Which investment firm is the “best?”
March 30, 2012Who knew that a post-modern world where a big government controls everything and has a televised tournament where children fight till the death would be so popular? The Hunger Games movie opened recently and had the third best debut weekend of all time. It even beat all of the Twilight series movies as a box office success. Fortunately, or unfortunately depending upon how I view this, I have read both the Twilight trilogy as well as the Hunger Games trilogy.
Why? I have a teenage daughter who loves to read and sometimes we read the same books so that we can talk about what’s going on in the book. Often, I learn a lot about what’s going on in her school, in her life, and in the world of teenagers through our discussions. One of the things I learned is that there is a rivalry of sorts between people who think Twilight was better than The Hunger Games and people who think it’s the other way around. Who knew?
It seems like there is almost nothing in our world today that doesn’t become a competition. I’ve seen this when hearing people talk about their financial advisors or which investment firm they use if they manage their own money. I met with a couple recently who were engaged and the wedding is coming up in just a few months. They are both successful. Both contribute the maximum to their 401(k) and both like to manage their own money. She is a huge fan of Vanguard. He prefers T. Rowe Price.
They asked me which firm was better because they were thinking about combining their assets after the wedding. I answered that both firms are high quality, well-respected firms that have different business models and appeal to slightly different types of investors. To that they said, “OK, but which one’s better?” I wasn’t going to fall into that trap. It’s the rough equivalent of being asked “Do these jeans make me look fat?” I have seen the same thing with people who have their assets managed by a financial advisor. Which firm is better: Merrill Lynch, Morgan Stanley Smith Barney, UBS, or………?”
There is no “best firm” out there. What works best, if you have a financial advisor, is finding one who takes the time to understand who you are, your goals, and your risk tolerance. If the process doesn’t start and end with your goals and what’s best for you, you’re probably in the wrong place. If you manage your own money, the firm that is best is the one who has the types of products and services that you find desirable and one who offers those products and services at low costs. The question isn’t just “which firm is the best?” There are actually many questions.
Do you know what level of risk is appropriate for your goals? Why take on too much risk if you don’t need to? Are you being recklessly conservative and forcing yourself to work 5-10 years longer than you otherwise would? If you are looking for a financial advisor, do you know what kinds of questions to ask? If you’re managing your own money, how do you know what to buy and how do you research your potential purchases? How do you know when to sell? Like I said, there are a lot of questions to consider rather than which firm is the best one out there. I’ll address these types of questions in my next blog post. Until then, I’m going to talk to my daughter about how I get my vote registered that The Hunger Games series is way better than Twilight!