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Dennis Hall: Financial planning differences across the pond

US clients want to intervene while people are calmer in the UK

The special relationship between the UK and the US extends beyond politics and is felt deep within financial services. Consider some of their lead figures, such as George Kinder, Maria Nemeth, Mark Tibergien, Dimensional and Vanguard, and you can appreciate the extent of US influence.

We tend to see them as closer to the leading edge of where things are going, although I am not so sure. I have been travelling to the US on a regular basis for the past 15 years or so as I have friends there. I have been introduced to their friends and have become part of their community. I have also become friendly with Steve, a financial adviser with clients from some of New York’s wealthier commuter towns in New Jersey.

I was out to dinner recently with a few people, including Steve. He was continually on his Blackberry and did not look relaxed and I wondered why.

It seems his clients were spooked by the markets and were constantly texting him. I compared this with my portfolio of clients who, by and large, are riding the waves.

After some discussion, we figured out it boiled down to a different culture in the US and it is not one that I would readily want to import. This difference was brought into sharper definition during a conversation about healthcare with some senior citizens.

I was lost for words as they reeled off the drugs they were on. There was a strange sense of pride attached to the ever growing list, which was crowned by one fit-looking senior announcing he had just been scheduled for a pacemaker.

We got into a debate about healthcare and financial advice and concluded that what they believed they were paying for was action, however that might be defined.

Getting things done equates to value for money for them. Whether it is getting maximum bang for their buck by their health insurance paying for procedures or having a very active portfolio manager, no one was prepared to just let things happen. Intervention was the name of the game.

I should admit I have read, listened to and acted on a lot of advice from over the pond and a lot of it makes sense to me but not all translates to the UK marketplace. The more I visit the US, the more I feel the need to take a huge marker pen and strike through a lot of what they are telling us.

But therein lies a problem. Who in the UK is able to act with the same degree of conviction and acceptance? I really am struggling to name home-grown talent that commands as much attention from consumers as the North American names that spring to mind. And even if I could, would I be prepared to listen to them?

Dennis Hall is managing director at Yellowtail Financial Planning


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. Interesting article – it’s something I have noticed when talking to friends in the USA. They seem to take a far more active interest in portfolio mix, asset allocation etc. too.

  2. I don’t think this is a USA v UK issue.

    Nick Murray (American financial adviser / author) is very committed to the long term sit and hold type approach and has a large following.

    One UK financial adviser my colleague met one night a couple of weeks ago was rushing into the office first thing in the morning as ‘the market is going to fall 10% tomorrow!’. I hate to think what has happened to his clients given that market actually rose about 7.5%!

  3. Agree with you Dennis, noticed this difference all the time.

    Many – not all – Americans work over much shorter time horizons, and have boundless faith in their ability to identify the best Stock / Drug / whatever.
    We tend to be less convinced we have the power to change things.

    As ever, a ‘mid pond’ approach may have merit. But that’s Iceland, and we all know what happened there!

  4. Do they have our compensation machine over there?

  5. Groucho Marx once famously described a stockbroker as someone who invests your money until it’s all gone. And he knew that from experience.
    I understand that whole of life contracts are promoted rather than term. Hence, I suppose, life settlement funds.
    The USA locks up the directors of web based betting sites and yet promotes Las Vegas, a town where you can lose your money 24 hours a day every day. A country full of contradictions I’m afraid.

  6. I have clients from about 20 countries, many Americans, Brits, Europeans, Australians and Kiwis, French, you name it. The hardest by far are the US nationals, they do, as you point out, expect action.

    The buy and hold strategy is perceived by them as you doing nothing and not working for them. I tell them that I am not a stockbroker but a long term financial planner. To them, there is no difference, you handle their money and therefore you act.

    It can be tiresome!

  7. If you go a little further across the pond to Australia you will find the key positioning of top financial advisers is ‘lifestyle financial planning’. And it’s nothing to do with life coaching or tree hugging. The net result is that clients stop chasing the stockmarket and focus on their lifestyle needs, seeing it as a long-time journey, as is their retirement.

  8. Green Eyed Monster 12th December 2011 at 11:32 am

    Thank you Tony Dickin!

    I was beginning to believe our readers did not know the difference between financial planning and portfolio management. The headline to the article does not help. please change it to ‘Portfolio Management differences across the pond’

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