Honesty is Such a Lonely Word
HOW IMPORTANT IS CANDOR, OR AN HONEST MESSAGE, WHEN YOU DETERMINE WHERE AND HOW TO INVEST? The value of candor in the financial services industry came up in a recent interview with Jack Bogle, the founder of Vanguard. Over the years he has said much, written much, and had much said about him. The Bogle/Vanguard story is unique and compelling.
IN THIS INTERVIEW, HE MADE A COMMENT THAT I THOUGHT WAS PROFOUND. It was brief and even simplistic, but it really struck me. He was asked if the index fund had won. As he answers the question and comments on the growth of the index fund as a successful option for all types of investors, he describes the index fund message as “…candor as a marketing strategy.” Read the article in the link and look for the quote.
THOUGH THIS IS OBVIOUSLY TRUE, I’VE NEVER HEARD IT EXPRESSED SO ELOQUENTLY. The Vanguard approach to investing could not be any more honest. Their core product, the index fund, is the market. You get what the market delivers, less whatever it costs Vanguard to provide it. A simple idea. At this point in my career this is the message I want to buy and what I suggest my clients buy as well.
BUT HOW SUSCEPTIBLE ARE YOU TO THE MARKETING STORIES AND SCHEMES OF THE FINANCIAL SERVICES INDUSTRY? Do you prefer a good story or are you willing to accept a less glamorous, honest message? If you want your money to “work hard” for you, will the straightforward candor of Bogle and Vanguard win you over?
UNFORTUNATELY, I BELIEVE MOST INVESTORS ARE NOT WILLING TO SETTLE FOR PURE CANDOR. Vanguard has done an amazing job, but too many people want to believe in the message that someone can deliver more than the market. In the financial services industry, too often great story telling and marketing trumps candor, and honesty truly is a lonely word.