LCM Capital Management Article

Doing the Right Thing

On September 4th, 2006, Investment News ran an article in the Monday Morning column entitled "A well-done retirement assessment is rare", written by editor Jim Pavia. In the article, Jim relates a discussion with two friends at a backyard barbecue, highlighting that "a realistic retirement income strategy should extend beyond life expectancy", and that finding an adviser that can help formulate that strategy is key to financial health in retirement.

John Nowicki, President of LCM Capital, read the article and responded with the following letter to the editor. His letter was published in the Investment News on October 2, 2006.


Belief in doing the right thing

October 2, 2006

In regard to your Sept. 4 Monday Morning column, with your permission, I may have to start distributing your article regarding Danny and Tim to prospective clients.

I, not unlike a lot of advisers, have broken off and started a registered investment adviser firm. I take a very novel approach - do the right thing for the client and charge the lowest fee (this could not be done working for a brokerage house without repercussions).

The most difficult dilemma I continually face is reining in unrealistic expectations. Because I prefer to be candid with clients (i.e. choose the higher ground), I have lost prospective clients to unrealistic promises.

I couldn't agree with you more in wondering how advisers and planners sleep at night. But after 20 years in the business, I realize they sleep quite well, because they have no conscience. If they did, they wouldn't buy annuities, let alone put them in clients' IRAs.

They wouldn't buy five "different" whole-life policies for the same client; they would manage the money themselves and take responsibility for the performance or lack of performance as opposed to laying blame on someone else and then moving the money to another entity that would "give us the return we need to retire on."

They would tell their clients how much they got paid for these transactions and what vacation destination they would go to for making them.

My partner and I call this the "shh factor," because the adviser was always silent when it came to disclosing this to their client.

But after reading your article, I realize it's because they are sleeping so well, and we are not supposed to wake them. Jack Bogle (founder of Vanguard) was probably despised by most of his competitors, but he believed in doing the right thing for his clients. So do I.

John M. Nowicki
LCM Capital Management Inc.
Chicago, IL

The view expressed reflects those of the authors as of the date of this commentary. Any such views are subject to change at any time based on market or other conditions, and LCM Capital Management (LCMCM) disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for LCMCM are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of LCMCM. Thoughts about investing, the direction of the market, and individual securities are based on the author's own analysis and are not representative of actual future performance. Investing involves risk including the possible loss of principal.