Have you ever noticed how fads come and go? Hula hoops were a thing once. Pet rocks, lava lamps and beanie babies, too. I can remember thinking I was to coolest guy ever rocking my mullet and parachute pants. And some fads even come back again. Daily News Record names 1967 the Year of the Turtleneck. Well in 1991 a turtleneck and acid washed jeans was the look. Turtlenecks had returned with a vengeance. It's like there's this wheel in the sky and it keeps on turning.
This wheel in the sky, these cycles, apply to the economy and the financial markets. A time to reap and a time to sow to quote King Solomon. And it's not just bull and bear markets. We can have inflation, deflation or stagflation. Bond rates can rise or fall. Our economy can be affected by war and peace. Even our demographics goes through cycles of Baby Boomers and Baby Busters (Generation X). These cycles repeat themselves, but not in an identical way. Financial history doesn't necessarily repeat, but it often rhymes.
So now that I've expounded on the existential mysteries of the cosmos, what's the point for you? Here's my point: hire a financial strategy agnostic. Let me explain.
Financial planners and other financial professionals have a job to do. But each of them is unique in their training, outlook and toolset that they bring to their clients. In fact, you can often separate these financial professionals into denominations. Some believe in a strategy that relies heavily on Money Manager X. Another evangelizes for a specific fixed-income strategy that resembles Jacob's Bond Ladder. Yet another praises the merits of life insurance as a be all, end all strategy. Still another has found the Holy Grail of stock trading and will lead you to retirement nirvana.
If you get these fictional four financial professionals in the room and ask them their opinion on how best to retire you're get five opinions. But often one financial professional will throw shade at the strategy of the other professionals. One will talk about how their passive, low-fee strategy is cheaper than Variable Annuity X. Another will warn you of doom and gloom in the stock market, to be avoided at all costs. They have mantras like, "buy term insurance and invest the difference." Or "you can't beat the market."
Rather than joining one denomination, see the wisdom and truth in all of them. There is no such thing as a perfect strategy. Why? Because the wheel in the sky keeps on turning. Those who preached stock market doom and gloom since 2009 have missed out on raging bull market. Eventually another bear market will return with a vengeance and these prophets of doom will be right for a season. Conversely, the low-fee passive investment proselytizers have been correct over the last few years. However, the time will come when low-fees won't matter as sequence of returns risks batters your portfolio.
Hiring a financial strategy agnostic means finding an investment fiduciary who looks at you and your goals as an individual. There's no one strategy or product for "sale." There's no one strategy or product that is strictly forbidden, unless you indicate otherwise. The reason for this open-mindedness is that every financial tool has a use depending on the cycle we find ourselves in. If you'd like to learn more about this topic click here.