An entrepreneur who creates, manages, and grows a company should be able to do the same with an investment portfolio, no? After all, success is transferable, isn’t it? The very qualities that make a great entrepreneur should also make for a great money manager. Right?
I don’t think so, and here’s why.
Being an ace attorney doesn’t qualify you to perform surgery. World-class architects rarely have accounting businesses on the side. And no one wants to visit a dentist whose education and experience are chiefly in musical performance. We turn to skilled, specialized professionals in all matters of importance, and I encourage the same for entrepreneurs hoping to build and protect their portfolios.
Different task. Different skills.
An entrepreneurial mind is a beautiful thing that can create remarkable business value and wealth. Entrepreneurs see opportunity where others see obstacles. They welcome risk. They’re ready to experiment, innovate, and improvise. They absorb, decide, and act.
While these qualities are essential for building a breakthrough business, they may not be ideal for managing a high value investment portfolio. In investing, not taking action when market, economic and political conditions change requires patience and restraint that many entrepreneurs find unnatural or unsatisfying.
Fortunately, another key characteristic of successful entrepreneurs is “knowing what you don’t know.” The perspective to recognize the need for specialized skills and experience — and the ability to identify experts who can deliver that insight — allow entrepreneurs to transform big ideas into dramatic results.
I recommend the same approach for investing — supplement your own skills with those of experts and trusted advisors. Rely on the experience of a registered investment advisor to provide key investment and wealth management guidance, as well as to marshal patience and restraint when markets misbehave. Focus your energies not on managing your portfolio, but on finding an investment advisor who understands your goals and pursues a strategy that makes sense to you and for you.
It’s not a hobby
Many entrepreneurs find themselves wondering “What next?” after selling or ceding control of their businesses. Managing your portfolio can be an interesting diversion, but with your family’s financial security on the line, it’s a poor choice of a hobby. Teaching, the next company, or philanthropy might be better choices. If you want to make a hobby of investing, it’s best to do so with a small discretionary account, money you’re prepared to lose if your investments don’t pan out (while the rest of your assets are professionally managed).
As a middle ground, consider this option: Appoint yourself chairman of the board of “Me, Inc.” Hire a “chief of staff” financial advisor who reports to you, and is responsible for keeping and growing your investment capital. Treat your money like a business, and hold it accountable. But don’t try to run parts of the business where you’re not fully qualified.
Ultimately entrepreneurial success and investment success are two very different things. As this Entrepreneur.com article asks: “Just because you can manage your own portfolio, does it mean you should?” I think the answer is no.
This communication may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”
“Historical performance is not indicative of future results. The investment return will fluctuate with market conditions.
Past performance is not indicative of any specific investment or future results. Views regarding the economy, securities markets or other specialized areas, like all predictors of future events, cannot be guaranteed to be accurate and may result in economic loss to the investor.
Investment strategies, philosophies, allocations and holdings are subject to change without prior notice.
This communication is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice.
While the Adviser believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.
Adviser does not endorse the statements, services or performance of any third-party vendor.
Unless stated otherwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only. Adviser’s clients may or may not hold the securities discussed in their portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable.
Any IPO alerts are purely informational and should not be construed as recommendations to invest.
Adviser is not licensed to provide and does not provide legal, tax or accounting advice to clients. Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.
Any case studies or hypothetical client profiles are for demonstration purposes only. They illustrate the breadth and depth of the many clients we represent at various life stages. Any similarities to actual Adviser’s clients past or present are strictly coincidental. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.