I'm the Chief Investment Officer of Nerad + Deppe Wealth Managment, a fee-only Registered Investment Adviser based in sunny San Diego, CA. investing for success over the long term is more than just a pie chart and annual rebalancing.

I believe i can help you prudently manage your investment portfolio. 

"Focus On Planning" Less, "Focus On Doing" More

If I had a dime for every time I’ve heard or read an advisor suggest we all “focus on planning” I’d be a multimillionaire. Ironically, I cringe a bit every time I hear or read it, primarily because it lacks substance, provides no unique selling proposition, and brings back memories to my time in the industry in the early 2000s. We were taught to “focus on planning” then too, but the plans we prepared then were a 100+ page boilerplate document of pure fluff, fantasizing about what someone’s retirement looked like 20-30 years out, as if we had certainty in predicting the myriad of variables affecting the forecast. In actuality, it became apparent that the idea behind the “focus on planning” was to sell products and generate revenue. I’d guesstimate 99% of the financial plans our firm produced in the early 2000s were dead documents that were fantastic at collecting dust, and little else. We were encouraged to spend more time having deep, thoughtful, and emotionally driven conversations about what’s important to our clients, often well beyond their realistic monetary constraints, rather than to emphasize the ongoing implementation of equitable financial recommendations in the present to optimize someone’s ability to achieve their long-term financial goals. The industry has grown up a lot since the early 2000s, and the point of this post is not to suggest that we as advisors avoid deep, thoughtful, and emotionally driven conversations in an effort to identify our clients’ financial goals, but it is to remind everyone that it’s the doing, the ongoing execution of the plan’s recommendations, and not the planning, that truly brings about massive change in your clients’ ability to achieve their financial goals. “Focus on doing”, that sounds better to me.

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I’m a fan of the sport of bodybuilding, and my favorite bodybuilder at the moment is a gentleman named Sam Okunola (www.samokfit.com). Sam is arguably the best natural bodybuilder in the world, and this past weekend he won the 2019 INBF California Natural Muscle Mayhem. We often draw parallels between the worlds of dieting and investing, so it’s easy to find an intersection between Sam’s physique transformation and prudent financial planning.

Sam began planning for his 2019 bodybuilding season in November of 2018 at roughly 240 pounds. It was at that time he established his goals, formed a clear vision for his physique, and developed a specific, measurable, and actionable plan that, if executed, would give him the best probability of bringing his perfect physique to life (he’d need to lose roughly 40 pounds). This is analogous to the entire financial planning process. It should begin with thoughtful conversations to identify our clients’ goals, and then develop a specific, measurable, and actionable plan that will give them a great chance at bringing their financial goals to life. But it’s important to keep in mind that Sam’s ability to transform his physique over the last 9 months was not a result of the plan he devised in November of 2018, as that plan by itself is entirely useless, but rather was the result of the execution of his plan over the last 9 months. The ideas Sam came up with in November didn’t move the mountain, the weekly bulldozer of Sam’s execution of those ideas moved the mountain. Every gym session, every macro-nutrient tracked, every activity change, every dietary change, and every adjustment he needed to make in response to variables that he couldn’t predict (life’s curveballs), is what got him to where he was trying to go. Financial planning is no different; a “focus on planning” is a process that’s alive, it’s ongoing and never-ending, and it’s emphasis shouldn’t be placed on the plan that’s initially created, but instead should be on the monthly or yearly execution of the plan’s ongoing recommendations. This will optimize the likelihood of our clients achieving their stated financial objectives, and it will also help you see just how much of a positive impact you’ve made in your clients financial well-being.

This brings about another point, we as advisors should be doing everything within our power to execute or carry out the ongoing recommendations of our clients’ financial plans. I cringe a bit more when I hear the words “Financial Advisor” or “Advisor” because I like to think we should be so much more than an “Advisor”. In our industry, you can lead a horse to water, and you can make it drink. We shouldn’t be “advising” someone to increase their 401(k) deferral, we should be logging into their 401(k) plan with them to make sure they increase their 401(k) deferral. We shouldn’t be “advising” someone to establish a Roth IRA, and make the maximum annual contribution, we should be opening up a Roth IRA for them and funding the account through an electronica funds transfer arrangement with their financial institution. We shouldn’t be “advising” them to establish a living trust, we should be providing their contact information to a trusted estate attorney who’ll be sure to contact them - and then following up with our clients to make sure they met with said estate attorney. This is how we “focus on planning”, by focusing on doing every single thing we can for our clients. The less they have to do, the better. The more we do, the better. Technology has made this rather easy nowadays.

Our industry also likes to create a divide between “Financial Advisors” and “Investment Managers”, and it’s rather head-scratching. If every prudent financial plan identifies the minimum rate of annualized return necessary for our clients to achieve their stated financial objectives (a big “if”, but stay with me), then the responsibility of “Financial Advisors” and “Investment Managers” in regards to portfolio management is ultimately the same. We all have to help our clients draft investment policy designed to hopefully generate the minimum annualized return necessary to fund their stated financial objectives over the full market cycle. “Financial Advisors” shouldn’t ignore this responsibility because they’re not “market guys”, and “investment managers” shouldn’t ignore the financial planning aspect that’s necessary to define the minimum rate of annualized return necessary for our clients simply because they’re “market guys”. I’m often labeled or categorized as a “market guy”, but i’m a “Financial Advisor”, we can be one and the same. (Cringe, call me a “Financial Manager”)

Finally, part of why I enjoy writing and disseminating so much information about the markets is because it helps my clients stay in love with the process I’m utilizing in managing their investment portfolio. I’ve provided my clients a weekly market update each and every Sunday for a decade-plus. To most, this is overkill. Some would even argue it brings the focus away from “planning”, and toward “investments”, and that’s part of my issue with the generic “focus on planning” tagline. Hopefully, after reading this blog you’ll understand why. “Focus on doing”, that’s how you get the most out of financial planning.

S&P 500 - 12 To 6 Curveball