No. How Can I Help You?
Are customers always right? In the retail sector, employees adopt a "customer is always right" approach, prioritizing saying "yes" to client requests and fulfilling their immediate desires rather than addressing their needs. Consequently, encountering a salesperson willing to say "no" to client requests can be rare.
Suppose I order a triple bacon cheeseburger with guacamole, chili cheese fries, and a chocolate shake. A clerk will take my order, deliver my food, and move on to the next customer without questioning my selection or its ramifications on my health.
My role as an advisor is to recommend what clients need, not what they want, which means I often say no to client requests, especially when it's not in their best interest. My goal is to ensure they follow their financial plan. Of course, I try to say yes, but not at the expense of their financial well-being.
In December 1999, I met with a client who coveted high-flying technology and internet stocks. He questioned our allocation to value stocks, international holdings, and bonds. He requested we sell them to buy Nasdaq-traded stocks. I said no because of the rich valuations, and they didn't fit into his long-term plans. He didn't like my answer and asked the branch manager to transfer his account to another broker. A few months later, the NASDAQ fell 70%.
Today, with AI stocks such as Nvidia reaching unprecedented highs, investors are reevaluating the effectiveness of diversified portfolios and contemplating abandoning their established asset allocation models in pursuit of higher returns. While yielding to these requests is tempting, the question arises: is this approach prudent? History suggests otherwise. Cisco Systems was an internet darling, soaring 6,320% from 1995 to 1999. Twenty-five years later, it has yet to eclipse its all-time high.
As a Certified Financial Planner Practioner™, I adhere to the fiduciary standard, which means I must put my client's interest first and be legally bound to act in their best interest. Which, at times, is at odds with client requests. However, my ultimate objective is to ensure they achieve their financial goals and dreams, which is always prudent.
"Never ask a barber if you need a haircut." ~ Warren Buffett
February 6, 2024
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level.
Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren't suitable for every investor. Prices and yields are for today only and are subject to change without notice. Past performance is not a guarantee of future performance.