Nancy Graham CPA, CA, CIM, CFP, TEP

Portfolio Manager
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Personal Survival in the Financial Jungle

Welcome to our next installment in Nancy Graham’s “Minding Your Money Matters,” thoughtful financial advocacy vignettes that you can readily apply. In this installment, we’ll turn the focus on the most important contributing factor of all: the personal challenges you face as a long-term investor. 

Personal Survival in the Financial Jungle

If we could impart one message to guide your financial decisions, it would be this: You cannot expect to control global events, but you can (and should) control how you react to them.

This seems logical enough. But well before we heed what our intellect has to say, our instincts love to play tricks on us, resulting in ill-advised gut reactions.

Survival strategies that served us well as we evolved in the frozen tundra and predatory savannahs become our enemy in today’s capital markets. Here are a few examples of counterproductive investment activities that spring directly from our impulse to preserve life and limb, if not fame and fortune:

  • Selling low – We react to imminent risks such as plummeting prices by yearning to flee, selling when prices are low.
  • Buying high – We react to an impending “feast” by leaping on popular run-ups, buying when prices are high.
  • Hyperactive trading – As we itch to land that next big fish, we grow overconfident of our abilities to read the market’s murky waters, incurring unnecessary expenses through hyperactive trading.
  • Trusting in illusions – To make snap decisions in a fast-moving world, we constantly perceive patterns … even when none exist. This tempts us to engage further in all of the above financial foibles, and more. 

In short, as financial author and neurologist William Bernstein, MD, PhD has observed, “Human nature turns out to be a virtual Petrie dish of financially pathologic behavior.”1

The Power of Planning

The first step in combatting your financially damaging instincts is to be aware that they exist. But these forces are so powerful and such a challenge to ignore, that it takes more than that to replace them with investment rhyme and reason. We suggest that you and your advisor establish a detailed, written Investment Policy Statement (IPS). Tailored to your long-term financial goals and risk tolerances, your IPS replaces fallible instincts with a structured, predetermined plan to guide your rational decision-making in the financial jungle.

And a jungle it is. In our next post, we’ll discuss important issues around the costs of managing your investments and what you need to know.

1William J. Bernstein, “If You Can: How Millennials Can Get Rich Slowly,” Efficient Frontiers Publication, copyright © 2014.

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Identifying an Advisor Advocate

Welcome to our next installment in Nancy Graham’s “Minding Your Money Matters,” thoughtful financial advocacy vignettes that you can readily apply. In our last post, we discussed the differences between financial vendors and financial advocates, and how we’d like to see far more of the latter in our industry. In this installment, we’ll take a closer look at what qualities to seek in a financial advocate who has your best interests at heart.

How to Identify a Financial Advocate

As the law of the land stands today, there’s not much difference between the rules of engagement for selling a lawnmower versus an investment product – which means investors are in a buyer-beware environment. How do you avoid the many product peddlers out there and identify the financial advocate and advisor who is dedicated to serving your highest financial interests?


Is your advisor more than an order-taker? Is she willing to tell you not only what you want to hear, but what you need to hear to make well-reasoned decisions about your wealth? Will he dispense advice even when it runs counter to his own best interests (such as eliminating an opportunity for additional compensation)? Is your advisor there for you when you call, and sometimes even when you don’t?


Is your advisor’s investment advice changeable in reaction to hot and cold market trends and forecasts? Or is it a patient, disciplined approach to capturing long-term market returns according to your goals and risk tolerances? When markets are plummeting or soaring, does your advisor help you stick to your plans? To further understand sensible, market-based investment strategy, consider this article by Dimensional Fund Advisors’ Director of Canadian Financial Services Brad Steinman, “The Paradox of Skill.”


Does your advisor help you coordinate your personal, professional and family wealth into a unified whole? Are your investment decisions seamlessly integrated with your tax, business, retirement, risk, estate and similar planning needs?


Perhaps most critically, what are your investments really costing you? The financial industry is burdened by hidden expenses that can weigh heavily against best-intended returns. And when they’re well-hidden, it’s hard to know how much damage they may be causing. As reported in this CBC news report, this is one area where strengthened regulations may be on the way … none too soon! But new disclosure requirements are to be phased in slowly; time will tell how effective they may be. In the meantime, investors are advised to arm themselves with insights from blogs by financial advocates such as the Canadian Couch Potato, U.S. News & World Report’s Daniel Solin … and yours truly.

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