Client expectations - what %?
first reaction is that if they are simply performance driven investors, good riddance. eventually you will not be the highest performing advisor they meet and will move on then. stick with the conceptual selling, it is much more profitable long term.
i would potentially say the performance might not be the real reason they left, but i do not know the situation very well.I usually say 7-9% (of course this depends on the allocation model I use). For forecasting, I use 8% pre-retirement and 6 or 7% post-retirement. I don’t think 7-9% is unreasonable. To me, 7-8% over the long-term for a good quality portfolio seems a bit low (which is only a shade lower than what I use). But I use real defensive portfolios (American, FT) that hold up real well in down markets, so even through the real bad markets, we are going to do far better than what I tell people.
As Horse said, some clients are purely numbers driven. These type make me nervous. They somehow believe (despite what you tell them) that you will get EXACTLY the return you tell them, no more, no less. So if you get 5% in a down year for the market, you’re screwed. Then when the market shoots up 20%, and you do 17%, they find a way to talk to other brokers that are doing 30% returns, and TELLING prospects that. Then they BUY IT. These are NOT good clients.
I do not like any client that wants to “compare” returns. I will not tell anyone what they will get. I just tell them that “long term, a well diversified portfolio like this will generally average 7-9% while taking less risk than the overall market or benchmarks”.
OK. LMFAO. exponential economic growth is impossible. If you do not know that, you better study macro economics. The edge of the big cliff is much closer than you think. We have big problems here. We may not have business in this industry in the next 2-5 years. YES…we are that close. PEACE
Hey, I heard there was this big asteroid coming next year too. That's going to be followed by the polar ice caps melting causing worldwide flooding. Al Gore told me that himself. So, I stopped using hairspray. That should stop it. Iran has nukes. China is going to take over the world. Hillary is going to be the next president. The dollar is going to zero. Oil is going to $400/barrel. Any other theories you want to discuss?
Spiff’s comming out!
Spiffman..you are not well informed.... do you understand the exponential function in economics? Is it sustainable? Don't worry about global warming, Don't worry about nukes. don't worry about China..they are doomed too. Whomever becomes the next president..wait, who would want to become president in the light of everything...Yes, the dollar is going to zero (as the roman aureus did 1700 years ago), with or without $400 oil..but exponential energy costs (which raises everything else) will speed up the process. Last summer, I sold most of my book to an optimist, CNBC sunshine blown up their ass broker...space spiff, you need to do the same.
Have you heard of Richard Rainwater? Probably not.Not to be too flip about it, but get ahold of an American Funds ICA Guide. Yeah, I know it’s a marketing piece. But if you look at the reasons not to invest section (I haven’t looked at it in a while, but I know you have all seen it at some point), there is a very compelling case to put your money in CD’s, if not gold bars buried in the backyard, almost all the time.
I know, this time is different. Just like tech stocks in 1999, just like the Cuban missle crisis, just like the first Gulf war, which was supposed to be another Vietnam, except with WMD's being used by the other side. Just like Pearl Harbor. Just like the Russians beating us into space. This time is always different.By the way, when you say performance may not be the real reason they left, I know that there are other reasons as well. They have an existing relationship with EDJ, and I am trying to get them as a new client. This was a long shot anyway, but the fact that performance was at least one of the reasons annoyed me, especially since what I showed them had better diversification and better performance both.
edJ,
Not to critisize you, but brokers that sell using the ICA chart.....look this thing's done 12.7% for the last 73 years, how can you go wrong..is what this thread started with. I think the EJones saleman used something like that to get the business..while you were being more (but not nearly enough) convervative. Brokers like that are going to kill their clients. "past performance does not guarantee future results" Speaking to Rainwater a couple of years ago, I though he was a bit premature about the oil crisis. But he hit the credit, dollar, finance crisis right on the head. Then add the frosting on the cake of energy and commodities shortages (only getting worse). Dire Consenquences.So, MC Lovin, what you are telling us is “This time is different.” Thanks for the insight.
Yes. So different and unprecidented that that an exodus is occurring from all levels of your beloved industry.
