THE BLOG
05/03/2013 10:28 am ET Updated Jul 03, 2013

The Ironman Model for Investors

Having raced the Ironman triathlon seven times and completed numerous other endurance tests, including solo swims around Manhattan and across the English Channel, I can attest to one thing: the battle is never won in the first hour or two, but it certainly can be lost then. Athletes can get "cooked" - stressed or overheated in the adrenaline of the moment - early in the race and then never recover. You must let the race come to you, rather than attack it right away.

There are no finish lines in private wealth management, of course, but the parallels between investing and Ironman racing are many. Just as athletes can get cooked, investors can get caught up with day trading, market timing and weekly economic reports or quarterly earnings. These rarely prove to be as successful as a long-range, well-reasoned plan.

The Ironman triathlon is a 2.4 mile swim, followed by a 112-mile bike leg and a 26.2 mile run. It requires grueling preparation over hundreds of hours, thousands of miles of cycling and running hills, intervals, tracks and flats; millions of yards in swimming pools and oceans; weight rooms, massage therapists, chiropractors, nutritionists and reactivation specialists. The best Ironman coaches are those with panoramic experience and a team of specialists to drive across the discipline, honesty and relentless focus on - what else? - ratios: watts per kilogram; miles per hour; grams of carbohydrates per hour trained. These are the earnings per share, enterprise value/EBITDA and Sharpe ratios for the athlete.

Just as the Ironman requires athletes to develop drive, self-control and proficiency in multiple sports, high net worth clients expect their wealth managers to be tax- and investment-savvy, licensed and accredited in many disciplines, empathetic and active listeners who can facilitate communication about family values across generations. Clients expect portfolios that protect in times of downside stress, participate in up markets and yield adequate cash flow while being sensitive to taxes. They expect excellence - but also appreciate the efficiency that comes with an integrated solution.

Twenty years ago, advisors did not have to be as well-rounded - they needed to identify either a good stock or a good bond for a portfolio, and have a general knowledge of economics and taxation. Today, however, leading advisory teams run holistic single- or multi-family operations that integrate financial, tax, estate and philanthropic planning and guidance with investment consulting, analysis and portfolio construction. These wealth management teams must possess comprehensive analytical and advisory skills, plus a family office environment where clients have a single point of contact to have issues resolved and service needs exceeded.

Is this too much pressure? Does this make the advisor prone to getting "cooked" like an over-eager athlete? Not necessarily. Just as proper nutrition, balance and recovery can prolong an elite endurance athlete's career (Sister Madonna Buder, aka the Iron Nun, continues to compete into her eighties), continual coaching, training and process improvement help an advisor stay current, proactive and relevant through market gyrations and cycles. The world-class advisor knows to learn, listen and hone his or her craft.

Today's holistic advisor is an elite athlete, coach and general manager combined. But the most important element of the advisor-client connection is that it is a mutually beneficial relationship of trust. As such, advisors and clients are best understood as training partners and as they navigate the varied terrain that is wealth management, they succeed when they support and coach one another.