Type to search


By Chris Hanson

Hanover – During this most wonderful time of the year, it’s common to make an optimistic wish list. Children wish for lots of toys, and investors hope for a magical advisor. Unfortunately, both parties are best served reverting to realistic expectations.

Taking my own advice, I knew if I wanted to revel in an enchanting holiday pipe dream, I would have to take a sabbatical from compliance-laden investment advising.  So, I applied for a job as a department store Santa. The thought of kids, giddy with joy in my presence, was intoxicating. In stark contrast, most adults avoid investment advisors like the plague.

During a grueling interview process, I tried to convince the hiring managers of my Santa myth making ability. “I’ll make a great Kris Kringle,” I insisted. “My strengths include convincingly making empty promises that I do not have to deliver on,” I joked.  “With a straight face, I can tell the kids I know who is naughty and who is nice!” I would, however, have to conceal my lethargy so the precious little angels would believe I’m fast enough to circumvent the globe in an instant.

The interview was progressing gloriously until my conscience intervened, and I reluctantly admitted I’d make a horrible Santa Claus. Let me explain.

I work in a highly regulated industry that prevents me from making promises. It is flat out illegal to promise anything in my line of business. So if a little boy asks Santa Wicked Smart Investor for a toy truck I might say “A toy truck under the tree is possible. In fact, kids that ask for a toy truck are more likely to receive one, but I can’t guarantee it.” Tears and a significantly reduced queue may follow that Grinch-like qualifier.

Next, the naugthy/nice judgment makes me uncomfortable. It’s not my place to pass judgment on clients’ behavior. My job is to examine their needs, goals and risk tolerance and manage their investments accordingly. Even if my clients put tacks on the boss’s chair or fly paper airplanes on Red Line trains, it makes no difference to me. My advice is the same. Kids may surmise their behavior is irrelevant, as Santa skips the naughty/nice calculation.  I am very confident the parents would despise losing this hugely effective seasonal disciplinary leverage.

Lastly, I may tell kids that Santa does not deliver gifts every December 25th, just like the stocks end some years in negative territory. In fact, investors may liken the stock market to a Santa that gives great returns one year, only to take them back the next year. To top it off, he eats cookies and drinks milk anyway. Investors must realize that instant gratification is almost impossible. Money frequently needs years, not one night, to grow substantially. At this point, to avoid a public outcry, I’d be pink slipped.

Investment advisors are not magical Fathers Christmas, we are simply mere mortals. It is our job to help you achieve your reasonable goals using our knowledge of investing, tax law and estate planning. We are able to reduce some risks using diversification strategies, but taking risks is required to earn potential returns. Market volatility and uncertainty are ever present, so we do our best to work within those confines. You also must be patient; the stock market may take 10 years to deliver joyous returns.  The good news is that many investors can reduce risks, cut costs, and boost expected rate of returns using evidenced-based strategies.

That’s an adult size portion of realism. I hope you have a Christmas that is just as joyous as your childhood memories.

About the Author: Chris Hanson is the author of The Wicked Smart Investor blog and a CPA who specializes in financial planning  at Lindner Capital Adivisors in Hanover. He earned his BBA at the Isenberg School of Management University of Massachusetts and an MBA at Babson College’s F. W. Olin Graduate School of Business. He may be reached at (978) 888 – 5395 and you can read his blog at  wickedsmartinvestor.blogspot.com. ∞