The Co-Pilot


Brett Horowitz, CFP®, AIF® Principal, Wealth Manager

Success, with a Little Help from Evensky & Katz / Foldes Financial

 “The real trouble with this world of ours is not that it is an unreasonable world, nor even that it is a reasonable one.  The commonest kind of trouble is that it is nearly reasonable, but not quite.” – Frederick R. Macaulay

In other words, just when things look stable and one thinks he or she can know what to expect, something occurs to change the current path and that something is unthinkable and unknowable (i.e., Black Swan Theory).  So, if the economy doesn’t move in a predictable pattern and we can’t predict the future, where does our value lie?

To answer that question, we’d like to share three short stories from clients that recently joined Evensky & Katz / Foldes Financial.  Please note that their names and facts have been changed for privacy.

The Co-Pilot

Tina and her husband have been with the same broker for a number of years.  Their portfolio was invested primarily in high quality bonds and they were rarely informed of market events or portfolio strategy changes.  When they were called, they were given a choice of bonds or stocks for investment and it was up to them to make a decision.  Tina has never had any experience investing and was left wondering how she would make the decision based on a complete lack of information.  Just as most of us wouldn’t be comfortable co-piloting a plane if we had no experience flying, she was not at all comfortable being co-pilot of their investment portfolio.  “It’s up to you” was clearly not what she wanted to hear from her “advisor”.  While this may be appropriate for a do-it-yourselfer, she wanted a different relationship.  Tina had never gone through a budgeting exercise and had no idea what she and her husband spent.  She also didn’t know how much in management fees they paid.  While she assumed she was being charged for the services performed, the fees were never disclosed and didn’t show up on any statement or invoice.  Thankfully, Tina’s attorney suggested she contact us.

We developed expense projections to ensure that their conservative portfolio could handle their annual living expenses.  Even though they are fairly risk-adverse investors, the question still remained as to whether they would deplete their assets given their high spending and low expected portfolio returns.  We developed an investment plan and met with them quarterly over the first few years to make sure they were kept abreast of their progress and the markets.  Tina is now so comfortable that she only wants to meet twice a year!  She is so relieved that our fees are openly stated and enjoys the fact that we make the investment decisions for her based on our role as a fiduciaries and registered investment advisors.  It has been a huge relief for her to see us make portfolio changes on their behalf.  After all, monitoring and managing the portfolio is a significant part of what she pays us to do.  She knows that as fiduciaries, we will put their best interest ahead of our own.  She is now enjoying all the free time she has, much to the dismay of her tennis opponents!

Check out our next blog post for the final of the three stories, and feel free to contact Brett Horowitz with any questions 305.448.8882 x216 or