Take Care of Your Chicken: How Physical Fitness Is Actually Fiscal Fitness
By Greg Fields
When’s the last time you heard a successful pro-athlete talk up saving money instead of blowing it? NFL tailback Marshawn Lynch caused a Twitter “Beast Quake” recently with his off-the-cuff press conference chock-full of colorful language - and oddly - retirement advice for his professional colleagues. His message was clear: football careers are short; life is long and dropping Benjamins to keep the champagne fountain flowing with Cristal Brut is not a sustainable habit. “Take care of your chicken,” Lynch pleaded, i.e. be sensible with your money, guys. Someday soon, you’re gonna need it after you bronze your cleats.
In truth - athletes of all people - should be exceptionally good with money. They must work hard, endure multiple injuries, and possess an incredible discipline to join the other 0.08% of high school athletes who climb their way into the pros. Not everyone can run a 4.2 forty-yard dash, but we can all stay fit. Not only does exercise increase energy and longevity, but the will and effort to takes to become fit has an unappreciated side benefit: it’s a great template for winning with your finances.
Like a lot of people after New Year’s, I recently joined a ‘concept gym’. Now, this isn’t some casual club where you show up to (mostly) chat up your buddies between reps. This gym only offers instructor-led classes and deploys modules in every class to cover the Holy Trinity of fitness: strength, flexibility, and endurance. But recently, as I was leaking sweat all over my treadmill console, it struck me: the fitness principles taught here are a great metaphor for the investment advice I give my clients.
ACCOUNT + ABILITY
First and foremost, do you get better fitness results when you show up alone or when guided by a professional? The answer seems obvious, yet when it comes to finances, people STILL try to invest and manage their money by themselves. That yield sign-shaped fitness instructor is not going to let your half-ass your way through a workout. He’s paid to torture you into shape. Likewise, any worthy investment advisor holds you accountable for your financial decisions. Maybe you’d like to build a man cave in your back yard this year instead of contributing to your retirement account. Without an advisor, you can pull up Fidelity’s website and turn off the tap. But try to explain to your human advisor why you raided your 401k just so you could house your 65-inch 8k TV and wall of beer taps. Good luck with that.
The other critical role a good advisor/instructor plays is a data analyst. It’s one thing to use a heart monitor, but it’s quite another to have a professional process the numbers, then plug those results into a database to chart your improvement over time. At my “concept gym,” TV screens post your effort in real-time. I always end up pushing myself harder because I know the more I sweat, the more “points” I’m rewarded for keeping my heart rate up. Likewise, real financial advisors don’t just dial you up once a year to wish you a happy birthday, they take you through investment results quarterly and explain what they mean. A solid financial planner will reassess your investment strategy regularly and ensure you’re not straying from your objectives.
KEEP YOUR ENEMIES BORED
True fitness is balance. Sure, you want to build muscle, but you also need to build cardiovascular stamina. Without yoga or flexibility training, your body is going to break down quicker as you get older. Your portfolio - just like your body - needs to be diversified to withstand gyrations within the stock market. The proper balance of stocks, bonds, and cash based on your age and specific financial situation is essential to reaching the finish line of life (retirement; not death!).
The enemy of a consistent fitness program is boredom. The reason I’m a repeat customer at my gym is that they change up exercises and modules, so every class is a unique experience. Similarly, if you’re with an advisor who stuffs your money into a set-it-and-forget-it model, the results (read “returns”) will be less impressive. Your investment plan must evolve as your life situation and needs change. Dynamic asset allocation is the practice of staying on top of a portfolio and tweaking it to properly reflect different phases of your life. Getting pregnant means, you need to rethink the plan you set up before when you were DINKWADs (Dual Income, No Kids, With a Dog).
So, if you’re serious about taking care of your body, go to the gym. If you’re serious about taking care of your chicken, it’s crucial to draft a pro onto your investment team.
Greg Fields is a Financial Advisor of Santa Monica, Calif-based Gerber Kawasaki Inc., an SEC-registered investment firm with approximately $1 billion in assets under management as of 11/27/19. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures the success or protects against loss. Readers shouldn’t buy any investment without doing their own research to determine if the investments are suitable for their situation. “All investments involve risk and one should consult a financial advisor before making any investments. Past performance is not indicative of future results.”