[quote=MC Lovin]Yes. So different and unprecidented that that an exodus is occurring from all levels of your beloved industry.[/quote]
Yawn …
Yawn? Please wake up. Anyone with a triple digit IQ can smell the coffee and have some real concerns. Most people don’t believe something can happen until it already has. That’s not stupidity or weakness, that’s just human nature.
1929 a walk in the parkI’ve seen this movie before. When the guy that shines my shoes & the biggest producer in the branch both start dumping stuff it’s time to start buying…
I would assume that all of us have some concerns. Short term concerns. This year could get ugly. But we’re not willing to jump on the “It’s the end of the world as we know it” bandwagon. After all, REM told us that way back in 1987. Great song, bad advice. So, forgive us if we don’t stick our heads in the sand.
[quote=MC Lovin]edJ,
Not to critisize you, but brokers that sell using the ICA chart.....look this thing's done 12.7% for the last 73 years, how can you go wrong..is what this thread started with. I think the EJones saleman used something like that to get the business..while you were being more (but not nearly enough) convervative. Brokers like that are going to kill their clients. "past performance does not guarantee future results" Speaking to Rainwater a couple of years ago, I though he was a bit premature about the oil crisis. But he hit the credit, dollar, finance crisis right on the head. Then add the frosting on the cake of energy and commodities shortages (only getting worse). Dire Consenquences.[/quote] Let's say worst case scenario....Great Depression? 1987? 2000-2002? Um, I think we recovered from those pretty well. But this time it's different. It's a NEW PARADIGM!Space, short term concern? Ugly year? I hope so too, but how can we recover from all this!
Broker24, worse case senario, your 3 mentioned are mere blips in the big picture...look back further. Think harder.By AD369 the Empire was beginning to crumble for the following reasons:
The Government was running out of money.
The people had to pay very high taxes - up to a third of their money.
Water and Food supplies could not meet demand.
Where are we today? Much like the Romans, but worse off...much worse. All the problems are at a much larger exponet today. Their money was gold, ours is pure fiat debt. Our economy is entrenched and dependent on OIL, a commodity in which the demand has outstripped supply.I’ve heard all this before in the 1950’s, 1960’s, 1970’s, 1980’s, 1990’s, and the new century we live in–all of you need to help your client’s balance their portfolio for the current market conditions–not the chicken little syndrome!
True story: in August 1987 I went on a cruise on the USS Enterprise and I when I left I had $42,000 in a growth and income mutual fund---I came back from the cruise in March 1988 and my fund was worth $45,000 and some change--I didn't change anything yet the market crashed in Oct 1987... our job is to control expectation of our clients--not predict WWIII.Well, getting back to the original point of the thread (as I see it), I recommend getting the book entitled, "The Wedge". To get a sense of what the book is about, imagine you want to date a girl who is already involved with someone else. What would you do to break-up that relationship? Getting in the girl's face, telling her how great you are and what a loser her boyfriend is, won't work. It must be more subtle. The girl must think that SHE decided to break-up and date you.
The same thing applies to business relationships. Rather than tell the prospect that you're great and that the other broker is an idiot, you might ask the prospect: "So, when Joe Broker reviewed your investment policy statement, clearly showed the expenses you'd incur, explained asset allocation and how often he'd/she'd rebalance your account, and established a quarterly review schedule for the next twelve months, how was that result?" Of course, don't pack all this in one question! But break it up into a series of questions. After your prospect has negatively answered your questions three or four times, they will starting doubting the wisdom of their decision to go with the other broker. This is just a sliver of what the book is about. There's a lot more, in the book, that I found very valuable. Dollar for dollar, it's been the best investment I've ever made in a book on sales. And although the book is written for insurance agents, it's principles are very transferable to our line of work. Just sayin'....[quote=Roadhard]I’ve heard all this before in the 1950’s, 1960’s, 1970’s, 1980’s, 1990’s, and the new century we live in–all of you need to help your client’s balance their portfolio for the current market conditions–not the chicken little syndrome!
