We Are Not The Bakery!

Financial Advisors

Each morning a few industry publications land in my inbox. E-mails that might summarize the goings-on in the world of finance, helpful tips for best business practices, etc. As I pondered my inbox this past week I realized many of these “suggestions” were, in reality, about how to distract clients from the job you’re doing. “Set aside a personalized parking space in front of your building,” “hand deliver a honey-baked ham on Christmas,” “have you assistant deliver warm, fresh-baked chocolate chip cookies during meetings,” and so on.

Now, don’t get me wrong. On occasion I’ve been known to send boxes of brownies, deliver vegetables fresh from my garden, or buy someone lunch. But always, in the end, I want my clients my clients to know I believe my #1 job and where I spend most of my day is taking care of their investments and scouring their financial plans for ways to better execute their budgets, save on their taxes and make sure their insurance needs are being met. In short, if they want cookies, they’re in the wrong place.

It amazes how people will overlook the fact that 1/2 their IRA disappeared in 2008 but “my advisor brings me tea during our meeting, so I just love her.” When I question whether they’d rather have a $3 cup of tea or their $125,000 back, they say “well, certainly the money!” Perhaps its time to start acting like it and demanding more from an advisor than an alliance with Mrs. Fields.

Next time you find yourself enjoying an espresso while wearing a crown (yes, literally, I hear advisors do this!) ask yourself if this is just the cherry on top of an already great relationship or a distraction from what could be the real issue of a job you’re paying for not being done.

The Prior Month

Stocks rallied 11 of the first 12 trading days of September into the Federal Reserve meeting on the 18th. It was widely expected the Fed would begin “tapering” their asset purchase program at the meeting, but instead, the Fed announced no cuts in the rate of their asset purchases were forthcoming. On that bit of news the market partied like it was 1999, rising 1 1/4% by the end of the day. The hangover, though, was ugly as stocks then fell 7 of the last 8 trading days to end the month. When all was said and done, the market did manage a 3% gain for September.

This Month

October has been and will be a story about the government shutdown and debt ceiling debate going on in Washington. While no one can really say for sure the true ramifications of not raising the debt ceiling, it would seem any clear thinking person shouldn’t want to find out. The interlinkages between financial instruments and the idea that “the U.S. government always pays its debts” could be catastrophic if that maxim were to suddenly not be true. We hope rational heads prevail… Even if it takes the delivery of a few cookies during the negotiations.

Meanwhile 3rd quarter earnings have already begun and will hit full steam later this month. FactSet reported earlier this month a record high number of companies issued negative earnings guidance for the coming quarter; no bueno. We’ll see now if the market has adequately lowered its expectations. Remember, stocks may do just fine if they can clear the lowered bar that’s been set. Alternatively, if the bar hasn’t been lowered enough, look out below.

Obama and Boehner

“You mean nobody brought cookies?”


Market Lesson

“The second mouse gets the cheese” is a saying that has meaning in the world of finance. Oftentimes a stock or index will move through a key area and get investors thinking one way only to quickly reverse and burn those initial investors (who quickly sell at a loss). However, after the reversal, a second reversal takes place and the market moves back in the way originally thought. It’s these “second moves” that are often explosive and long-lasting, i.e. the one you want to be a part of.

Fun Fact

The average person will produce 25,000 quarts of saliva in their lifetime- enough to fill up two swimming pools.

Calendar of Upcoming Events

Happy Hour to celebrate our new office opening!

October 22 ; 4 – 6 pm
Centro Latin Kitchen
950 Pearl St.
Boulder, CO 80302

Free drinks and appetizers provided, and all are welcome!

Have a great October,

Steve Zakelj, CFP®

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