Personalize instead of Maximize - J.E. Wilson Advisors

Personalize instead of Maximize

Much of the literature on financial planning and investing focuses on how to “maximize” return. Both advisors and clients become wrapped up in the comfortable cloak of chasing the always illusive “god of maximus.” It can become more than an exercise in futility; it can become destructive to sound, long-term planning.

There is a better way. The first step is to get off of the “maximize/optimize” train and instead, follow the path personalized by your goals. The idea that we can precisely pinpoint which investments, which times, which strategies, and which managers will yield us “the most return” is to ignore the precept of what we really control.

Maximizing return is just a mental construct like the horizon that we can’t really ever reach. There are over 12,000 stocks and 24,000 mutual funds. Thinking that we can select “the best” one at any point is far-fetched. Far too much mental energy goes into seeking this and it often diverts investors from real life financial choices that are far more important.

The opposite side of the coin – minimizing – is also problematic. While we all want to lessen taxes or risk, strategies that absolutely focus on minimizing can be detrimental to financial health. I have been to meetings where speakers talk about complex, multi-step tax strategies that seek to save a couple hundred dollars of tax, all the while taking the eye off what should be driving overall choices…personal long-term goals.

Over 30 years of advising successful individuals, I have concluded that oftentimes those that follow the “maximize/optimize” philosophy usually have very fuzzy goals or even no goals at all. They just want “more.”

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