We just want you to stick to the plan

I presented at a financial planning meeting this week the “missing link” we’ve witnessed the past 20+ years. While providing a financial plan and cash flow strategy is absolutely necessary to build a behavioral portfolio that can withstand the market and emotional cycles nearly all investors go through, if the investment allocation does not fit the personality of the client, most ultimately end up abandoning their plan at some point.


Some of the other presenters at the meeting used the usual charts that showed how great you would be if you stuck to your buy & hold strategy and how stupid you would be to go to cash, this does not work for many clients. If you’ve ever had teenage girls you know there are times you simply cannot provide rationalization to their thoughts via data and statistics. Not that I’m comparing investors to teenage girls, but I’ve been doing this long enough and have the psychological studies to back it up to know most investors will become emotional at times in the market cycle. When we become emotional, we tend to make mistakes.

Here is an expanded version of the risk tolerance data:

I emphasized to the group — if you want the best, liquid, long-term investment that is the place to be. The problem is few people will stick with it long enough to receive those rewards. Everything we are doing at SEM is to provide ways to ensure investors (and their advisors) stick to the overall financial plan. I then showed the statistics from our database of a question we’ve used with our clients the last 15+ years along with the number of times clients in those categories would be uncomfortable.


When we’re uncomfortable, we tend to not always think well, especially if we are being bombarded with negative headlines. We have a variety of tools to help investors and their advisors develop their own customized behavioral portfolio. If you’re an advisor and aren’t doing any sort of financial plan with your clients, we have a few ideas that are affordable and do not require a lot of effort on your part. If you’d like to learn more, or help getting started let me know.

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New Kent, VA
Jeff joined SEM in October 1998. Outside of SEM, Jeff is part of the worship team at LifePointe Christian Church where he plays the keyboard and bass guitar. He also coaches a club soccer team.