I am borrowing from Notre Dame here. But even USC and Michigan fans will accept this as a universal concept.
Last year the University of Notre Dame celebrated 175 years since its founding. There was a lot to celebrate – far more than the seven Heisman Trophy winners since Angelo Bertelli in 1943. More notably, Notre Dame literally considers its greatest accomplishment as establishing itself upon the principal, “A Force for Good”. These were the words uttered by the Catholic priest founders of the University in the winter of 1842.
“A Force for Good” is what the whole world needs, yes?! A Force for Good is also needed desperately in financial services– but in ways not immediately evident.
Of course, most obvious, we need the Fiduciary Rule to be defined – in English – and present and enforced in our ALL our relationships where anyone is advising us on our financial affairs (more on the importance of the Fiduciary Rule in a future edition).
But less obvious – or practiced – is that YOUR ADVISER needs to be “A Force for Good” in YOUR LIFE.I mean this literally: you need to see and feel that the advisory fees you pay are really making a positive difference in your life.
Amidst the “high stakes news” of late maybe it is time for a more mellow message. Whether it has been G-7 talks, world leader summits, US Federal Reserve meetings, celebrity events – or your child’s graduation from kindergarten – the art of not freaking out seems to be harder than ever.
Despite all of the calculations involved in investing, there is still an element of luck involved. A specific term for this luck is, “Sequence of Returns.” What on earth is that? Answer: it is a risk. And it may just be the most important concept in the world if you ever wish to spend your savings – and have them last as long as you need.
The topic became relevant recently when a client asked me to assist in defining what their “concerns” should be for the long-term, now that they had accumulated a decent amount of savings and investments. The desire was to continue to accumulate savings but, more important, have the monies last at least long enough to see their plan to fruition for themselves and their kids. Continue reading “Sequence of Returns: The Luck Factor”