So Showtimes has a show called Billions that I’m more than a little obsessed with. Why? Well I’m a sucker for well written and acted dramas. And being the finance nerd I am this is a this show is like the perfect storm. For those that haven’t seen the show a quick synopsis (without giving too much away) is that it’s about a billionaire CEO of a hedge fund and his run ins with a U.S. attorney that is trying to get him for insider trading (using nonpublic information to his advantage). The main story is the high stakes chess game the two play with each other as one tries to outdo the other. Throughout that interplay is woven a clashing of male bravados as the CEO believes that he is untouchable by the law and the U.S. attorney thinks he is the law which leads to a CEO willing to do anything increase the returns of his firm vs. an attorney willing to do anything to bring him down. Great drama. Trust me.
Now rewind this back to real life. While I love this show, because hey who doesn’t want to be a billionaire, it is just that–a show. Earlier, in my article a peek behind the curtain I mentioned how many people had misconceptions about what financial advisors do and often think of us as akin to the billionaire CEO willing to screw over anyone in pursuit of our own self-interest.
Ok, so if that’s not what you do, what do you do? To put it in a nutshell, we help to provide a framework about how to think through your financial situation so you can examine all the outcomes and make the best decision.
So questions like should I pay off my debt or should I invest. How can I make sure I don’t take too much risk with my investments? It’s not giving hot stock tips: you know what Jim Cramer does; not that.
To add some context to the aforementioned description I think it might be helpful to give an example. The most memorable one that comes to mind was one client of mine that recently lost her husband. He used to manage all the finances and now she had to do so in the wake of his passing. It was a trying time for her. Nevertheless, slowly but surely we were able to provide her with a framework to think about how she should structure her investments and the best way for her to create an income from her savings.
Now while that story might be helpful for some. It still doesn’t alleviate for others how financial advisors are different from that Billions CEO. Why? Because it doesn’t fully explain how the culture of the financial advice industry is fundamentally different from what is depicted in the show Billions. To resolve that idea, we have to take a look at advisors incentives and see how they are compensated, which is something we will take a look at in the next few articles.