A few months ago, I posted a blog titled, The Only Goal That Matters Is Yours. It included content from Carl Richard’s excellent blog, The Behavior Gap, and spoke about your financial plan being a road map to your personal and financial goals. This talk from Dave Butler, Head of Global Financial Advisor Services at Dimensional Fund Advisors, reinforces this point.
In the video, Butler discusses a broker he worked with 25 years ago. “He used to call me on a regular basis, probably every other day, with a stock idea. One time, he called me and there was a stock trading at $17. Both he and the analyst thought the stock would go to $23 after the earnings report came out the following week.”
“Long story short, the earnings report came out, it didn’t hit expectations and the stock ended up going to $7. I basically lost about half of my net worth on that one particular stock.”
Butler reflects on his relationship with the broker, “He had no idea about me. He had no idea about my family situation or my financial plans. All he had in his mind was transacting on that particular stock.”
Butler describes the migration in strategies he has seen during the course of his career. Advisors have moved from a stock-picking orientation to a more transparent investment philosophy approach that focuses on:
- Global Diversification
- Tax Planning
- Minimizing Transaction Costs
“It’s really an idea around controlling what you can control in the portfolio process.”
Sparrow Wealth Management has been practicing this philosophy since our inception. Please refer to our Key Investment Principles.
About Christopher Jones
Christopher Jones is the Founder and President of Sparrow Wealth Management, a fee-only financial planning and investment management firm. Before entering the investment field, Chris was a management consultant for Deloitte Monitor. He graduated summa cum laude from Brigham Young University with a B.S. in Economics and a minor in Business Management.
