By Patricia Holburn
The latest Sanlam Benchmark survey notes that most of the respondents find “solace in simplicity.” This includes enjoying being alive, enjoying family and friends and having a sense of purpose.
Most of us too want the same thing – a comfortable life that we can provide for financially.
These are not complicated wishes.
And then along comes investing – where we frequently expose investors to a ‘bi-polar’ view. Take track record and past performance.
When it comes to selecting an investment manager in particular it is important to select someone with some experience who can demonstrate that they know what they are doing. When it comes to money experience is quite close to trust. Look at the track record.
But then we add in the caveat – past performance is no guarantee – don’t look at past performance and expect the same thing.
When you live, breathe and work in the industry this is just the way we operate. But perhaps we need to recognise the mixed messages we are giving out. In general people understand that there are no guarantees in life and that anything can happen. But too much conflict does result in indecision, and before an investor can even buy a product they are exposed to the direct conflicts in how we word our thoughts and regulations on performance.
Another conflict is apparent in the macroeconomics versus microeconomics. Macroeconomics are mostly what an investor sees – recession, unemployment for example. Microeconomics – and specific company situations can be directly conflicting with these. The example of a good investment buy in a bad market.
At this year’s FPI Convention 2009s Financial Planner of the Year Alec Riddle commented that when he entered the profession it took him a few years to get used to all the investment terms, jargon and product. And we expect and need our clients to ‘get it’ in a few hours.
The outcome of what we want from an investment is simple – the way to get there is littered with conflict. It is as tough being an investor as it is an investment expert. When you are told one thing and then a few minutes later the opposite what is your reaction? Frequently we don’t know what to believe. Riddle uses sports analogies with his clients – Comrades Marathon – a long race with many up and down hills. The end goal is quite far in the distance and to get there you have to race the race.