a million chances to fail

Your mission is to invest for the long term. Simple but not easy.

The world will offer you a million chances to fail in that mission. On any given day, over any period of time you want to document, there are plenty of reasons to be fearful and flee to the (perceived) safety of cash. On any given day, there is someone willing to feed the small bit of anxiety already present in the back of your mind.

This week, it’s Robert Kiyosaki, creator of the massive Rich Dad, Poor Dad book publishing empire. Kiyosaki likes to throw the word “crash” around a lot. He does it all the time. Crash, crash, crash. It’s a big attention getter.

He’s currently pushing a book about cryptocurrency. Great, who isn’t. This explains why you would see a tweet like this…

The best time to prepare for a crash is before the crash. The biggest crash in world history is coming. The good news is the best time to get rich is during a crash. Bad news is the next crash will be a long one. Get more gold, silver, and Bitcoin while you can. Take care.

— therealkiyosaki (@theRealKiyosaki) June 28, 2021

He has real, legitimate fans in this world. People who are listening to him and acting on this stuff. Imagine treating your fans like this?

In 2015, Kiyosaki predicted the biggest crash ever for the year 2016. Never happened. I’m sure he would tell you it’s still early, or that the 2020 coronavirus crash qualifies, or that Trump saved us from the ’16 crash by getting elected. Forgot to mention, Kiyosaki and Donald Trump have co-authored a couple of books together about business. I won’t add anything here…

Kiyosaki’s been selling a book since 2002 called “Rich Dad Prophecy”, which predicts “the biggest crash in world history”, and then he reprints it every few years so that he can take credit for calling the periodic bear markets that everyone knows are a normal part of the investment cycle. We’re still waiting for the biggest crash in world history from the last two reprintings of Prophecy from 2013 and 2015. Any minute now.

Now let’s say you’re one of the regular people who comes across the Kiyosaki crash tweet this week, knowing little about the business or background of these things. You say to yourself, “I know that name, who is he?” A simple Google search turns up the fact that he is a world-renowned best-selling author and famous entrepreneur. That’s going to rattle you. It may even make you second-guess what your portfolio is invested in or how you’re spending and saving your money. If you’re susceptible to this sort of thing, it could have a major impact on everything you do for months or even years afterward. But Kiyosaki also knows that it’s a great way to sell you a book, or an online course, or a newsletter, or a bucket of vitamin powder for the apocalypse or whatever else.

Nothing could be easier than to scare people in order to sell them something. I’m thoroughly unimpressed by it. A cheap trick, even when pulled off on an industrial scale.

Far more impressive to me is the entrepreneur or author or advisory firm founder who tells the public that, yes, there is substantial risk and it can never be truly removed from the investing process – but that they should, undaunted, continue to invest anyway. Regardless. Because risk and reward are linked, and because the history of American capitalism has been one of bountiful reward for the risk-takers, and because the sun is going to come out tomorrow, and the next day, and the next day, and because there is going to be a future – a future in which the cost of living is higher, not lower, thus necessitating the risk we all must take of drawdowns, crashes, corrections, volatility, uncertainty and doubt.

If you can sell that message, effectively, and actually shepherd the people who follow you toward accomplishing their hopes and dreams – that I’m impressed with. Which is why entrepreneurs  like Ric Edelman, Peter Mallouk, Ken Fisher, Joe Duran, Jon Stein, Charles Schwab and others are so much more inspiring to me. Poisoning an audience and selling it the antidote takes very little talent. Holding the audience’s hand, through thick and thin, ups and downs, through years and decades of fear and greed – that’s about the hardest thing you can do in this industry. It’s what Jack Bogle did for longer than anyone. It’s admirable because it’s so hard.

This week, a letter went out to 18 families whose money we manage at our firm. These are families who became clients in the second quarter of 2018. In that letter, we’ve congratulated them for achieving three full years of loyalty to their own financial plans. They’ve remained invested through the trade war, the yield curve inversion, a twenty percent stock market correction at the end of 2018, the midterm elections that fall, the most contentious Presidential election of our time, an attempted coup at the Capitol building, the onset of the biggest pandemic in a century and a whole lot more. Up, down, up again, down again, sideways, diagonal, they continued to stick to the financial plan and portfolio we’ve built for them. Their stoicism in the face of such outrageously extreme headlines has paid off. These 18 families represent the newest class of our Milestone Rewards clients. For their help in the work that we’re doing for them, they receive a permanent fee reduction, forever.

One of the core tenets of our investing and wealth management philosophy is that nothing we do will work if we don’t have a client who is willing to do their part. Which is why none of our Milestone Rewards clients have been given anything. It’s not a gift. They’ve earned it themselves.

Of this new Milestone Rewards class of Q2 2021, only 17 percent of them are from the Northeast, despite the fact that we’re headquartered in New York. We’ve been onboarding clients remotely across the country for almost eight years now, way before the pandemic necessitated it. Another 17 percent are from the Southeast, while 22 percent are from the Midwest. The remaining 44 percent are from the West coast. Our message is resonating nationwide, which is one of the most gratifying aspects of building our business the way we have. The average age for the clients in this class is 58 years old with 33 percent of them below age 50. This is another aspect of our practice that I find so gratifying – appealing to investors of all age groups and objectives. Half of these households are between 50 and 70, and 17 percent of them are above 70. Having a client-facing advisor corp of all ages and regional locations makes this sort of thing possible.

When you scare people, you get their attention. You might even get their money. At least, for a little while. It’s effective, which is why there’s so much of this out there.

But when you inspire people and gain their attention with empathy and solutions, it’s a whole other level of professional satisfaction. Saying constructive, uplifting things makes it a little bit more of a challenge to get that initial burst of attention, but when you get it, it’s real. For the right reasons. This is the highest ideal we have in our industry. There are so many incredible advisors all over America who strive to live up to this ideal, I meet more and more of them (virtually, lately) all the time. It’s an amazing era to be living and working in this business.

I want to congratulate the 18 families who’ve earned their Milestone Rewards this quarter and the thousands of financial advisors everywhere who are working toward the continued success of the advisory profession. The finish line isn’t the thing, it’s the route we take to get there and the milestones we celebrate along the way.