Recently I attended the 2018 LINC Conference held by TD Ameritrade. At the event, a wealth of information was shared about the future of the investment management industry. One of the most valuable bits of insight I received was from a recent survey conducted by Dimensional Fund Advisors. The survey of more than 17,000 wealth advisor clients provided valuable insight into what they want, what they’re afraid of, and how they define value.

The question that stood out the most to me in the study was what client’s value most about their advisor. You might think investment performance, or help in reaching goals would be what clients value the most. But by a wide margin, the most valuable aspect of working with an advisor, according to the respondents, was the peace of mind and security that comes from knowing someone is personally watching their accounts and ready to take necessary steps to protect them in a market downturn.

Ironically, most advisors do not do this, or even try. Most advisors subscribe to the static allocation method of investing. What this means for the client is their investments are rarely, if ever changed. And during a downturn like 2008, the accounts they managed went down at basically the same rate as the markets did. In most of those instances the advisors primary function was to calm their client’s fear and try to convince them that all would be ok in the long run.

I would argue that the peace of mind many clients have is a false one, based on nothing more than the idea that an expert is managing their account. Active management firms, like ours, subscribe to a different idea. We believe that it is not only possible, but imperative to actively change the investment mix of our clients based on current economic conditions.  By doing so we believe we can protect client accounts from heavy losses during bear markets and provide a sense of real security for our clients.

The past several weeks have been a stark reminder to many that the market is volatile and doesn’t just go up. On February 8, the Dow Jones industrial average marked its biggest single-day point drop, plunging nearly 1,600 points during trading hours, before recovering to close down 1,175. As this was happening, I can promise you that active management firms were analyzing the data to determine their next move. Those advisors who are not active were most likely simply hoping the market would turn around.

If you are someone who doesn’t know if your accounts are actively managed, there’s a simple way to find out. Just ask your advisor if they make changes to their portfolios based on the conditions of the market. If they say they don’t they’re not active money managers. If you want more information about the advantages of active portfolio management, check out our website at