I was one of the first fee-only independent financial advisors in the UK – back in 1987 a group of us formed the Institute for Financial Planning and rejected commission-based advice for our clients. We had becomeÂ disillusionedÂ with the pressure to either sell a policy to make a living or expect markets to move ever upwards to generate management fees. Happily, many clients were prepared to pay a regular retainer by direct debit, in the knowledge that future advice could include the option of buying/selling nothing. I have always regarded the stock market as a form of roulette (sometimes of the Soviet variety) in whcih, to coin a famous unattributed remark:
Investment advisors took the credit for things they didn’t influence and the blame for things they couldn’t control
It seems that little has changed, although dentistry is blessed by the services of fee-only advisors like Martin Haines who do a fantastic job for their clients. Listening to Labour Peer Lord Desai on Radio 4’s morning news yesterday was a reminder that stock markets and economies are different places. In my 25-year career as a financial planner, I never saw any private individual become wealthy from stock market investments (or, for that matter, from whacky “get rich quick” tax-planning schemes driven by the lure of quick, fat commissions) – what I did see was people who became wealthy because:
they built and sold a business and/or
they acquired a property portfolio and/or
they bought, refurbished and sold businesses and properties and/or
they inherited from someone who had done the above.
To get wealthy in the stock market you have to work in the stock market – and make miniscule percentage gains on the market’s movements. The market HAS to move for the people in it to make money – they don’t give a monkeys whether it moves up or down – it just has to MOVE!
To get wealthy outside of the stock market you have to take part in an economy – whether its business and/or property is your choice.
I’m unconcerned with stock market movements – up, down, sideways – who cares – I can’t control it or anticipate it – I don’t belong there – I’m not a member – and neither is your investment advisor (oh dear – I can hear the howls from some advisors as they read that – so for the record, I have an investment advisor and I value his opinion greatly).
I am concerned with the economy, because that’s where I’ll make my wealth and that’s where the dentists I work with will make theirs.
Lord Desai points out that we are heading for a “long but shallow recession” – and that means business will still be there – but we will have to work a little harder for it.
Its time to put your marketing thinking cap on – but please, please refuse to take part in the “we are all doomed” debate – that’s a stock market conversation designed to encourage the market to MOVE.
Its got nothing to do with economic reality.
The economic reality is that:
patients aged 25-35 are facing serious concerns for their future employment and “buy to let” woes – and are less likely to be spending money on cosmetic dentistry;
families with direct debits in force to pay for the dental maintenance will keep those direct debits going;
families who are fee per item will delay or cancel treatment and drift backwards towards any available NHS provision;
patients of all ages for private orthodontics will keep buying it – invisible braces, lingual ortho – selling like hot cakes;
the wonderful but grumpy over-50’s will keep investing to look good and feel good;
you are going to have to make me an offer I cannot refuse to encourage me to invest my money with you.
Don’t bother reviewing your investment portfolio – review your marketing plan.