Investing & Economy

Slow and Steady Wins the Race

Despite the financial blogs’ assurances and the TV personalities’ loud declarations, few people, if any, can beat the market. And when clients walk into National Financial Services Group’s (NFSG) office looking to outperform the S&P 500 years over year, it is their job to pour cold water on those fantasies.

“What the client understands [about returns] is ‘Can you beat the market?’ and we’ll have to tell them, ‘That’s not what we do,’” said Jim Cook ChFC®, CFS, the chief executive officer of NFSG. “If you want to work with us, we’re not going to beat the S&P 500. What we want to do is provide a reasonable rate of return with a less than reasonable rate of risk.”

NFSG is a Georgia-based firm that provides comprehensive wealth management and retirement planning services to high net worth individuals, business owners, and to America’s underserved middle market. The firm does not maintain a minimum to invest.

Cook’s belief in growing with the market emerged from his experiences in the 1990s. Then, Cook said, prospective investors would ask--with a straight face--for a 12 percent rate of return. Investors in that decade were “being promised things that couldn’t happen,” Cook told The Suit during a recent interview. Cook added that NSFG “lost clients” in the 1990s because of those promises being made by other firms, syphoning away investors to advisors elsewhere who likely never delivered.

And when the 2008 financial crisis roiled markets, NFSG’s bet on stability paid off, with their clients coming through with less significant losses than those at other firms.

“We protected clients’ money as best as possible,” he said.

Investors believing the market is a game they can win remain incredibly common. A lack of financial literacy among savers may be partly to blame for this, with few prospective investors understanding even the basics of how the market works. Advisors often need to address this through client education, Cook said, adding that he participates in the GAMA International, an industry group that promotes improving financial literacy training in schools.

“We believe that [financial] education needs to start at the elementary level,” Cook said. “It needs to start in elementary school with the basic fundamentals of saving money.”

In addition to teaching students the value of money, schools also need to demonstrate that financial services is a viable career path, Cook said.

The average age of a financial advisor is 50.9 years old, and 43 percent of advisors are over 55, according to a report by Cerulli Associates. Further, 8,600 advisors plan to leave the profession each year for the next decade, meaning a full third of the industry will retire within 10 years.

With 10,000 baby boomers retiring per day--and 10,000 millennials turning 21 each day--there are plenty of retirees and emerging investors for the industry to take care of (Sen. Rob Portman, R-Ohio, The Wall Street Journal, July 22, 2014). The question is, will there be enough advisors to handle the next generation?

New talent, it turns out, may be a long time coming. The consulting firm Accenture found that only 5 percent of advisors are under the age of 30. Cook added that few young people seem to be aware that financial services careers are available to them, financially rewarding, and can provide a sense of accomplishment.

“When I was in high school in the 1970s, nobody ever said, ‘Do you want to be a financial planner or a stockbroker?’” Cook said.

The jcooksmilingfinancial services industry, despite its size and ubiquitousness in public life, also struggles to band together to protect its interests, Cook said. He pointed to the recent Department of Labor fiduciary rules that required all financial services professionals, including stockbrokers and insurance agents, to serve client interests without regard for commission or fee yields. The industry struggled to communicate with policy makers about the rule’s numerous downsides, Cook said (he noted that NFSG already is working to comply with the final requirements of the rule before it fully goes into effect).
“There’s no American Bar Association, no AARP, no American Medical Association, no national organization to represent this industry,” Cook said, adding that the financial services industry is represented by several groups. “I think these congressmen and senators were saying, ‘Where is the spokesperson? Where is the one voice coming from the financial services industry?’”

“We need to band together so that Congress knows what we do,” he said.

Education is the key to success, whether that’s an investor achieving financial goals or policy makers understanding the industry’s role in society. Cook said that investors today especially need to be well-educated in finance given the overwhelming amount of misinformation and the number of competing voices in the media. Advisors no longer hold a monopoly on information and instead have to help clients sort through the noise, and reassure them that the negative drumbeat about the financial industry in the press is not always an accurate representation of reality.

“When I got into the industry knowledge was king, information was king, and now it’s not,” Cook said. “Now it’s wisdom and implementation. We have an innate need to educate our clients and get them feeling comfortable with how we do business. We feel that the more educated a client is the less likely they are to leave.”

For more information see

Securities and investment advisory services are offered solely through Equity Services Inc., a broker-dealer and registered investment advisor. 1050 Crown Point Parkway, Suite 1700, Atlanta, GA 30338 National Financial Services Group is independent of ESI. TC96676(0817)1

Standard and Poor’s®,” “S&P®,” “Standard and Poor’s 500,” and “500” are trademarks of Standard & Poor’s


Related Articles

© 2017-2021 Advisors Magazine. All Rights Reserved.Design & Development by The Web Empire