Mrs. H was a wonderful role model for women investors: generous, kind, adventuresome and prudent. Prudent because she informed herself and, in doing so, understood the important role risk played in her investment portfolio. Her interest and aptitude were extraordinarily rare. Few of my subsequent women clients have understood the importance of taking part in the management of their wealth. Or understood risk is not universally bad.
In fact, Mrs. H understood the importance of taking enough risk to generate strong returns for the future. Which is why she questioned why we owned so many bonds in her portfolio – why not more stocks? Every student of investing learns diversification is prudent, but Mrs. H wasn’t convinced. She believed she should own the best performing asset rather than a smattering of everything. If that meant more stocks, so be it. She wanted to take more risks to achieve a reasonable total return, and she was right.
Only you can help your adviser understand your risk tolerance and return expectations. Take a page from Mrs. H’s book.
LM, on the other hand, was a gadfly. Like Mrs. H, she inherited her wealth, but unlike Mrs. H she didn’t care one wit about the particulars. She hired me because she wanted a woman managing her money, but she wasn’t interested in the how and why of investing her assets; rather, she was much more interested in the snowpack in Vale.
When I tried to reach her to suggest she take some profits off the table, I didn’t hear back for three weeks. I fired her. If LM wasn’t interested in her investments, I knew she would make a terrible client when the market went down. I exhorted her to engage in our process and to understand why we were doing what we are doing (the very reason she had hired us), but she remained uninterested and unresponsive – the quickest way to turn a large fortune into a small one.
Periodic engagement is dangerous. It causes one to zig when she should zag. “Stocks are down … let’s sell!”
Finally, Ideal Client (IC) is a composite of savvy women I have worked with over the years. These women are engaged in the process, though somewhat tentative. (Being tentative is empirically proven to be a superior strategy.) These women know what they know and what they don’t know. However! They are not shy, they don’t withdraw. They ask questions. They own their input. They understand their limitations. They don’t try to tell me (their adviser) how to do my job, but rather, they enlighten me on the personal factors which inform my diagnosis of their financial fitness and ensure my recommendations are appropriate to their objectives and risk tolerance.
These women are engaged by not trying to dictate the process. They understand the management of their wealth is uber important but they are unwilling to abdicate.
Investing can be daunting, but it is not brain surgery. Engage, ask questions, make suggestions, then sit back and observe. If your adviser is focused on you and your objectives, you should achieve your goals. If not, find someone who will listen and adjust.
It is, after all, your money.
Nancy Tengler is chief investment strategist at Tengler Wealth Management, ButcherJoseph Asset Management and the author of “The Women’s Guide to Successful Investing.”
This article originally appeared on USA TODAY: It is important to engage, ask questions and listen when investing.