remember as if they only happened yesterday.
The first was way back in 1985 (I was 15 at the time) and I received news that I was picked on the Irish senior tennis team to compete in what was then called The European Nations Cup to be held in La Coruna, Spain. It was incredible news and one that will stay with me forever.
The second day I remember vividly was back in September 1997, because that was the day when my first client entrusted me with investing her money - money she had inherited from the death of her parents.
The sum was very big back then, still is, in fact, but I will never forget the delight in the trust she had in me. The second reason I remember it so well was because I didn’t sleep a wink that night!
It is a big deal when someone gives you a sum of money to invest on their behalf because what happens to it has a huge impact on their lives.
I knew from having got to know her over the previous couple of months what her aspirations for this money were because how much her money was going to grow would have an impact on what age she wanted to retire; if she could afford to put her three children through university and so on, so there was a lot resting on my shoulders hence the insomnia I suffered that night.
I am happy to tell you that this person is still a client of mine and her money performed very well and she used the interest earned on it to achieve many things so we achieved the objective of making and protecting her money.
A question I ask many people when I give talks in their workplace on the subject of investing is: how many of their financial advisors do they think lose sleep at night after they give them advice and invest money on their behalf?
It’s an interesting question isn’t it? Because I come across people who have money, entrust it with a bank or broker and it is the client rather than their advisor who loses sleep worrying about whether their money is safe or not.
And of course the reason for this is simple; who stands to lose more if things go wrong?
I have worked in very large financial advisory firms over the last 26 years and let me tell you something you probably already know – very, very few advisors lose a minute of sleep over your money.
And don’t get me wrong I am not, for a second suggesting that advisors should get so emotionally involved in your finances that it should prevent them from sleeping, but I do want them to care.
And how I personally slept very well at night when more and more clients sought investment advice from me was very simple: I gave them advice and invested their money the same way I invested my own money.
I mean really, how could I invest one way and do something different with my clients’ money?
I personally couldn’t but the answer why others don’t, I think, is based on them making more money by selling certain investments over others.
Commissioned advisors do this all of the time; they pitch to and advise clients to put their money in certain accounts with little or no regard for their financial goals, time horizons or, worst of all, risk tolerance.
I came across a financial advisor a couple of years ago who came to me looking for advice regarding his pension. He was looking for a second opinion, which was fine, but when I looked at his whole portfolio the majority, and I mean the majority, of his money outside of his pension was invested with An Post.
Yet this guy was in receipt of significant amounts of commission from institutions for introducing investment business where there was no capital protection in any of the accounts.
He was happy to risk his clients’ money and be very well paid for it and then use the commission he received to put into safe, guaranteed accounts in his own name. Can you hear his loud snore? I can.
I read somewhere recently that the “typical” questions you should ask your broker or bank before you invest with them - and there are many websites available that tell you what these questions are - are actually designed by financial institutions who, in turn, train their staff in how to respond to them.
As I write there are role play dialogues going on in training departments in financial institutions all over Ireland (I took part in some of them myself at one time) training people how to up-sell products, how to overcome negative response, how to cross sell, how to downplay charges and fees, how to dismiss other institutions’ products that are clearly superior to their own etc.
I know of one large equity company in the States who will not invest in particular funds unless the people managing the same fund have personally invested in it themselves and isn’t that the right attitude to have?
Anyone, whether they are a broker or an employee of a bank should not be able to advise you on products that they haven’t personally invested in themselves and I don’t mean they have to have thousands in the same account, but they should put their money where their mouth is right?
So bear this in mind the next time you sit down with a financial advisor, ask them tough questions, try get verification from them that they take their own advice and remember very few people care about your money more than you do.