Hard not to argue with the clarity of 50 Cent’s overall life goals, but dare I say it’s a little more complicated for the rest of us.
What does money mean to you? I mean really? Yes, there is the standard glib answer that everyone wants more so they can buy more stuff and do more things. But why?
I had an initial meeting recently with a client. We were discussing his objectives and he mentioned he was looking for maximum growth from his portfolio. Great. Easily defined objective. Now I could have written that down, put him into a 100% Global Equity fund and have him sign off that he agrees with the risk profile. Job done. Client happy. Compliance happy. But I didn’t. I asked “Why?”. “Why do you want maximum growth from your portfolio?” and he got slightly annoyed at me and answered that he needed to increase the size of his overall capital, obviously. Fair enough.
But then, seeing the way he answered this and sensing his frustration, I took a risk. I asked again “Why?” Why does your capital need to be larger?“ and held my breath. Now this client’s in a position that most people would think was very successful. He had a successful job, his partner also had a high paying job and they seemed like a high-flying corporate couple.
So I waited for the answer. “Because I need enough to quit my job or I’m going to get fired because I hate it. ”Ah, there we go. Now we’re getting to the real underlying reasons. The conversation then went onto to discuss the different type of role he would like to have in the future (he’s in his early 50s). These roles would most certainly pay less, but he felt they would be much more satisfying for him. The risk was worth it. That one extra question helped this client avoid the mistake of taking on too much risk at exactly the wrong point.
So what did we do with the investments? We actually reduced the risk of the funds because of the potential income reduction in the future and he also left with the numbers of a couple of headhunters I knew in that industry. The meeting ended in a very different way than it potentially could have and the client’s portfolio is a lot more suitable now than it would have been.
So why do you want to grow your portfolio? Really? What does that money mean for you? What do you want to use it for in 5, 10 or 20 years? Having these goals clarified and written down does a huge amount for your self-belief and drive when facing that Monday 6am alarm clock.
