Recently, I flew to an investment conference. As I settled in for the long trip, I read the in-flight magazine. When I got to the advertisements for financial companies, I reviewed them carefully and realized a critical distinction: Whereas some sold form, others sold content.
Don’t invest in image
One Swiss bank’s ad stressed two images, the allure of “Swiss banking” and “complete discretion.” I once asked a Swiss banker to explain the allure of buying the “brand” of Swiss banks. “We have a history of banking,” he explained. When I pressed further, not knowing why that history should make a difference, he conceded that, “Some clients just prefer Switzerland for holding their money.” Some people used to hide their money in Switzerland because of the country’s strict rules on protecting client privacy. Welcome to the new millennium. Swiss banks have turned over the names of literally thousands of their clients to U.S. authorities.
The small print at the bottom of investment ads frequently mentions, “Past performance is no guarantee of future success.” Indeed, in light of recent developments between America and global banks, the Swiss banking history of secrecy may not be indicative of its future.
Content is King
People buy things for their content, and investments are no exception. But be wary of purchasing complicated or complex investments. One ad that I read stressed the uniqueness of the firm’s investment selections, but “unique” investments don’t necessarily make (more) money. Having been in the investment business for over twenty years, I can say definitively that being unique is not the quality that I look for in choosing an investment.
Advertisements are meant to inspire customers to bring their business to a certain establishment. Are you motivated by the hype of investment ads or are there other key factors that motivate your investment decisions? If you can’t answer that question, and are blinded by the gloss of advertising, check here next week to learn which motivating factors I suggest to my clients to consider. If you are tempted to purchase a unique or historical investment, send me an email (doug@profile-financial.com) and I’ll forward you a copy of the article early.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published June 4, 2012.