We very much are advocates of using the irrationality of short-term price movements to our advantage. We call it opportunistic rebalancing. This combined with long term strategies relieves the pressure on the will power bank and potentially even deposits a few extra nickels in the actual investment bank. A win win.

How often have you been frustrated by this?

“Invest for the long term. Ride it out. Don’t worry about the day to day.” Easy for someone else to say about my money. There is a major disconnect in investing. We are supposed to think long term, but we are constantly reinforced in the short term. Short term pain for long term gain perhaps. But the most conditioned individuals only have so much will power. Each person has a will power bank. If you spend it all on dieting and fitness, then work, love and finance fall apart. If you take from dieting and fitness to give to work love and finance, well then dieting and fitness suffers. Sure, there are those seemingly superhuman people that can do it all but what about the other 8 billion people on the planet.

In our industry, clients pay a lot of money to advisors to tell them to have more will power. I think that, while well intended, this forced willpower is misleading.

Imagine paying your fitness coach to tell you not to eat and to work out all the time. You do not need to pay someone for that, you know that. You pay your fitness coach to help you execute in the short run so that in the long run you like the results. Same should go with financial advisors. But that requires work on the part of the advisor. A lot of work. We at Members’ Wealth love this type of work for our clients.

What are we at Members’ Wealth supposed to be doing today, what is actionable, that will help our clients in the long run? Financial Fitness is much like Athletic Fitness.

As a short example of various short term actionable items, we can implement to enhance long term results, one may consider the difference between timing of rebalancing. There is calendar-based rebalancing, which is basically where you set every 90 days or once a year to go in and rebalance your portfolio back to target. However, there is also what we call opportunistic rebalancing, and that is when you use market movements, say the equity markets going down five, ten, or 15%, to rebalance. This could be midday, in the middle of the week, in the middle of August.

As advisors we must prepare for this. I have found that in interviewing many firms over the years, many financial advisory firms are oftentimes not set up for opportunistic rebalancing. It takes an investment in personnel and technology to be able to pull the trigger and do these intraday trades. Spending time in advance educating your clients about the pros and cons of buying opportunistically rather than on a calendar basis is also required.

This works and investors tend to like opportunistic rebalancing, because we spend time educating them about the benefits of buying low and using intra-year volatility to their advantage.

Now as a person in charge of helping people manage and/or grow their wealth, I am constantly thinking about the difference between the benefits of taking the long game approach vs the short game approach. I have found, most humans think short term yet are being force fed to think long term. Therein lies the disconnect. My job each day is to help couples, individuals, families, and businesses bridge this gap. If you are tired of hearing think long term but every bone in body screams out at the short term, then give the will power bank a break and call Members’ Wealth to help you create a disciplined short term routine for long-term results.

About the Author – Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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