Nailing Your Flag to the Mast
In the age of sail, there was an expression: ‘nailing your colors (flag) to the mast’. It was a way for naval captains to signal to opponents that there would be no lowering of the flag. No surrender. Eventually, it came to mean simply staking out a firm position on something; perhaps one you would be willing to live or die by, at least metaphorically speaking!
In the investment industry, we seldom see anyone nailing their flag to the mast. In fact, there are few things as bland and milquetoast as mainstream financial services communications. Asset managers, lacking the courage of their convictions, somehow say very little about the future, no matter how long they speak. How many market updates have you attended where the primary takeaway is to be ‘cautiously optimistic’ or to ‘expect more volatility going forward’? Translation: stocks may go higher, or lower, or both.
Closer to the coal face, financial advisors, burdened with zealous compliance departments and a desire to appeal to as wide and diverse a client base as possible, avoid publicizing views of any kind whatsoever. This is a mistake.
Avoiding controversial opinions seems like the safe bet in the short term, but it prevents your firm from developing the unique voice it needs to stand apart. Standing apart is essential to developing a niche and succeeding with more sophisticated (read: affluent) client segments.
At NextStep, we help you develop a unique voice with commentary that stands apart from the crowd. We call it the way we see it, whether it’s convenient and comfortable, or not. Clients value the insights, appreciate the directness, and enjoy sharing space with advisors able to have the sophisticated discussions we help start.
There is a misconception that providing peace of mind to clients means glossing over the reality of a complex world and avoiding topics without clear, easy answers. We believe that instead, peace of mind comes from the trust and confidence that clients place in their advisor. The best way to grow trust and confidence is through open, candid conversation about the investment process, and frank acknowledgement of its limits.
Clients pay advisors, in part, to help them navigate an uncertain world. The least we can do is to stake out a few market views and make ourselves accountable to them. Inevitably, we’ll get some of it wrong. But intellectual honesty, a willingness to admit mistakes and occasionally even be ‘vulnerable’ to clients tends to improve, not damage the relationship. We no longer live in the age of sail. Nailing our flag to the mast today no longer risks a watery grave. Let’s have the courage of our convictions.
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The information and opinions expressed herein are for general information and educational purposes, and may change at any time. They do not constitute investment advice and are not a solicitation for the purchase or sale of any security or implementation of any specific investment strategy.