Letter to Our Clients - May 2013

May 2013


Dear Clients and Friends:

I recently returned from a conference in California where I had the opportunity to hear from some high-profile academics and investment professionals, many with doctorate degrees in finance and economics. One of the featured speakers was a man name Eugene Fama, who many consider the father of modern finance. The conference was very interesting and informative, but what struck me most (other than the beautiful weather) was how similar their message was to what we discuss with clients every day. As I sat there listening to themes we emphasize with clients (such as the benefits of diversification, how important it is to keep costs low, the need to craft a plan and commit to sticking with it even when the markets seem too good to be true or too bad to believe), I felt like Bob could be up there giving the presentation. Of course these principles mean different things to different people, but it was refreshing to hear some very well respected speakers agree with and espouse our investment beliefs.

One speaker, who had earned a doctorate in economics, emphasized that every investment discussion, no matter who is involved or what their situation, should start with the same conversation and understanding: what is the reason for this investment portfolio? For many people the answer is often a simple “growth” or “saving for retirement,” but sometimes the goal is much more complicated and specific than that. This basic starting point can often be forgotten as time passes and we focus on picking the very best investments or ways to “beat the market” (I always ask what “market” people think they need to beat, but that can be the topic of another letter). However, this starting point is very important to keep in mind. After all, outperforming a certain benchmark is never the real goal of our investments. Beating or even equaling a given index might sound good, but will be little consolation if you outlive your savings in retirement or cannot afford the house you have been saving for.

This presentation, and much of the conference in general, reminded me of the quote attributed to the Chinese philosopher Lao-Tzu: “A journey of a thousand miles begins with a single step.” I would add that along the journey, it is important to occasionally stop and remember that initial step, to remind yourself of where you are going and why, and to reflect on all the steps that you have taken so far in your journey.

That Lao-Tzu quote has been on my mind lately, because my wife and I are currently preparing for a journey of many thousands of miles, and roughly 300 of them will be on foot. We will be spending much of the month of May backpacking an ancient pilgrimage route called The Way of St. James, or El Camino de Santiago in Spanish. Since medieval times, people have walked to the city of Santiago de Compostela along a series of routes from France to the Northwestern part of Spain. Catholics consider Santiago to be a Holy City and people would walk to the cathedral there to ask for forgiveness, miracles, and salvation. Today many “pilgrims” like us hike the route for the cultural experience. We will be walking 10-20 miles every day, sleeping in hostels with anywhere between 2 and 100 beds per room, eating and drinking the local fare, and always moving West.

Preparing for the trip has been fun and exciting, but a little uncertain at the same time. Unlike most vacations, we don’t know as we start how long we will walk every day, where we will stay (because most hostels do not take reservations and they fill up quickly), whether there will be a place to eat when we arrive at small villages and towns, or what we will see along the way. This uncertainty could be seen as scary, but the reality is that it is similar to what we deal with every day in the financial markets. There are many variables Lindsey and I cannot control about our adventure, but we know our basics, like when and where we will start, when we need to fly home, and we will take the rest as it comes.

Similarly, we want to work with you in your financial lives to make sure we understand your basics, like your financial goals and where you stand today. Once the fundamentals are understood we help you choose the options that are best suited to your path, help you understand the potential risks along the way, and then guide you through your financial journey as it winds through the years. We cannot predict or control the financial markets, but we hope to help you feel comfortable and confident in your financial decisions and make sure you are on track to reach your financial goals.

I am very lucky that we have such a fantastic team here at Advanced Wealth Management that I can take off several weeks for this trip and feel confident that our clients will still be well taken care of. Our team has grown and advanced by leaps and bounds, and everyone in our office is professional, highly competent, and fun to be around. Bob has done a wonderful job of growing the firm and mentoring me, and I am grateful he and I have the working relationship that we do. In addition, we are lucky to have some of the best people in the world as clients. If it has been a while since we last spoke, or if something has changed in your financial life that we should discuss, please reach out to us so we can schedule a meeting – whether I am here or not!

As always, if you know someone that you think could benefit from our services, please feel free to forward our letters and contact information. Thank you again for the opportunity to work with you, and I look forward to talking with you again after I return.


Theodore R. Haley, CFP®, AIF®
Vice President