The Ingredients of a Philosophy


Have you every questioned (in your mind) the so-called “expert business coaches” — those individuals who have written numerous books on what you need to do in order to improve your business, yet never seem to have run one themselves? I’ve always tried to find out if these advice givers have done what is called Eating Your Own Cooking. The advice may be theoretically correct, but does it work in the “real world?”

In other words, does their guiding philosophy have all the proper ingredients? According to Chef Gordon Ramsay (famed chef of Kitchen Nightmares and Hell’s Kitchen), it is critical that the chef taste every dish before it goes out. During his shows, Chef Ramsay will literally scream: “How do you know the quality of what you’re serving if it you don’t taste your own meal?”

I bring this up because as professional advice givers, we are constantly cooking up and serving a philosophy to our clients. How we do this? By providing comprehensive financial planning, behavioral financial guidance, and goal and multigenerational family planning. We not only bring value, but real world tools to help improve our client’s financial journey. Now, this may look like a pretty appetizing buffet table we have prepared for our clients, so the question you should ask (I hope you are following this and not just getting hungry), “How do you find out your advisor’s philosophy?”

The way to find the answer simply is the “low I.Q. approach” — just ask them. Most financial planners — that are planning driven — won’t have a problem explaining, in plain English, their guiding philosophy. If, however, during this enlightened exchange, you begin to get a sense of a product push or jumbled words followed by uuhhhmmm, make a fast exit and find another planner that has an actual philosophy. The current advice giver has presented you with a market outlook, which is different from a guiding philosophy and will continually change based on what interest rates, unemployment rates, current economy, oil prices, world crisis, currency, gold prices, and quarterly earnings are doing at any given moment.

Although market indicators may have some importance in the short run, in the long run (which is the one you should be focused on) what truly matters is the trusted advice you are receiving from the financial advisor you have chosen to guide your family’s multigenerational legacy.

Over the last few years, as market volatility spiked to levels that would give any skydiver a few butterflies in the belly, many investors that were confidently committed to the planning process found even they were questioning the soundness of their plan (as well as their advisor’s philosophy). Why? The news outlets — by the minute and even by the second — began telling the public the financial system was near collapse, Wall Street firms was becoming insolvent, banks were closing, auto companies were filing for bankruptcy, housing prices were plunging, and it was global.

While the uncertainty mounted, enhanced by a few sessions of media confusion, the rising emotions led many to begin to think with the “this time is different” crowd. To combat their fears, they needed to immediately reference their comprehensive financial plan and take their mind off the day-to-day noise. They needed to focus on the foundation of their longer-term financial goals. In addition, a subtle reminder was needed to show the history of bear markets and how they’ve been a normal and natural occurrence of the business cycle. Although these events were extreme, I urged investors at the time to add to their portfolio of managers, turn off the news, and have faith that capitalism will continue to prevail even in the most uncertain of times as it has repeatedly done throughout history.

If these actions were followed, after adhering to the focused philosophy of a seasoned advice giver, prudent investors should feel relieved that they could look back with confidence on a job well done. They heeded the guidance given and could stay seated at the dinner table, even as the investor may have considered, at the time, hiring a new chef to serve a meal more appetizing.

Past performance is no guarantee of future results.
This article was written by Lou Melone, Managing Partner, with Budd, Melone & Company in Auburn Hills, MI. Lou Melone can be reached at 248.499.8704.
Posted date on Article III, Issue I
Dated 7.1.2010
Wells Fargo Advisors Financial Network did not assist in the preparation of this article, and its accuracy and completeness are not guaranteed. The opinions expressed in this article are those of the author and are not necessarily those of Wells Fargo Advisors Financial Network or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy.
Budd, Melone & Company and Wells Fargo Advisors Financial Network do not provide tax or legal advise.
Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Budd, Melone & Company is a separate entity from WFAFN.