Send home the financial clowns
By Tony Walker
Until recently, clowns limited their silly antics to events such as parties, amusement parks, circuses and the like. However, I’m starting to notice a lot of clowns showing up in the financial world.
Do you enjoy good music? I sure do. I grew up in a house full of musicians. Back in the 1960s and early 1970s, my dad was the lead singer and saxophone player in his very own dance band, The Four Sounds. My mom played the piano. A few years later, at the ripe-old age of 13, my older brother Marty joined the family band as the drummer. Music was in our family and in our blood.
Me? As the youngest member of the family, I was the aspiring trumpet player — too young to play in The Four Sounds, but apparently not too young to "work" for The Four Sounds. I was the band boy, a position my dad created out of thin air in hopes of making me feel a part of the family plan.
As the band boy, my job was to haul equipment from Dad’s station wagon (picture Clark Griswold’s car in the movie, "Vacation") into the venue they were playing (usually a local country club). After setting up, they’d start playing. I hung out and listened to Dad play and sing all sorts of songs, while also yelling at my brother Marty for not keeping a good back beat. By this stage of the game, Mom had resigned as the piano player and, also, as Dad’s spouse (I was 10 years old at the time of their divorce).
Dad loved singing the ballads; those soft-spoken songs with great melodies, chord progressions and dramatic lyrics. So cool were the lyrics of these ballads that Dad never got them right. Often forgetting the words (or maybe it was the fact that he never took the time to learn them), Dad would often make up the words as he sang. But who could notice? Crowds of people were drawn to the performance, not the accuracy of the lyrics.
One of his favorites was a song called “Tenderly." He liked it so much that he made me learn it on my trumpet. (I guess a newly divorced Dad figured that forcing his son to learn "Tenderly" on the trumpet was cheaper than therapy.) Anyway, one day, as I helped Dad and Marty load up the station wagon for that evening's gig, he told me to bring along my trumpet to play "Tenderly."
I was extremely nervous as I loaded my trumpet into the back of the car. But looking back, it was the coolest moment of my young life; walking into that country club packing my axe. Two hours later, with the crowd fully engaged (that’s a nice way of saying that the majority were fully inebriated by this time), Dad proudly announced that his 10-year-old was going to come on stage to play the classic ballad, "Tenderly." Well, you can imagine the thrill for me and the response of the crowd.
Since that life-changing moment, I’ve continued to enjoy great ballads. Problem is, many of the greatest ballads have some of the goofiest lyrics. Take one of the all-time classics, “Send in the Clowns." (Now I know why Dad used to make up his own lyrics). Written by Stephen Sondheim and sung by the great Judy Collins, "Send in the Clowns" possesses a wonderful melody and beautiful chord progressions. However, as much as I love the melody, with all due respect to Mr. Sondheim, the song itself contains lyrics that make absolutely no sense. The more you think about and visualize the lyrics — “send in the clowns; there ought to be clowns” — the goofier it sounds.
The thought of someone saying, “Hey folks, I know what we need to liven this place up: some clowns!”
“Why?” asks one of the guys.
“Because!” responds the annoyed clown-seeker. “There ought to be clowns, so send in the clowns!”
OK, let’s go with the assumption that in life, “there really ought to be clowns.”
First things first: I think we can all agree that in the real world, clowns are easy to spot. The typical clown has a big nose, funny hair, flat feet, lots of makeup and is like, well, a clown! You understand their goofy antics are just for entertainment. The sillier they act, the funnier it is. After the performance, all of us — including the clowns — go home, returning to our normal lives with no ill or long-term effects as a result of their clownish behavior.
Until recently, clowns limited their silly antics to events such as parties, amusement parks, circuses and the like. However, I’m starting to notice a lot of clowns showing up in the financial world. (By the way, it’s not just financial clowns showing up, but political clowns, as well. Just watch and listen to the nightly news for as much silliness as you can stand.)
Unlike the easy-to-spot clowns of the past, the new breed of financial clowns is well-dressed and highly articulate (they can really carry a tune). Throwing out untested advice (lyrics that are often made up on the fly, just like my Dad's) to whatever crowd will listen, these clowns appear to know what they’re singing. But unlike the innocent goofiness of traditional clowns, the advice given by financial clowns is serious business.
With so many financial clowns on TV, radio, print media and the Internet — not to mention many of them out on the streets representing various financial institutions — you're going to need a few tips on how to avoid looking like a financial clown. 1. Get registered as an investment advisor. Being registered means you are held accountable (by the SEC) for the advice you give. Most financial clowns don’t like to be held accountable to anyone; that’s why they don’t become registered. They work alone for a reason.
2. Work in the financial trenches each day to test and verify the accuracy of your advice. Clowns lack a vested, long-term interest in truly helping the people they are giving advice to. They simply hop on stage, belting out two-minute sound bites.
3. Recommend only products that you would invest in. Clowns practice the “do what I say, not do as I do” philosophy. If you advise your clients to invest in no-load growth mutual funds, be prepared to show your clients your no-load growth mutual fund statement. It’s been said that a well-known financial clown tells followers to invest in growth mutual funds, yet most of his/her net worth is in individual stocks and bonds, not growth mutual funds. Apparently, what’s good enough for clients may not be good enough for clowns.
4. Seek training from various financial resources and experts in the financial field. It’s heart-warming to hear about financial clowns who went broke and learned a painful lesson, but that doesn’t mean their clients should put their faith, trust and life savings in them. I had surgery on my nose (a very painful experience), but that fact alone does not make me an expert on medical issues.
5. There is no perfect investment, and there is no terrible investment. This is something I've learned after working in this business for nearly 30 years. Anyone who says otherwise is a financial clown. A clown’s words and attitude appear dogmatic ("It’s my way or the highway") and/or defensive ("How could you ever question my advice?"). All financial products, tools and strategies have their place.
6. Do not use too-good-to-be-true statements. These include: “We can double your money in five years,” or “Over the last 20 years, the stock market has done 12 percent, so let’s assume in your plans you’ll make that, too!” or "This index annuity has a cap of 19 percent.” All will prove to be clownish advice.
7. Be open to any and all questions from your clients. Financial clowns hate to be questioned. Acting annoyed or defensive when a client asks you a question makes it seem like you have something to hide. It also makes your client feel embarrassed or ashamed for having upset you by asking questions, thus resulting in them less likely to feel comfortable around you.
Financial clowns are crafty little devils — they’ll do their best to look just like us. Be sure you take the steps to establish yourself as one who truly know the lyrics versus one who is just entertaining.
In the meantime, I’ve got to go; I’m excited about a new song I’m learning to play on my trumpet called “Send Home the Clowns."