Manager or Planner?

Close your eyes and imagine this…

(Hey, if you're reading this then you are not following directions … but I guess that's okay so you can still read!)

The criminal defendant approaches the bench. "Your honor", he says, "it's not like I stabbed him 27 times. I only stabbed him 21 times!"

That is close to what I imagined when I was talking with a fellow financial professional at the conference in Texas a few weeks ago. In the course of our conversation, we were talking about a few products we liked or disliked. When I mentioned one particular program my clients and I have had a great deal of success with, she told me it was too simple for her as it did not have enough asset classes.

"Not enough asset classes? Doesn't it use nine different asset classifications?" I queried.

"Exactly my point" she said, "I track 27 different asset categories for my clients."

That is overkill. Diversification is good. But too much diversification can lead to confusion, and confusion is never good. Here is a good rule for every investor; don't invest if you don't understand.

As the advisor and I talked it became clear that she prides herself on comprehensive management of her clients' investments down to every detail. She not only selects each security, she also makes all the buy/sell decisions such as timing, amount, and price. By every sense of its meaning, she is an asset manager.

I'm not. My services may seem similar, but they are very different. As a Certified Financial Planner ^TM practitioner, I take a more holistic approach to financial planning. I assist clients by designing a portfolio which suits their needs, objectives, and tolerances and then I identify appropriate investment programs to build that portfolio. In other words, I manage the asset managers to make sure they are proper stewards of my client's accounts. At the same time, I consider other factors like my client's income and protection needs too.

During the conference there were several days in a row where the markets were falling hard and fast. Since we were both attending the same sessions, I wondered who was performing the day to day (sometimes minute to minute) management for her clients. I was comfortable with the knowledge that even though I was out of the office, my client's interests were still being served.