Beware the tinker man

Beware the tinker man

You’ll come across many personality types, and character traits, as a Lifestyle Financial Planner – and we’ve talked about a few of these already.  But what do you do when your client likes to tinker?

Who is the tinker man?

The tinker man is the client who wants to include a certain type of investment (or share) within the investment portfolio that you recommend.  They are not a self investor – they don’t want to do it all themselves, or avoid fees – and are quite happy for you to make your recommendations. However, they just want to insist that a certain investment is included within that portfolio.  It’s usually down to 1 of 2 reasons:

  1. They have heard about a particular investment or fund and think it’s a dead cert.  They therefore want to include it.  Woodford was a common one, up until recently.
  2. They have some sort of personal or emotional attachment to the investment.  It might be their employer or a company within their local area or sector.  They believe they have insider knowledge and therefore feel they have an advantage.

Both are dangerous.

What makes this dangerous?

As Financial Planners, we need to make sure that our recommendation is just that – our recommendation.  We can’t allow someone to tinker with that.  No other profession would.

Your electrician wouldn’t sign off a safety certificate knowing that you’ve had your hands in there and done some of the work.  Similarly, an anaesthetist isn’t going to put the needle in your arm if they thought someone else had filled the needle with the relevant anaesthetic.  In both of these cases, their job is about being in control of the process from start to finish, and taking responsibility for that.

We have to be the same.  We cannot allow someone to tinker with our investment recommendation.

Why emotional attachment to investment is even more dangerous

It can be even more dangerous if your client has an emotional attachment to investment.  This is because emotional attachments tend to make people over commit.  They feel that, because they have insider knowledge, they cannot lose.

There was an example of this in my local area.  A big mine appeared to be very successful because it found a plentiful supply of phosphate in the ground.  It struck a huge deal to mine the phosphate and employed a lot of people locally who had previously worked in other mines.  It was a big thing.

Because the miners felt they had insider knowledge (they felt they were really onto something) many invested their own money to buy shares in that company.  Some even invested everything they had because they felt sure they couldn’t lose.  Their insider knowledge blinded them to the risks.  Ultimately, the company ran out of funding and had to be taken over – share prices fell and many people lost large sums of money.

It highlights just how dangerous emotional investments can be.

So, how do you accommodate the tinker man?

The best way to deal with the tinker man is to keep things separate.

If they want shares in a particular company, and you can’t talk them out of it, then that’s fine.  But set up a separate account that isn’t part of your financial plan.  Call it something else – ‘The Play Account’.  It can be an entirely different pot within your client’s pension or investment account.

But keep it separate from the plan.  Have it so it’s not even included.  If your client then loses it all, it doesn’t matter.  Otherwise, it will always taint the financial planning work that you’re doing.

You don’t want your professional responsibilities to be dependent on someone unqualified (and making emotional investment decisions) tinkering with a particular pot of money.

I once saw a great advert on the wall at a local garage – it pretty much sums it up:

MOTs – £50

If you want to wait – £60

If you want to watch us do it – £70

If you want to help – £100

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