When I set up Fortress Financial Planning a number of years ago, I wanted to build something that gave clients the best chance to achieve the lifestyle they want both now and through a thirty plus year retirement. And while all that may sound fairly cliche, I do admit that I was partially naive in my aspirations. I have learned and embrace that what we do is not for everyone, and I am at peace with that now.
What I have discovered is some people’s willingness to accept short-term volatility as part of the financial process and have hard conversations when these periods will inevitably arise, is too off-putting for them.
Those few, who find it too much head back to a world that will most likely result in failure. They go in the knowledge that our door is always open when they return.
For the record, I believe;
A broadly diversified portfolio of equities will over the long term produce twice the real return of bonds of similar quality.
In the short to medium term, these equities will produce returns both higher and lower than the market average.
That working with us will help you ignore fads and fear as they occur.
We earn our fee by helping you earn equity returns over the long term as the mainstream equity market continues on.
Those selling you market timing and selection are bringing you down a predictable cycle. The story will change but these advisors will have the same underlying message. Volatility can be suppressed, with no effect on return. While you and I know this to be impossible, anyone who goes down this route will be burned as they roll from one new product to the next.
The keywords to look out for and avoid;
Alpha
Equity like returns with bond volatility
Absolute returns
Lower volatility
Uncorrelated returns
Guarantee
In the end, these strategies and ones like it will betray the client and the advisor who sells it. These complex and expensive products and strategies are driven by the fear of volatility. But the real truth is temporary declines have no real way of harming us in the long term, equity returns are earned and earned by those who hold them through the whole market cycle, over and over.
These people embrace volatility. They are following a plan.