What are the most common misconceptions about investor needs?

How to communicate risk? Right now statistical math is often used.... but.... Unsophisticated investors (regardless of worth) fail to understand that current statistical math is not indicative of forecasting the odds of a tail events. Multi-sigma events happen regularly and in defiance of statistical outputs. The best advice I have heard is that you should pay more attention to managing your equity curve. That means active management which seems to be a pariah these days. But if one is to go full-blown passive, then managing risk must also be deemed as superfluous.

Most investors have no idea where to look for risk or how to quantify it. Additionally there are ways to reduce some risk and actually increase returns.

A trader looking for a quick gamble will do this. It's often not about the risk at all it's more about finding something you believe will have a positive future and creating comparables for other companies that have made it and then monitoring the variables. It's all about making calculated risks. That being said. It's always best to diversify and chose multiple assets classes and markets that have different functions in order to reduce potential risks.

Past performance is indicative of future results. It is absurd to believe otherwise. How reliable is it? Well, more reliable than not using past performance. Can you imagine any pension fund manager not basing their allocations based on past performance? They'd be fired before lunch.

Absolutely. Past performance could just be hype and will lead you to make decisions to buy assets that are oversold. A new company has just started and has expanded it's sales by 200% per year by reinvesting in itself and borrowing to meet customer demands. Great buy. A mutual fund that has delivered 6% every year for 15 years by investing in USD and inflation sensitive bonds. With a foreseeable selloff and likely lack of liquidity in that market due to an increased need for dollars to cover expenses and a lack of new investors. Great track record bad investment. Another asset class everyone has been talking to has almost no use case and is worth billions more than it should be. Everyone's buying. Use market analysis not FOMO.

Are fees relevant? No. The value that comes with the fees is 110% relevant. We suggest paying for most services as you would a lawyer, physician, or accountant - by the hour or the service provided. We also suggest paying from your own pocket rather than from the investment account. Finally, always use a third-party objective portfolio performance service to determine is those fees result in improved investment performance over your AAM or if they are acting as a drag on ROI.

Fees are often a deal breaker because they reduce ROI and can potentially ruin returns. It's best to calculate fees into the equation.

Emotions are irrelevant if you can control them and make decisions rationally. If an investor cannot control their emotions, most can't and it's nothing to be ashamed of, a skilled financial advisor is what the doctor ordered.

Emotions are going to determine whether or not a client implements an investment plan and whether or not they stick with it. A recent client interaction reinforced this idea when a real estate strategy became a bit challenging. Because of the emotion-centered work we had done in the past before selecting this strategy we were able to meet the challenge and tweak the strategy instead of throwing it all out the window, which would have been the default action in the past. Clients must find a driving, emotional connection to their chosen investment strategy in order to experience the best results.

Absolutely. You invest in a company that was on the brink of failure and they are now netting positive. But everywhere you look people have a negative opinion on that company. You think it won't matter so you invest anyways. Over time you realize that the true market value is a psychological value made by the investors opinion of that particular market and decide to move on after wasting a bunch of time and even possibly taking a loss. While emotions often cause bad decisions like buying high fomo and selling low out of fear of losing. It's best to keep the emotions there out. Look for an actual reason why it should be valued higher or lower. In a quick market move you should always investigate. Never act on the color of the order book.

There are universal principles for wealth-building and investments but there are infinite ways to implement those principles. The client does not need a machine-generated table of facts and figures. In fact, clients easily see through the jumble of numbers to the lack of personalization. She needs a solution that she can get behind, clearly understand and implement. And, considering the fees that are being charged for comprehensive investment plans, I think customization for the client's personality, priorities, goals and dreams should be the bare minimum.

Definitely not there are long term stable investments with slow returns that are great for someone to hold lots of money in. There are also short term investments that are likely to change direction in time that are terrible for large amounts of money. All the variables should be looked at. Especially things like liquidity or market conditions.

Many new advisors or coaches believe that investors need the highest returns, while in-fact what investors need is stability, assurance and a plan to achieve their financial goals. Advisors often confuse investors with a range of products which are seeking to strike gold. This approach is not required. Often, above-average returns make the investors happy and in my experince such returns help investors have realistic expectations about long term returns and they tend to develop a better temperament. These investors are able to stay calmer in market extremes, helping them make better decisions.