By Ronald Cordes, Brian O'Toole, and Richard Steiny
Reviewed by Gary W. Silverman, CFP®
Gary Silverman owns a fee-only financial planning firm in Wichita Falls, Texas. He is the editor of the financial newsletter Personal Money Planning, writes the newspaper columns Your Money and Biz2Biz, and hosts the cable talk show, Money Cent$. Contact him at www.PersonalMoneyPlanning.com.
A few months back, I attended Genworth Financial's Mastery Program. At the conclusion, they gave out this book. It is geared to the individual investor and is used to explain and convince the prospect or client of the soundness and thoroughness of the adviser's investing process.
Since the book is available on Amazon.com, I was wondering: Might this be a book that you could use as well? Would it be a good addition to your prospecting or client education efforts? Like so much in this business, the answer is, "it depends."
The draw to investors is that this book promises to show them how to have the same investing results the largest institutions are privy to. After all, it is purported, the little-guy can't afford to use the tools that are available to the mega-managers, nor do they have the ability to hire the truly best investment minds out there. But, by following the process outlined in the book, "You will learn how the world's premier investors-a select group of large institutional investment firms-manage money for their clients so that you can emulate their approach when it comes to building and maintaining your own investment portfolio."
As the authors are the co-founders of Genworth Financial, they are, as you'd expect, pro-adviser throughout the book. The basic message is to hire a great team to help you, choose the best investments for your situation, and invest in an unemotionally driven way. That way, "...you'll put yourself in a category above the rest by investing with the stone-cold composure of a professional, which will lead to greater profits... ."
To give you that stone-cold composure, the authors cover the "cycle of emotion." You know it well: Positive market performance results first in confidence, then enthusiasm, and finally greed. Market losses cause fear, which turns to panic, and ends in despair. More behavioral finance information lets the reader know that doing what is natural is often a bad idea when it comes to investing. They then walk the readers through establishing their own Investment Policy Statement to lead them to an understanding of what they want from their portfolios.
Of particular interest to this financial adviser is the last chapter: Selecting a Financial Adviser. Several criteria are given: They should be an RIA, fee-based, consultative, and incorporate superior strategies. If you don't meet those criteria, you may not want to hand out this book.
While the "superior strategies" are the Genworth way of doing things, there's nothing that most readers of this review would have a problem with. The process described in the book is similar to what most of us who give investment advice already follow in one form or another. That is, with one very large exception.
What will make or break the usefulness of the book in your practice depends on whether or not you agree with page 71, where it says:
However, we believe so strongly in the value of a dedicated portfolio strategist that we don't recommend that investors delegate asset-allocation and management-selection decisions to a financial advisor or stockbroker. Most advisors have the best intentions of serving their clients well. Even great advisors, however, often lack the time or the resources to make superior portfolio strategy decisions.
Advisors must spend a great deal of their time responding to clients' questions and concerns, as well as running their own businesses, leaving them little time to devote to advanced asset-allocation techniques or manager evaluation.
In other words, if you do your own investment management, this book strongly advises the reader not use your services.
So, who should use this book?
- Advisers who outsource to Genworth Financial-definitely
- Advisers who outsource investment management to a third-party provider-probably
- Advisers who perform their own investment management work, even if only at the asset allocation level-nope
By the way, if you have the chance to go to Genworth Financial's Mastery Program, I highly recommend it. Yes, they are trying to sell you on outsourcing to them; however, they keep the marketing to a minimum. The two-day program is a wonderful overview of current best practices research that will challenge you to improve the way you run your business. I was able to incorporate many of the ideas from the program into my own business efforts. And no, I'm not a Genworth adviser.
McGraw Hill (2008)