Investing is boring? Many pros believe so

For some financial professionals, there is a question that is never welcome and that arises in various social contexts: “Do you have a stock tip?” »

No. The answer is always no.

For financial advisors who think this way, investing is good, it is necessary, but it is not always very interesting and it is not what brings joy to life.

These professionals know how to invest and they care about a job well done. But for them—and maybe for you, too—investing is just a tool to help you achieve your goals in life. They get their real satisfaction from helping people define and achieve those goals.

There’s nothing wrong with that. In fact, it may be the healthiest way to think about investing, whether you’re managing your finances yourself or trying to find an advisor who feels the same way.

Defiance requires courage

Setting goals and engaging in serious, long-term dialogue to refine them seems more important than paying attention to the stock market. It even seems obvious.

Yet the financial services industry struggles with this.

For decades, brokers were paid on commission, which gave them an incentive to multiply their trades and investment strategies. Even today, many financial planners base their fees on the assets they manage for you, which tends to focus too much of the conversation on how (and how aggressively) they invest those assets.

So a financial professional must have the courage to deflect investment conversations or admit that the markets are bad.

“It’s risky to say that in the newspaper, that’s for sure,” says Danika Waddell, a financial planner in Seattle, who first said it out loud in a conversation with Joy Lere, a psychologist and coach of executives. The two women were returning on foot from a dinner conference, when M^me Lere asked her what she liked least about her job and what took up the most energy.

It also takes courage and determination for individuals seeking to build wealth. It takes ignoring the hype that makes it seem like everyone is making a fortune with the latest hot stock, Nvidia these days.

But how to do it ?

Boring is a virtue

“I think investing should be boring,” says Leighann Miko, a financial planner on the West Coast. “You can’t overthink it.”

The whole idea is to take what the different markets give you – stocks, bonds, real estate. So, buy mutual funds or exchange-traded funds that own all the stocks in a given segment. So an S&P 500 index fund owns all 500 stocks.

If you tolerate higher risk, you put more into stock funds and keep less money in cash. But you shouldn’t bet too much on a handful of individual companies or a single segment of the market: it can cause your net worth to drop quickly if you get it wrong. And there’s some guessing in that.

This approach has many advantages. These index funds have low fees and the overall portfolio is generally less volatile than individual stocks. In the long term, this approach should provide better returns.

Ask lots of questions

Index funds, which are rather dull, are often described as passive investing: you don’t try to enter and exit the markets depending on the situation. You stay the course, by investing, for example, 80% of your retirement savings in stocks for the first 25 years of your career.

The advantage of this method is that it leaves time to ask more in-depth questions of your advisor, or of yourself. What type of life would make you happier? What will your aging loved ones need from you, and how much will you have to give? How can you best help your grandchildren?

Asking and answering these questions is the opposite of passivity.

“We actively plan for the things that are important when we listen to the deepest and most important desires in our customers’ lives,” said Ms.^me Miko: If you don’t know what the money is for, how can you develop an investment strategy for that money?

Mike Zung, a financial planner in Lee’s Summit, Mo., avoids technical topics when he talks with people in a social setting. “I prefer to hear about their first money memories and how they handle money as a couple,” he says.

These are topics that are difficult to discuss with a stranger, but not with a friend. A friend of someone who does not have the help of a financial professional might ask questions and try to help, if they sense an opening and the conversation lends itself to it.

“I want to know what their current life and their ideal future life look like, to see if their financial situation lends itself to it,” explains M^me Waddell, who recently spoke with a client who wondered whether being a therapist might have been a better career choice.

Is it too late, at 40, to change jobs? Maybe not.

The same thing applies to other major turning points in life: “There will be one or two very important things,” explains M.^me Waddell. For most people, these won’t be investments. »

This article was published in the New York Times.

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