Investing like a triathlete

August 28, 2014 Categories: The Art of Advising
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Pink running shoes

Whenever I hear rumblings of the equity markets being fully valued and possibly heading for a pull-back, sending many investors to scurry for the sidelines, I can’t help but compare the situation to the peak of a successful triathlon racing season.

Aside from my family, triathlon racing is my passion outside of work. Seattle’s triathlon season comes to a close in early September and by this point, triathletes’ bodies have trained, performed and finally peaked – and then it is time for the off-season. But ask any dedicated athlete: Is there really an off-season? I’d argue no. I’d make a case it’s similar with investing for retirement: there really isn’t an off-season.

As a triathlete, when you have tirelessly trained your body and built up your strength for competition, you definitely hit a peak performance point near the end of the season. But at that peak, do you make a change in your training to prepare for the worst – a potential “pull-back” like an injury? And to avoid that possible injury, do you hang up the bike and commit to the safety of TV and ice cream for the next six months?

Of course not! That’s not how you get stronger, faster and better prepared for your long-term racing career. And that’s not how you plan and invest for retirement, either. When equity markets have had a strong run, cashing out due to fear of a pull-back can be a risky strategy.

In both cases, the time when nerves hit can be the perfect time to review what you have planned and developed so far, and your strategy for the future. A triathlete might sit down and review their race reports, their training plan and their strategy for upcoming races. An investor and their advisor might review their retirement savings, financial goals and overall plan.

Reviewing all that you have in place to help create success over the long term can be a helpful way to regain perspective on what may or may not happen in the short term. Point out and celebrate the successes of the market and certain asset classes – while also providing context around where the markets and economies stand. Discuss the risks that come with investing and why it can be important to be diversified. Because just like a triathlete cross-trains with yoga and weights to build strength and reduce the chance of injury, an investor’s portfolio can be stronger in times of volatility with a diversified approach.

The bottom line

You want your clients to trust the time and energy they have put into their plan with you, and the smarts they have gained along the way. A core piece of being an advisor is instilling this faith in your clients. You both have done a lot of work to develop strong portfolios and financial plans so they can navigate whatever they might encounter on their paths to the finish line.

So, when those nerves strike at the “peak,” take advantage of the opportunity to emphasize the strategic planning process and strengthen your relationship with your clients.

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