My father is not impressed with how either my mother or I handle our finances. He wants to have us put our funds in the hands of a financial manager. He has done this in the past year and he has been favorably impressed with the results. He wants us to do the same.

My mother has refused. She says that she has had an account with the same company for thirty years and that she is happy with them. She knows them, and they know her. She is doing very well, and she has enough money to spend. She doesn't think the experts know anything, anyway. Just read the newspapers, she says. They all disagree. Half the time they're wrong. What I do, she says, is good enough. Whenever my mother has too much money in the bank, she always does the same thing. My mother likes to put all her extra money into IBM.

My father does not think my mother knows what she is doing. He is not impressed with how my mother invests. He also is not impressed with how I don't invest. I always depend on his advice to know what to do. So he decided that I should meet with his financial advisors.

I don't really know how or what financial advisors advise, so I was somewhat curious. They started out explaining some vague policy or other about diversifying your portfolio, so that whatever happens in the market, you are prepared. Even if the market takes a steep decline, they said. When some people might panic.

"I don't care if the market declines," I said. "I want to invest in companies with a sound intrinsic worth so that, whatever happens to the market, over the long term the value of the stock will increase."

"That is our philosophy in a nutshell!" one of the financial advisors exclaimed. "We should take you with us to explain our policy when we make presentations."

I was surprised and pleased at my precocious level of understanding, and I sat back to continue learning more about financial policy. The financial advisors were now talking about selling stock to raise cash.

"I don't like Home Depot," my father said, looking over his portfolio. "You can sell that if you want to raise cash."

"We can't," the financial advisors said. "You have to have Home Depot. It's on the Core List."

"The Core List?" I asked. "There's a Core List? What's that?" It turned out to be a list of ten to fifteen stocks that were necessary for all their clients to have.

"But I don't like Home Depot," my father objected.

"You will have to give us something in writing if you object to a particular stock and want us to sell it. We may make an exception. But I want to say right now that we have to have discretion over your account. If you are not going to allow us to use our own discretion, you might as well not pay us for our advice," the financial advisor intoned. He was putting my father in his place and every one of us knew it. My father looked chagrined. "But, of course, it's your money," the advisor added magnanimously.

My father dropped the Home Depot issue, and I asked some more questions about how they would be handling my account. They told me they would be buying core stocks slowly and would be keeping about 20% of the account in cash. That is because, they said, in the climate of the current market they want to have enough cash in all accounts to be able to buy good stocks when the opportunity presents itself.

"For instance, "they told my father, "we had enough cash in your account so that we were able to take advantage of the situation and buy a really fine stock for you as soon as we saw that the timing was right."

My father looked at me. He wanted to be sure that I was paying attention. He was impressed at their perspicacity and at how well they were handling funds on his behalf. He seemed comfortable knowing that his money was being deployed by people so experienced and so expert in their field. "What stock did you invest in?" he inquired politely.

"IBM," they said.

Upon hearing this pronouncement, I do not know which was greater - my surprise or my mirth. I was sitting there, astonished and amused, while my father was trying hard not to appear either startled or distressed. My father and I had both realized the same thing at the same time. The investment strategy these sophisticated financial advisors had come up with, after much deliberation on their part, was exactly the same as my mother's!

As I scanned back over these solemn proceedings, I was delighted. I was feeling somewhat bad for my father. But I was feeling very very proud of my mother.

January, 1997
BB