Hey everyone,

And a special welcome to the 670 new readers who signed up since I put Stocks To Space into the beehiiv recommendation algorithm!

Another busy week building out our nurture sequences for our website lead magnet.

Trying to maximise personalisation by putting leads through a 3-week-long email nurture campaign is thankless work, but I have conviction in its long-term value.

Frequent touchpoints and nurturing beat cold-calling any day.

Today's piece is a reflection on three unexpected insights from my interactions with BRWM clients that have completely shattered my frame of how the world works.

These insights made me realise that non-financially trained people think very differently about their finances, investments and money in general.

Bear with me as I channel my inner Carl Jung.

Framing Financial Success

My educational and professional background is primarily financial, and as a result, I have a particular bias in how I view the world, money, and investments.

One of my roles at BRWM is working as a financial advisor. When I’m not creating content, building systems, or operating the business, I meet with our customers as their advisor and work with them on their personal finances and investment portfolios.

It's been a super fascinating process. One that has forced me to step into the shoes of non-financial people and look at the world through their eyes.

There are many other insights from doing this, but the three I’ve written about below stand out to me the most.

I’ll do my best to translate them into lessons we can all apply to our lives.

1) A complex system

The financial system is incredibly complex.

You will never truly understand the complexity if you have only been a student of finance or are an institutional investor who never interacts with the average person.

This system is so complex, so dynamic, so unpredictable, and so convoluted that even the best, most astute investors (think Belfort, Madoff) get caught with their pants down.

There are dozens of cottage industries within the financial system, hundreds of investment vehicles and products and countless regulations.

Until you have worked in the financial system and seen it firsthand, you will never truly understand the scale of this phenomenon.

Even for advisors who are professionally trained, the complexities are sometimes staggering.

I’ll be the first to admit that I’ve got loads to learn—I certainly do not claim to know the ins and outs of the financial system yet. I don’t even think a veteran of 40 years could make that claim.

But that’s not the point. The point is that if it’s hard for me, a trained finance professional with years of experience, imagine how difficult it must be for the average person on the street.

Imagine the cashier at the grocery store, the account manager at a mining company, or even the super-smart doctor.

They have zero chance of decoding the financial system, let alone navigating it successfully to grow their wealth, without significant effort.

It can easily become a full-time job. DIY investors will tell you firsthand.

The unfortunate aspect of this is that the complexity creates an information asymmetry. And that allows for exploitation.

One of our new clients recently signed his pension over to a big corporate advisor whom he wanted nothing to do with. The best part—he did it unknowingly. 

Just because their corporate sleezebag salesmen put a form in front of him, promised him a cash payout and said it’d all be okay. Of course he signed.

Your initial reaction might be that he should’ve known better. Maybe. But can you really blame him?

He had zero chance—he was a lowly account manager who’d worked for 36 years at a company earning a decent pension against trained financial salespeople who knew exactly how to exert enough pressure to get a deal.

What is the solution to this? I believe it’s transparency and simplicity.

The former doesn’t need explanation, but let me elaborate on the latter.

The way to navigate a hyper-complex system is to deploy simple solutions at scale.

No fancy investment products or trading strategies. No crazy tax structuring. No over-optimised withdrawal schedules.

Just plain and simple—invest as much as you can in high-growth assets as you can tolerate and make sure you have enough dry powder on the side for committed expenditure in the short-term.

Your ass is covered if markets crash, but you’re invested enough to grow over time.

That’s really it.

2) Clients don’t care

About a year ago, I wrote a piece about how customers don’t care about your end-of-year corporate getaway, your tech stack or that you built on the blockchain.

They care that you solved their problem.

That you helped save them time, money or both.

Working in financial advice is no different: our customers couldn’t give two hoots about what stocks, shares or hedge funds are in their portfolio.

All they care about is that they’re richer this year than they were last.

Case in point: earlier this year, I was reviewing one of our key clients' portfolios, and their overall return for the past year appeared somewhat depressed.

I realised that there was one particular actively managed fund that wasn't in a good cycle, which was dragging on the client’s overall portfolio.

I prepared an entire deck to justify why this single fund was well-positioned and why the client shouldn’t be concerned with the lower-than-expected returns.

Guess what happened?

First thing the client says is how happy they are with the overall return of the portfolio because it beat inflation and more importantly it beat their expectations.

At that moment, all the preparation and analysis I had done became pointless for one simple reason. The client was in a better position than they were last year overall.

It doesn't matter how they got there, what cool investment they had that outperformed the others, or, in our case, what investment underperformed. As long as the overall pie increased from one year to the next.

A funny juxtaposition to this insight is to realise that there are trillions of dollars in sub-industries within the financial system that focus exclusively on portfolio construction, selling funky hedge funds, crypto etc.

For the hardcore investor, it’s like being a kid in a candy store to have all these tools at your disposal.

But the fact is that people don't care what is in their portfolio as long as it continues to make them wealthier every year.

3) No one’s crazy

Clients are human.

Humans are emotional.

And being emotional leads to making crazy decisions.

My insight, which ties into the quote above, is that people’s decisions appear crazy from an outsider perspective.

But everyone makes rational decisions from their own perspective.

This phenomenon has never been more apparent than when looking at how people manage their money.

We have a client who had chronic anxiety about paying too much tax. So, they would actively put their cash (of which they were sitting on bucketloads) into non-interest-earning bank accounts to avoid paying tax.

That was a perfectly rational decision to them and made them feel really good. But to an outsider, they seemed crazy for letting their cash be silently taxed by inflation.

Another client became incredibly resistant to selling a portion of their portfolio’s core growth fund, which had performed exceptionally well. They were adamant about not selling because it had done so well.

Perfectly rational to them. But to an outsider, they were crazy for not taking some chips off the table after having such immense outperformance.

Funny enough, two years prior when that fund was underperforming they wanted to get out desperately. Same logic but in reverse.

Ultimately, none of us is in a position to judge the decisions of others because we lack an entire life's worth of context that explains why that decision was made.

From our perspective, many decisions may seem irrational, but to the person making the decision, it’s perfectly logical.

There are two key lessons from the above:

1. Deploying empathy when considering other people's decisions is extremely important.

   1. Take the time to listen and understand where they are coming from.

2. On the other hand, realise that every decision you make is from a subjective point of view.

   1. Understand that it may be in your best interests to test your rationale against an objective 3rd party’s reasoning so that you can ultimately find the truth.

The three insights above have reinforced the value of having a financial advisor for me and why I believe we offer such a valuable service.

Having a great advisor can:

1. Cut through the noise and provide simple solutions that move the needle

2. Focus on solutions that solve real problems that people care about

3. Be an objective 3rd party to keep people going toward true north

Having an advisor isn’t for everybody.

But through the systems and products we’re building at BRWM, my mission is to scale this incredibly valuable service to as many people as possible.

Onward.

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Thanks for reading,

— Luca

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That’s it from me. See you next week, Luca 👋

P.P.S Let’s connect on LinkedIn and X.