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People vs Tasks, Heart Disease in Childhood, Rise of the Robo-Adviser

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People vs Task Focus

One of my favorite books on athletics is “Inside Out Coaching”, by Joe Ehrmann. If you have kids and are considering getting them involved in sports, I highly recommend the book. In it, Joe shows how most kids’ experience in sports is actually detrimental to the development of their character, not positive (think about the outcome obsessed parents or the just the commercials when you are watching sports these days).

Instead of taking a Transactional (you deliver us wins, we give you praise) approach to coaching, Joe and his coaches take a Transformational approach. Meaning the coaches and the game exists to transform these boys into young men of character, not just to win games (though they win a ton of games).

Taking a Transformational approach at work is also the best way to build great teams, attract people and outperform your competitors (take Chick-fil-a or Southwest Airlines as examples).

My problem is that I am naturally task oriented (maybe it is the accountant in me…). There are upsides to being task oriented:

Into the details
Give clear directions
Very few things are missed
Can coordinate, schedule and manage large groups
Efficient

But the downsides are strong too:

Low creativity
Lack of employee morale
Employee burnout

The best approach, or defense, to this natural inclination is to force myself to make the time to know the people I work with at a deeper level. This is difficult for task oriented people to do, because deepening these relationships takes time – time we could have spent knocking out tasks!

But, when you do get to know the skills, talents, passions and dreams of the people you work with, there are multiple benefits.

You assign people to work they love and that will help them reach their goals
Job performance improves
Engagement skyrockets
Employee attrition plummets
Great people are attracted to your organization

In the end, I am thankful for my natural task orientation. It is there for me when I need it and I know it would be incredibly difficult to cultivate if it was not natural for me.

A great exercise that you can do with your team to get to know them better (and become more People oriented) is the “Be-Do-Have-Help” exercise that Chick-fil-a uses. You can learn more about it here.

Heart Disease Starts in Childhood

Fatty streaks, the first stage of heart disease, were found in 100% of kids by age 10. The #1 risk factor was cholesterol intake. A famous heart study even created a scoring system to measure your risk. The higher the number the greater the risk.

Do you smoke? +1
High blood pressure? +4
Obese Male? +6
Total Cholesterol – good cholesterol > 220? +8!

This study shows that damage to our bodies starts at a very early age. We also must understand that our eating habits are established when we are young. Lets not fool ourselves into believing that a bad diet won’t hurt our young children. It does. In 2 ways: Establishing bad habits and actually damaging our bodies.

You can see the video (5 mins) and read the transcript of the study here.

Life, Fun, Whatever!

Is A Robo-Financial Adviser Right for You?

I started my career as a tax and financial adviser for Arthur Andersen in Atlanta. We were responsible for managing the net worth and minimizing the taxes for some of the wealthiest people in the city. So, I’ve been around the financial services industry for some time and I am highly sensitive to investment fees.

Why? From my earliest days at Arthur Andersen we already knew that the capital markets were very efficient, meaning trying to beat market returns after fees and trading expenses was a big gamble. Some managers could do it, but what was the likelihood that you were going to pick that perfect manager? Very slim.

A little while back I convinced Jill to allow us to move our investments over to Betterment – one of the relatively new “robo-advisers”. Their fees are ridiculously cheap and they automatically rebalance my portfolio’s asset allocation as the market moves. This is a task that was crazy hard to do with my funds at Vanguard (I believe Vanguard has their own Robo option now).

If you did not know, asset allocation and expenses are the primary drivers of your portfolio’s performance (because the market is efficient and very difficult to beat).

Now, to the point of this article. Consumer Reports just did a story on the rise of the robo-advisers and here are a few quick facts on why you should really consider a robo-adviser.

the average 1% fee charged by most advisers will cost you $750,000 over a 30 year period, starting with a $500k porfolio – that is a lot of dough..
People who manage their own money do far worse! According to a recent Dalbar study, the S&P returned an average of 10.35% over 30 years. The average self-directed investor made only 3.7%! That is a fraction of what you could have earned investing in the S&P 500 index!
Robo-adviser fees range from .15 – .5% vs 1.0% for most advisers. That adds up over time.
In just a few years of existence, robo-advisers have racked up over $53 billion in investments.
A Deloitte study predicts that robos will be managing $5 – $7 trillion within a decade.

A great argument against robo-advisers is that real, live advisers do a lot more for you than just allocate your assets in the capital markets. If that is the case for you, just understand what you are paying for that service over the life of your investments. You can always negotiate a fee only (no commissions) arrangement.

If you want to check out robo-advisers, start with the Consumer Reports article and check out Betterment. Betterment has been great for me. There are several other robo-advisers mentioned in the article, including a Vanguard version which was not available when I switched to Betterment. If you follow this link to Betterment, you’ll get 6 months fee free and they’ll give me a discount on my fees!

Happy investing!