ARE YOUR INVESTMENTS STUCK IN A BUCKET?

​I have a second home with six Xanadu plants and two of them struggle while the others are doing great. With some research I discovered that the two were getting more hours of direct sunlight than the others.  I learned that the Xanadu family of plants thrives in low light and the few extra hours of sun was causing them stress.
 
One of the  biggest landscaping challenges is plant placement. Each plant species has specific needs and the same plant may grow well on one side of your yard but poorly on the other. Plants grow in the wild where they tend to be the happiest but in our yards we put them where we want them to be. I really wanted those two Xanadu plants right out front by the sidewalk but they preferred a shady location.
 
People, like plants, have many things in common, but are also very unique. The environments in which they thrive varies based on personal tastes, needs, goals etc.. When it comes to their investing needs, I have always disliked the investment modeling that is so common in our industry. Using this method an advisor, or more likely a computer program, assesses a person’s risk profilc and time horizon based on the answers to some questions. Then the person is classified as conservative, moderate or high risk, with perhaps a few other categories thrown in. Once the classification is defined, the investor’s funds are essentially allocated into a bucket of investments with all other similar investors. If the investments in a specific bucket are changed, they are changed for everyone in that classification. The problem with this system is that it assumes that what is good for one conservative investor (for example), is good for another.
 
I have 12 children. When I make a parental decision that results in the common retort, “That’s not fair” I remind them that I try to be fair but that doesn’t mean I am going to treat them all the same. They are 12 people with 12 unique sets of needs and as a parent, I try to do for each one that which is best. I had a client once ask me, after speaking to his friend who is also a client, “Joe told me about an investment you got for him but I don’t see it in my account. Why not?” I replied, “Because you are not Joe.”
 
All investors have basically the same pool of investments to choose from, so many things will be similar, but your particular portfolio selections should still be unique to you. Whether it be in the allocation percentages, or some of the specific holdings, your portfolio should be customized to address your specific needs. Just like plants, some investors need more water, others need more sun. The ultimate goal is not the portfolio but the health of the investor. And that can only be addressed using a personalized program.