True story: in August 1987 I went on a cruise on the USS Enterprise and I when I left I had $42,000 in a growth and income mutual fund---I came back from the cruise in March 1988 and my fund was worth $45,000 and some change--I didn't change anything yet the market crashed in Oct 1987... our job is to control expectation of our clients--not predict WWIII.[/quote]Was William Shatner aboard?
While I was never the most optimistic guy in the world, by nature, I was never one of those gloom and doom guys on the market. I was always a believer in the long term growth strategy, with a little bit of tactical investing thrown in to adjust to the world around me. So what MC is spouting here, sort of goes agains the grain. However!!! I had a conversation with one of the real smart guys in my office the other day. Does a lot of Alternatives, and is always looking to think ahead of the markets. He told me he was at a meeting with a big Hedge fund the other day and saw a presentation that made his jaw drop. It was very much like what MC is laying out here, and it really made some sense to me. The Hedge Fund manager is Paulson and Co. they have an amazing track record and they called this subprime thing way before the fact, and made huge oney on it. I did a little of my own research, and if you go to this link, you will read what I am referring to: http://www.bloomberg.com/apps/news?pid=20601103&sid=agHGvijV55fM&refer=us Yes. MC is painting the picture that we all dont want to see. And I want to believe he is a wacko. But there are a lot of smart people who agree with him.OK. LMFAO. exponential economic growth is impossible. If you do not know that, you better study macro economics. The edge of the big cliff is much closer than you think. We have big problems here. We may not have business in this industry in the next 2-5 years. YES…we are that close. PEACE
As a clarification to my first post, the link is to an article published in March 2007, where the manager clearly called this mess. That same manager is currently saying that there is a ton more to come, not just in foreclosures, and problems in housing mortgages, but credit cards, auto financing, etc, and there is even bigger trouble ahead.
Who knows if he is right, I've read some smart guys who say its time to step up and buy. But these guys are smart as well. Market of opinions. All I'm saying is maybe its we are wrong in dismissing MC's doomsday theory. What if...There is ALWAYS a possiblity for a catastrophic event. Buffett said a couple of years ago that insurance companies must prepare for a nuclear attack on US soil in the next decade. I don’t know what will or won’t happen, and neither do you, Rainwater, Dent or MC Leavin. I do know that well balanced portfolios that includes alternative type strategies like commodities, bear market strategies, etc will over time meet and beat their averages, and my clients need to grow their money to keep up with inflation & to meet their longer term financial goals.
The Dow Jones & S&P 500 are not the entire world of investing. Let’s seek returns & wealth elsewhere.
[quote=pratoman]As a clarification to my first post, the link is to an article published in March 2007, where the manager clearly called this mess. That same manager is currently saying that there is a ton more to come, not just in foreclosures, and problems in housing mortgages, but credit cards, auto financing, etc, and there is even bigger trouble ahead.
Who knows if he is right, I've read some smart guys who say its time to step up and buy. But these guys are smart as well. Market of opinions. All I'm saying is maybe its we are wrong in dismissing MC's doomsday theory. What if...[/quote]Prato there are plenty of folks who have been talking about this kind of stuff for a few years - major concerns about leverage and commodity inflation, recommending ownership of gold, quality international stocks, reduce exposure to US equities to less than 50% etc. Over the last 24 months they may be right, and it could go on for another 12 months. For example-the fellow from Europacific who is on Fox Business just about every day. I'm too lazy to google his name.
I just think when MC starts talking about the fall of the Roman Empire he's gone a little too far, IMHO.
I do honestly feel that we as a society have lost our way a bit with our overemphasis on material goods even at the risk of our long-term financial health and moral character. Perhaps this mess in the housing market will serve as a wakeup call to some folks.
Joe, Scotty was our chief engineer!
The oil issue is real. There is a finite amount of it out there. But don’t believe for a second that the powers that be don’t have plans in some desk drawer waiting for the day when the middle east decides that they’re done selling oil to the entire planet. Is Iraq about oil? Yep, to a certain extent. Would the world take out Iran for it’s oil. Yep. And not look back. Would they force drilling in Alaska? Yes. Are they still looking for new reserves? Yes. I’ve heard stories about oil reserves in the Rocky mountains that would last us for another 500 years or more. It’s just really difficult to get to. If the world was about to collapse, don’t you think someone would figure out how to get to it? Absolutely.
