RIA Zen and the art of doing what's prudent -- even if you can't brag about it over beers
James Osborne confesses his guilty desire to make his practice more exciting and why he resists the temptations of adrenaline highs on behalf of clients
Brooke's Note: We throw around the term "temperament" around every day as we contemplate having somebody run our military who can be baited by a tweet. But precious little is said in the RIA business about coolheadedness, what it looks like and what costs there are to staying moderate. It can assure success. It is is an embrace of the mundane. Not everybody has the temperament for that or they haven't convinced themselves of the necessity for it. Or they simply follow their inner adrenaline junkie in a heedless manner. Putting clients first isn't just about choosing the best or least expensive products. It's also about subjugating your need to show your stuff in an investing realm where the temptations to do just that never stop. In a quiet but effective writer's voice, James Osborne examines the topic by examining himself.
Next week I’ll make my monthly individual 401(k) contribution, just like last month and the month before that.
And because it’s a brokerage account and not a traditional plan, I’ll review my portfolio’s allocation and add to an ETF or two where I’m underweight. See: James Osborne makes a waiting list part of his new RIA's business model after 18 months -- with client care and mountain biking in mind
Next month I’ll do the same thing, just like the month after that and the one after that.
Some days this is just so excruciatingly boring I can barely stand it. I never get to do anything new. I never find some exciting stock or fund to buy. I never get to tell a great story over beers about the great trade I made in my account that week. I don’t have a new painstakingly crafted white paper to defend some exotic currency trade I just put on. See: Why as a self-employed RIA I love my individual 401(k) -- really
Is that all there is?
There are days that I really wish investing was more interesting (“things people only say in bull markets” I know).
Honestly, I feel the lure of throwing some money at an interesting strategy just like you.
I have smart friends in this business doing interesting stuff with quantitative or qualitative valuation metrics and momentum strategies. I hear the stories of the guy who dodged the Valeant bullet or “just knew” that owning the private prison operators was doomed to fail and I feel the little tug of jealously.
I’ll read a well-crafted white paper with an incredible backtest based on some thoughtful, sensible metrics and wonder why in the hell I’m not doing that. See: Where Virtus stands after F-Squared seemingly led it astray, to mutual benefit
The awful -- and righteous -- truth
Then I have to remind myself of the same thing I am always telling my clients. See: My 10-year journey from a BoA call center to establishing a solo $73-million AUM RIA
You have a plan for a reason. And the only good that plan is ever going to do for me will happen if I stick with it.
If I want the portfolio to grow faster, the best thing I can do is focus on putting more in it, earning more or spending less or both. And recognize that the whole point of the plan is to keep me from chasing down some bright idea when I feel the inevitable tug. See: Why technology is vital for RIAs looking to steady client nerves in stormy markets
James Osborne is a Certified Financial Planner® professional who has spent his career in the investment management industry, helping clients manage their portfolios and plan for retirement, legacy and lifetime goals. Basson Asset Management a flat-fee only asset management firm offering tax efficient and cost-effective portfolio management based in Lakewood, Colo. just west of downtown Denver, Bason serves clients locally and across the country.
Famously and fiercely solo James Osborne somewhat sheepishly doubles headcount at Bason to two after the fatigue of saying 'no' wore on him
For seven years,RIA, flat-fee evangelist and blogger in Greenwood, Colo. doggedly stayed solo and got to $200 million but now he has McKenzie Ebbesen; and she shares his discomfort with 1% fees.