Читать книгу More Straight Talk on Investing - John J. Brennan - Страница 32

For your safety and peace of mind, you need to establish a relationship with a financial services provider or two that you can trust. Or, a relationship with a financial advisor whom you can trust. (I will focus largely on firms in this section, although some of the lessons apply to financial advisors, which I cover in more detail in Chapter 12.) A trustworthy firm will serve you with integrity and help you accomplish your financial goals. And it won't push products and services that meet the company's quarterly sales goals but that do little for you, or seek to lure you with bait-and-switch tactics. Fortunately, there are plenty of good investment companies that offer sound products and quality services.

Picking a trustworthy partner is important to your success in more ways than one. If you do business with a firm that you trust, you will be better able to endure the misgivings that come when your portfolio has an off year. Believe me, sooner or later, that will happen. It's one of the facts of investing. If you trust your investment partner, you'll realize that a mutual fund or exchange-traded fund with a strong long-term track record is still a good investment even after it's had a bad year.

How can you be sure you are dealing with a firm that deserves to be trusted? There are several factors to examine, but it's not a bad idea to start by collecting referrals from friends, co-workers, or family members. Word-of-mouth is fine, if you trust the person giving you the recommendation and know that he or she has experience and good judgment. Though I warned earlier about believing stock tips from family members and friends, referrals are a different matter. If your sister, to whom you're willing to entrust your children if you die, says, “I trust this organization,” that should carry considerable weight. Even this endorsement deserves scrutiny, however. It is a good idea to trust, but also to verify. I've known several colleagues fall prey to too-good-to-be-true propositions or put their trust in questionable firms or individuals.

The firm's history is an additional consideration. An institution that has been in the business for many years will have a track record and experience serving clients effectively through up and down markets. For example, I've always believed an investment firm's greatest competitive advantage is its demonstrated trustworthiness through good times and bad. And the market agrees—the three largest fund families have roots in the business that go back for 75 years or more. There are plenty of newer firms with talent and ambition, but they must overcome the formidable advantage of tenure and credibility accumulated by established firms. It's very tough to earn marketplace acceptance in the absence of long-standing relationships with business partners and clients, along with a record of good service over the long term.

Experience also counts in the professionals who manage your money. There's a reason that sophisticated institutions look for gray hair (figuratively speaking!) when they hire money managers. Those who have endured feast and famine in the markets have the wisdom of experience. Some lessons simply are better learned by living through them than by reading about them in a textbook. The performance records of tenured money managers are much more meaningful than those of managers with limited experience. A young money manager with a good track record for four or five years isn't necessarily a great stock-picker—he or she may have simply floated up with a rising market. Even in a falling market, a money manager can look better than the competition—for a while—by sitting out the market and holding considerable cash.

For these reasons, I always want to know how a money manager has performed relative to the competition over the full cycle of a bull market and a bear market. An added advantage of experience is that it teaches humility. Investors who have been through up and down cycles tend to avoid overconfidence and are cognizant of risks. Anyone who's been in the financial business for a lengthy period of time has hit some rough patches and does not take lightly the unpredictability of the markets.

So experience is important, but don't let it be the sole factor in your decision. Being the oldest doesn't make a firm the best one, nor should you rule out a young firm purely because of its limited experience. Experience is not a litmus test; it's just a factor to be weighed. Still, if you're thinking of dealing with a small organization that you know little about, it makes sense to seek references from others who have done business with the company.

In any case, you'll also want to request the following information from any provider:

 A complete and candid explanation of the costs of the investments and any additional fees you'll be charged.

 A clear and comprehensive description of the fund's investment strategy and policies.

 A record of the past performance of fund and the background on the managers responsible for producing it.

 An explanation of how the performance of your own investments will be reported to you.

These are the questions that any sophisticated investor will ask before hiring an investment firm for a mutual fund, pension fund, endowment, or foundation. They're the questions we always asked at Vanguard before appointing an investment advisor to one of our funds. Whether you're looking for a mutual fund company, a brokerage firm, a robo-advisor, or a financial planner, these questions are as relevant for you as they are for a sizable company like Vanguard.

Once you've selected a trustworthy provider, stay alert for changes in the ownership or leadership of the firm. Rapid turnover of portfolio managers should also trigger some concern. Regulatory actions and security breaches are another red flag.

An important gauge of any company is communications. How frequent? Are they clear and candid? Are they consistent in good markets and bad? Are they selling or telling? Or, better yet, are they contrarian, giving you a dose of reality in times of market ebullience and perspective in seemingly dire days? If you ever have doubts about whether your company is being forthright with you, it's time to switch. Firms deserve to have your money only as long as they deserve your trust.