Choices

The unfortunate man or woman with a big time drinking problem, who is seeking help to quit, has as many similar choices as a punter looking for financial advice. Some of these choices can be fraught with peril and unfulfilled expectations for both parties.
The drinker can try going it alone and with total determination to stay stopped usually lasts a few weeks but at best until the next family funeral, wedding or golf club outing.
He can try a psychiatrist with master degrees in behavioral psychology working from a 30th floor plush city office. He will certainly get good advice from someone who read about alcoholism from books but his sobriety if any will come at a big price.
Or he can try AA which apparently has a good track record of success and it's also free. A member of AA once told me that at a meeting of say 10 alcoholics with an average sobriety of 10 years a newcomer was privy to 100 years of experience in fighting the booze.
For an individual, not familiar with finance, looking to plan his financial future, the myriad choices can make him feel as lost as the alcoholic. Who can he trust and where can he get the best results?
Individual investors are really up against it when it comes to stock picking. They account for less than 20% of investment activity. This is hardly surprising. Many of the people who participate in making investment decisions -including some of the most powerful- are not very experienced with investing and its often counterintuitive nature. Corporate executives have lived in the real world where smart people control outcomes and make things happen. For them the world of investing can be very frustrating and confusing because none of them can control the course of the market. And less lofty individuals who plan their future are so busy they don't usually have time to study and understand what they're getting into. .
If a potential client goes to a gleaming steel international bank in the center of Bangkok looking for financial advice he will be well treated and most likely the bank will sell him the product that best suits his needs. He will go away feeling well satisfied with his purchase. While regulated banks always try to treat their clients well, the problem is that some of them are serving from a very restricted menu. Most big banks have inexperienced investment professionals and because of this restrict their sales staff to selling a small predetermined set of investment products to cover most eventualities.
The third choice here is to use a broker. I have a strong bias to the broker who came up the hard way. Knocking doors and selling insurance for a living before graduating to investment products and later studying investment theory and client financial planning.
These people can usually sell any tradable asset quoted on any world stock market.
Their most important asset is that they are trained by experience to put the client's financial needs first. After all there's little use selling a client a savings plan for their children if they have no life insurance. Who will pay the monthly savings plan premiums if the client is dead? The child will still need the education.
Like the boozer the most important variable in the whole financial process is how well we understand ourselves. Investing involves making decisions whose outcomes we cannot predict. All of us perform in our own way to uncertainty some calmly some foolishly.
The philosopher George Santayana in summing up his life's leanings said:
"Those who cannot remember the past are condemned to repeat it" Investment professionals in any field have a wonderful opportunity to study and learn from history.
Like an AA meeting the best and cheapest lessons are those we can learn from someone else's mistakes. Most professional brokers have one lofty ideal which is to learn how to learn from history so we do not need to learn the same lesson again and again at our client's expense. And so we can share our learning with our clients.