It's all speculation at this point anyway. Talk to one person who says our economy is recession proof. Another says we might have a small one. Another still says we are headed back to the stone ages. The truth is in there somewhere. Who knows where. Until that time, the only real recourse we have as advisors is to keep planning like we are right now. If the dollar goes to zero, retirment planning is a moot point anyway.Spiff,
I had a 2 hour appointment with an old client in a few months ago. He was an oilman in the exploration department in the 70's till 1990. After the meeting, I havent been the same since. SERIOUSLY. Oil peaked in the US in late 1971. We never have and never will produce more oil. we use 21 million barrels a day(yes day). We produce 5 million per day. Why? ERoEI. There might be a large amount of oil in colorado..difficult/immposible to extract, like the tar sands in canada. but if the energy invested is more than the energy returned, that oil will never be used. It is just not economically feasable to lose money per barrel. In texas, there are many "dead" wells, but at $60, it became profitable to pump water into them to pull out the last bit of oil out of the ground. The problem is after we have peaked globally (many say we did last year) oil gets harder and harder to extract. And we cannot have a contracting energy and food supply if we expect the ecomony to grow. It is all speculation, but the person that siad we are recession proof has already been made an idiot. There are alot of problems.so much more than I or most of us can even comprehend. The current situation will fall somewhere between recession and stone age.[quote=MC Lovin]Space, short term concern? Ugly year? I hope so too, but how can we recover from all this!
Broker24, worse case senario, your 3 mentioned are mere blips in the big picture...look back further. Think harder.By AD369 the Empire was beginning to crumble for the following reasons:
The Government was running out of money.
The people had to pay very high taxes - up to a third of their money.
Water and Food supplies could not meet demand.
Where are we today? Much like the Romans, but worse off...much worse. All the problems are at a much larger exponet today. Their money was gold, ours is pure fiat debt. Our economy is entrenched and dependent on OIL, a commodity in which the demand has outstripped supply. [/quote] Now I have confimed that you are a complete lunatic.[quote=Broker7]Spiff,
I had a 2 hour appointment with an old client in a few months ago. He was an oilman in the exploration department in the 70's till 1990. After the meeting, I havent been the same since. SERIOUSLY. Oil peaked in the US in late 1971. We never have and never will produce more oil. we use 21 million barrels a day(yes day). We produce 5 million per day. Why? ERoEI. There might be a large amount of oil in colorado..difficult/immposible to extract, like the tar sands in canada. but if the energy invested is more than the energy returned, that oil will never be used. It is just not economically feasable to lose money per barrel. In texas, there are many "dead" wells, but at $60, it became profitable to pump water into them to pull out the last bit of oil out of the ground. The problem is after we have peaked globally (many say we did last year) oil gets harder and harder to extract. And we cannot have a contracting energy and food supply if we expect the ecomony to grow. It is all speculation, but the person that siad we are recession proof has already been made an idiot. There are alot of problems.so much more than I or most of us can even comprehend. The current situation will fall somewhere between recession and stone age. [/quote] The whole oil issue is true and real. BUT, like technology, much will be invested in the next 20 years on alternative fuel sources, renewable sources, environmental protection, renewable food sources, water purification, etc. I've seen a lot of proposed windmill farms in the news lately. That helps to generate energy and protect open land. I've actually seen some proposals for farms off the coast. The environment (including the oil issue) is the next "technology boom". I predict a huge bubble in that area 10-15 years from now (and nobody will still be on this board to challenge me in 15 years!!! ).24,
I hope you are right. Humans by nature are innovative. There has been a push in alternative energy lately. I see windmill farms close to my place. So hopefully if a gridcrash on coal and oil powerplants takes place, I will still be able to turn on the light. But I know oil is finite and non renewable. That is why I would question the renewable food source idea. Food is organic and has to be grown. Petroleum is the fertilizer that makes it possible to feed 6 billion people, w/o the fertilizer, there would be food for 500 million to 1 billion people. That would be a huge global contraction. Keep an eye on food prices.Not only are humans innovative–but the greatest resource in the United States is the people! Look what they can do WHEN THEY HAVE TOO, take WWII–they were building ships in under two weeks and aircraft carriers in 3 months. Could this country once again find alternatives–yes, when they HAVE TOO!
