A recent article on the dailyfinance.com explains some research made on investing and age. Specifically that older investors are more prone to make bold and erroneous investment decisions. Interestingly enough, this is purportedly caused by“daydreaming”. Which I find interesting as when I was a kid, older folks would accuse younger folks of daydreaming.
The research also found that younger people tend to be very cautious investment-wise, which could be a function of the last two stock market declines in the last ten years.
What I see here is something that has implications far beyond the research. I have noticed that my wife and I balance each other out. In some ways, we are very similar (similar values, similar political and religious views), but in some ways we are opposites. This leads to a happy marriage, in my opinion.
Now let’s apply that to investing and financial advisor-client relationships. Those relationships should have both sides similar enough that the can get along, but should also have a relationship that is open and honest, in addition to each side being a check on the other. Two aggressive people managing investments is a recipe for disaster. Two conservative personalities managing investments is a recipe for running out of money.
While age may play a role, care should be taken with your selection of an advisor. Be careful not to hire someone who agrees completely with you. Also be careful not to hire someone who doesn’t listen to you. The relationship is what matters the most. If that is taken care of, things will fall into place.