Controlling What You Can Control

When I started in the business 25 years ago, I had a broker, a guy named Tom. And Tom used to call me on a regular basis, probably every other day, with a stock idea. And I can remember one period of time where he actually called me and he said there was a stock he thought was a really compelling idea. The stock was trading at 17. Both, he and the analyst, thought the stock was gonna go to 23 after the earnings report came out the following week. Long story short is that the earnings report came out. It didn't hit expectations and the stock ended up going to seven, and I basically lost about half my net worth on that one particular stock. As I look back at my relationship with my broker, Tom, Tom had no idea about me. He had no idea about my family situation, about my financial plans. All Tom had in his mind was really transacting in that particular stock. When I called Tom to ask him about what happened in the stock, he picked up the phone and he said a line that I'll remember forever. He said, "I'm sorry. It just didn't work out the way we had planned." Not only did he have to say he was sorry to me, he probably had to say he was sorry to multiple other clients who he had suggested the same stock to. So this concept of constantly having to see your story, is a really, really tough business to be in. And what I've seen over my 20 years in this business, is I've seen advisors migrate from usually a stock picking orientation earlier in their career to something that's more aligned with the way we do the business at Dimensional. An investment philosophy approach that's transparent, that's clear, that can focus on diversification. Can focus on tax. Can focus on minimizing transaction costs. It is really an idea around controlling what you can control in the portfolio process. So the advisor then's put in a situation where they don't have to say they're sorry, because they haven't anticipated something in the future. They can focus in on the client, and the relationship with the advisor and the client becomes better and better over time.