Removing the Emotions from Investing
Written by: Martin Shields, CFP®, AIF®
When we meet with a prospective client in an initial meeting, we discuss the value we provide for our clients which can be broken down into the following categories:
- Personal CFO – We provide guidance regarding any finance related question.
- Tactical Investment Management – We manage ETF portfolios and adjust based on what we see in the markets and the economy.
- Client Service Team – We handle all interactions with our custodian Charles Schwab. Our clients always get a real person with no phone trees when they call us.
It is the combination all these three items together that provides value to our clients and allows us to have an industry high client retention rate.
Drilling down on our investment management, one element my colleague Steve Bouchey highlights is that we take the emotion out of managing investments. This alone can prove to be a tremendous relief to clients who have a psychological and emotional burden of managing their ever-growing portfolio. All this stress can be removed by delegating portfolio management to our firm.
The graph below is a great illustration of the challenges facing individual investors. For the 20 years from 2002 to 2021 the annualized return for the average investor is 3.6%. Compare this to the 6.4% annualized return of a portfolio with 60% bonds and 40% stocks and you can see that the average investor consistently makes investment decisions that negatively impact their portfolio performance.
Source: JPMorgan
There can be many reasons for underperformance but one of the strongest is their decisions to follow their emotions from headlines about the markets and the economies. The graph below shows inflows and outflows of assets into the markets for individual investors. What becomes clear is that when the market is hitting all-time highs the inflows hit their peak levels and when markets are at their lows, inflows drop or even become negative. The successful approach to investing would recommend doing the opposite.
The one requirement for a client to be successful working with our firm is they need to feel comfortable delegating this responsibility. For individuals who have been managing their portfolio for years this can be more difficult than they expect. To help provide them with an outlet for their investment urges we sometime open a brokerage account with 1-3% of their investable assets and let them buy what they want in that account while we manage the bulk of their assets.
At the heart of our investment philosophy is the belief that removing emotion from the decision-making process leads to better long-term outcomes. By combining personalized financial guidance, disciplined portfolio management, and high-touch client service, we offer a structured, supportive environment where clients can feel confident about their financial future. For those ready to let go of the day-to-day stress of managing their investments—and the emotional rollercoaster that often comes with it—delegating to a trusted advisor can be both a practical and empowering step. Our goal is to provide peace of mind, consistency, and clarity in a world where markets and headlines often deliver the opposite. If you’d like to speak to one of our advisors about our investment management, please contact our office.
Bouchey Financial Group has offices in Saratoga Springs and Historic Downtown Troy, NY as well as Boston, MA and Jupiter, FL.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bouchey Financial Group, Ltd. [“Bouchey Financial”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, no portion of this discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bouchey Financial. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Neither Bouchey Financial’s investment adviser registration status, nor any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if Bouchey Financial is engaged, or continues to be engaged, to provide investment advisory services. Bouchey Financial is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bouchey Financial’s current written disclosure Brochure and Form CRS discussing our advisory services and fees is available for review upon request or at www.bouchey.com. Please Note: Bouchey Financial does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Bouchey Financial’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a Bouchey Financial client, please contact Bouchey Financial, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.