When I turned 18, I needed to make money to help fund my post-secondary educational costs. I worked for my uncle’s company where we produced and erected steel buildings. Starting in the draft shop, I later graduated to erecting the steel. It was on my first job in the field that I learned a valuable life lesson: a building was constructed, but it was later discovered that the foundation was laid a couple of inches out of place.
Every worker following that attempted to compensate for that error only to make matters worse. My job was to fix the original foundation after the building was put up. As you can imagine, this was an incredibly difficult job but entirely necessary.
This life lesson helped me realize that great financial advisors work on the same principle. Nothing works without a sound foundation. Issues are magnified when you avoid the underlying problems with “band-aid” fixes.
Last month, Professor Eugene Fama, a consultant for Dimensional Fund Advisors was awarded the Nobel Prize for his work on the efficient market hypothesis. The portfolios that your advisors at The McClelland Financial Group recommend are structured and managed based on his work. I continually see portfolios built with faulty foundations. Charging high fees to justify individual stock-picking in an attempt to outperform the market will lead to bigger issues down the road. Similar to the buildings raised on flawed foundations, the only way to avoid ongoing issues is to address the root problem. Always fix the foundation first.
