Most Professions are Guided by Research and Evidence
In nearly every other learned profession, whether it is medicine, law, or engineering, there is a wide body of underlying research that represents the foundation of professional practice.
Although each practitioner may take a unique approach in the way that they apply the research to their day-to-day work, there is a common body of knowledge that links every upstanding professional in that industry together.
Think of a legal library at any major law firm, where a lawyer has access to hundreds of years of legislative history on legal statutes and case law.
Attorneys regularly refer to scholarly publications like the Harvard Law Review and Yale Law Journal in order to stay informed about legal issues and to draw upon the research of subject matter experts.
This information is used on a daily basis in order to make informed recommendations to clients that are based on current law and historic precedent.
Or consider a doctor who spends years studying the way that the human body functions and then several more years in residency under the supervision of highly experienced senior physicians before practicing on their own.
In diagnosing and treating patients, it would be virtually unheard of for a doctor to recommend any treatment that wasn’t based on well-documented, empirical evidence (not to mention the fact that it would be grounds for a malpractice lawsuit).
Likewise, in order for a drug to be approved for use in the United States, it must pass through exhaustive trials in order to assess the drug’s safety, its effectiveness compared to other available treatments, and any side effects that the drug may have.
Most Financial Advice is Based on Guessing and Speculation
Unfortunately, only a small percentage of the financial services industry operates in a manner that could be considered similar to law or medicine.
Instead, so-called “advice” from most individuals and companies in the world of investing is the financial equivalent of selling snake oil.
Rather than standing on a foundation of evidence, logic, and peer-reviewed research, most of what we hear in the news media and read in personal finance magazines is simply advertising, self-promotion, and fear-mongering masked as unbiased analysis.
Cut Through the Noise
According to most of the talking heads, we should be focused on things like the following:
- Picking winning stocks and avoiding the losers
- Timing when to get into and out of the market
- Buying the mutual funds listed as “top picks” by financial magazines and newsletters
- Moving our money into whatever asset class or country performed best last year
A careful review of the evidence, however, reveals that even the smartest, most highly-compensated money managers show no ability whatsoever to generate value on a consistent basis from these types of activities (beyond what random luck would predict).
In fact, that’s only half the story: In the aggregate, these efforts actually detract from the returns of the very investors and clients that these “professionals” are supposed to represent.
That’s why we base every decision we make for our clients on extensive, academic and industry research published in highly-respected, peer-reviewed journals like:
- Financial Analysts Journal
- Research Foundation of CFA Institute
- The Journal of Finance
- The Journal of Portfolio Management
- Journal of Financial Economics
- Journal of Financial Planning
While we can’t predict the future or guarantee success, we can apply the latest research from the smartest financial minds around the world and combine it with sound, logical principles.
This approach provides our clients with the highest confidence that they will achieve their financial goals. It also allows them to spend more time enjoying the journey, rather than worrying about the destination.