My First Post

Welcome to Clear Thoughts, a blog about living and investing simply.

In case you don’t follow college basketball and all of the hype surrounding bracketology, the University of Connecticut was just crowned King of the Court for 2014. I am a college basketball fanatic and am especially passionate about the Division I NCAA tournament. The tournament levels the competitive playing field for all universities, big and small. No matter what its pedigree, any team can get on a roll and win the national championship. It could end up that a storied program like Duke loses in the first round to a small unknown school like Mercer College in Macon, Georgia, or a relatively obscure team like Butler University makes it to the Final Four, as it did in 2010 and 2011.

Similar to investing, college basketball has its blue chips—Kentucky, North Carolina, and Kansas are easy favorites. There are also consistent, “dividend-paying” programs like Florida and Michigan State that year after year do well in the tournament, and then there are high-flying programs that once in a while pay off “big,” like last year’s darling, Florida Gulf Coast University, which had never been in the tournament but made it to the Sweet 16.

To be successful in the tournament, skill is important, but luck is also a major factor—where you are seeded or what region you are placed in matters. But ultimately what makes a team successful is experience and truly playing as a team. To play as a team means the players have a process for reaching their goal under the direction of a skillful coach.

A successful investor has to have a process too. I would argue that process trumps performance when analyzing your investments returns—like in basketball, results in a given year can be attributable to luck and not necessarily skill. Maintaining confidence in your advisor’s process over time is paramount in building a healthy, long-lasting, and successful relationship.

Process includes understanding clients’ goals, risk tolerance, and investment selection, but even more important is your advisor’s approach to asset location and allocation, tax efficiency, and keeping clients engaged during good and bad markets. You deserve to understand your advisor’s process and feel confident about it. It is your money. Support for the process will help get you and your family from here to where you want to be.