The biggest threat too all of us is the out of control spending of the US Government. In most big 7 countries like France, GB, ect..., spending is out of control. Can this be fixed? Yes, but it is going to take a bipartisan effort to do so. I agree that the market could be in a funk (old man talk) for the next couple of decades...but we can still make money for our clients just like they did in the 60's & 70's.Roadhard,
You are soooo right on the greatest resource. its just that we have never been put under such a test as we have today. I'm sure some others can state it much better than I can but: the greatest shortcoming of the human race is our inability to understand the exponential function. We dont understand infinite economic growth is not possible. You say the biggest threat is the out of control spending of the US government as with most other tier 1 nations. I will disagree. it is not out of contol, just appears to be. As our economy has grown exponentially so has government spending: Stock market 11% since 1930 inflation 3.5% government spending, ^ inline with inflation. We cannot contol the gov. spending and the money printing because ecomonic growth dictates that has to occur. I dont see any of the big 7 wanting to become a third world country by choice. we are a debt currency nation and more and more money has to be printed and spent in order for our economy to survive. That can possibly slow down or at worse come to a halt with the current financial crisis (which is revealing many houses of cards). The fed is talking about an emergency 50 basis point rate decrease, the IRS is talking about infusing each household with $650 in spending "vouchers", I feel both are just stop gaps to prolong the recession. Back to the exponential function (infinite growth). It is impossible in a finite world, but bankers and politicians seem to think so.Back in November we I attended a conference in Chicago and the UBS talking head said they are predicting oil at $40/barrell in 2010. Found that interesting. And no, I did not say $140, but $40.
[quote=Broker24]
Now I have confimed that you are a complete lunatic.[/quote] To incite such a response, I must have affected you in some way. You've shown me you are not in agreement, but are at least listening.That is very interesting speculation.. Did the UBS person give you any indication why? This hypothetical would work. Let us assume that in 2010 we are in a global depression, and oil intensive functions (manufacturing, transport, food production, etc) are cut back 60-70%. Then $40 oil would be inline with a dow 6000 or so. Also, many wonder when oil will be priced globally in euros instead of dollarsBack in November we I attended a conference in Chicago and the UBS talking head said they are predicting oil at $40/barrell in 2010. Found that interesting. And no, I did not say $140, but $40.
This is getting too complicated to follow. . Off to the plastic surgery forum!
[quote=MC Lovin] [quote=Broker24]
Now I have confimed that you are a complete lunatic.[/quote]
To incite such a response, I must have affected you in some way. You’ve shown me you are not in agreement, but are at least listening. [/quote]
Whatever keeps you motivated!
That is very interesting speculation.. Did the UBS person give you any indication why? This hypothetical would work. Let us assume that in 2010 we are in a global depression, and oil intensive functions (manufacturing, transport, food production, etc) are cut back 60-70%. Then $40 oil would be inline with a dow 6000 or so. Also, many wonder when oil will be priced globally in euros instead of dollars[/quote] $40 oil would not be posible in a global depression, unless we (the USA) are the only ones not in the depression. in a dow 6000 situation, i would suspect the dollar to be 1/2 what it is now. If oil is still priced in dollars..that is.[quote=theironhorse]Back in November we I attended a conference in Chicago and the UBS talking head said they are predicting oil at $40/barrell in 2010. Found that interesting. And no, I did not say $140, but $40.
http://www.nypost.com/seven/01202008/business/blood_on_the_street__trader_866023.htm well....alot of the mass " exodus" is forced...not voluntary..[quote=MC Lovin]Yes. So different and unprecidented that that an exodus is occurring from all levels of your beloved industry.[/quote]
Yawn …
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