The Complete Wealth Advisor

The Complete Wealth Advisor


I often wonder if the specialist is better than the generalist.  It seems intuitive that the specialist, whether in sports, academia or business, is more knowledgeable and competent than the generalist.  However, as time goes on, I find that the interaction between financial planning and asset management, objective and emotional decisions, confusion between one’s goals and dreams and the competing goals of a life partner may sabotage the ultimate goals.

In law and medicine, the business model is often referred to as the “practice”, rather than the business of law or medicine.  At first blush, it seems pompous, but there is quite a difference between the objectives of business, where the cost of materials, gross sales, and profitability is the dominant consideration, and professions, where the best interests of the client trump profits.  This distinction is very important.  If the bottom line focus of business shared some of the ethical and fiduciary requirements of attorneys, doctors and financial planners, the actions that almost destroyed the American banking system and caused the Great Recession in 2008 might have been avoided.

As wealth managers, we seek the highest return at a given level of risk for investments to achieve the life goals of the client.  Making more money in the short-term with greater volatility and uncertainty may create discomfort, and even fear, for some clients who are not emotionally prepared to commit for the longer term.  The tendency is to believe that rising markets will continue forever and unless one continues to take risk, they will not achieve their goals.  Or worse, when the markets correct, they should sell or risk losing all their money.  Emotions often interfere with the objective and intelligent focus of the normal market fluctuations and long-term trends.  As a result, the uninformed feel greater comfort buying at the top and selling at the bottom, just the opposite of the principle of making money by buying low and selling high. 

Warren Buffett, arguably one of the world’s smartest investors, reduced his stock position in the fall of 2007 until he had a 28% position in cash, which he held well into 2008 as the market declined by about 45%, and then aggressively began buying depressed stocks at much cheaper prices and valuations.  Baron Rothschild, member of the Rothschild banking family, is credited with saying that "The time to buy is when there's blood in the streets."

Investing without regard to one’s life goals is like going on vacation without a clear destination.  The specialist understands how to prepare for vacation but the generalist has a broader understanding of the types of vacations, finances and various ways to travel.  Similarly, financial planning without a clear strategy of implementation to accomplish those objectives is pointless.  The melding of the planning and implementation requires a skilled generalist with the education, training, experience, and fiduciary commitment, to assure that the client’s goals remain paramount.  This involves the specialized credentials of the CFP® and the money manager, the wisdom and caring of the counselor, the persistence of a coach, and the cooperation and trust of the client.  Each component is essential but success requires trust and a team effort.  Many adjustments are required over time to deal with both foreseen and unforeseen events because the future never exactly mimics the past. 

In football, position coaches are the technicians who focus on the fine points for each position on offense and defense but the head coach has a better understanding of the big position.  Neither is better, they merely fulfill different roles.  The financial planner, who understands and coordinates the many financial and legal strategies, as well as the lifestyle needs and wants of the client, is in the best position to see the big picture and direct the overall strategy as the generalist.  The experienced Certified Financial Planner designee, who has no conflicts of interest and places the clients’ interests before his or her own, has the greatest potential to achieve a positive result.

Marv Kaye, J.D., CFP® | Kaye Capital Management