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If Marvel did Investments

If Marvel did Investments 

When you’re going through your client’s existing savings and investments, you’ll sometimes come across savings that seem to have special powers.  I’m talking ‘Marvel’ powers.  And they have these special powers because of either where the money came from or who it’s going to.  Confused?  It’ll all become clear in a moment….

If Marvel did Investments

When you’re going through your client’s existing savings and investments, you’ll sometimes come across savings that seem to have special powers.  I’m talking ‘Marvel’ powers.  And they have these special powers because of either where the money came from or who it’s going to.  Confused?  It’ll all become clear in a moment….

The emotional burden of inheritance

The source of money often comes with an emotional burden.  Maybe it was inherited from a family member.  You’ll know because the money will be referred to as ‘Granny’s shares’ or ‘Dad’s legacy’.

But it’s almost as though the person who left them the money is still influencing the investment.  How?  Because your client feels guilty if they touch it.  To them, it’s almost like disrespecting the dead.

And often, it might sit completely outside of their investment comfort zone.  They might have everything else in a 10% equity portfolio – and then they have this weird and wonderful batch of single company shares.

It just makes no sense.

And if you try to talk to them about bringing things into line, or moderating risk, they’ll often shut you down.

Investments that are labeled as ‘inheritance’ seem to have superpowers

Even if you point out that these investments haven’t made any income or growth for years, it’s often not enough for them to see them in their true light.  It’s almost as if this particular investment of theirs has special powers.

It’s a bit like some sort of feral child that has been inherited by another family.  It’s  allowed to do whatever it wants to do – there are no rules.  It doesn’t have to go to bed at a reasonable time.  It can roam the streets – with no consequence.  And it’s all because of the emotional label attached to the investment.  “They were Granny’s shares.”

But there’s another type of investment that also has these superpowers.

The ‘pot with a purpose’ can also have superpowers

Let’s talk about the ‘pot with a purpose’.

These pots haven’t been inherited, but they are being fostered for a different purpose – ultimately, they are going to someone else in the future.

A great example is when your client’s been made a Trustee of little Johnny’s inheritance fund.  Or maybe it’s a college fund for Sally.  But again, this label – the looming figure of the person who will ultimately receive the pot of money – influences their investment strategy.

It influences the way your client thinks – and the decisions they make.

The ‘pot with a purpose’ is treated like a mollycoddled child

This label means the investment is treated like a mollycoddled child.  In fact, it’s the opposite of the feral child because it’s not even allowed to go out and play with the other children in case it hurts itself.  It’s not allowed to climb trees, it’s not allowed to run around. It’s protected at all times.

Why?

Because they are far more fearful about explaining to little Sally why its lost some of it’s original value, than they are about explaining why it’s not grown at all for the last 20 years.

Give investments the chance to grow and flourish

The ‘pot with a purpose’ is so mollycoddled and protected that it’s just sitting there.  Not growing.  Not really doing anything.

As an investment, it’s not being allowed the chance to become what it could be.

You’ve got to allow the investment to be a child.  You’ve got to allow it the chance to develop and grow. Yes, within guidelines, parameters and rules but it must be allowed to reach its full potential.

Why do these labels have such strong superpowers?

Just because an investment came from a certain person, or is going to a certain person, why does it seem to have such power?  What is it that makes our clients react in such an irrational way?

It’s all down to the fear of judgement.

The fear of judgement

Often your client will feel they need to leave their investment as it is, otherwise they’ll be disrespecting Granny.

If you sell her shares, it can feel like you’re making a statement – you disagreed with her choice of shares.  Granny will be looking down at you saying, “how dare you sell those!”  It might sound ridiculous, but that’s what’s going on in our heads.

And if the money is intended for someone else, there’s the fear that they will turn around in years to come and say, “why on earth did you do that with my money?!”

In reality, if you’re a trustee, you’re far more likely to get into trouble for not doing anything with it, or leaving that money in cash – rather than investing it and allowing it to grow.

Challenge these emotions

It’s really important to look out for these situations, and to challenge them.

The best way to deal with the emotional burden of inherited money is to remove the label altogether – get it all mixed in with other assets.  That way, it’s no longer “Granny’s shares”, it’s just money.

Help them to think and act with logic rather than emotion.

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