Nick Murray speech sparks debate in Talvest Town Hall

(November 21, 2003) Author and business coach Nick Murray’s contention that equities can be a suitable and safe investment, even for clients who are retired, sparked some lively debate this week in Advisor.ca’s Talvest Town Hall.

In a keynote speech on Wednesday at the Toronto Advisor Forum, Murray noted that actuarial projections suggest the average couple will live 30 years past retirement. The risk is not losing money, he said, but outliving that money as inflation erodes purchasing power.

Murray said equities are the only asset class that can historically be shown to provide the returns needed to offset the erosion of purchasing power.

“Tell your countrymen, without ceasing, that if they think in retirement, bonds are safe and stocks are risky, it’s the other way around,” he proclaimed.

A Talvest Town Hall participant identified as “Wheelz” started the discussion. “Being a fan of Nick Murray, I do have a high percentage of my clients in aggressive growth, even those in their 60s. Am I off my rocker?” he asked.

Steve K replied that while Murray is an entertaining and compelling speaker, he can also be “very dangerous to the gullible advisor.”

“Matching Murray’s 100% equity approach to the vast majority of investors who are older and require income is a recipe for disaster,” he added. “Advisors need to learn how to construct portfolios using proper asset allocation based on clients’ needs and risk tolerance.”

Dave P concurred, noting that equities, unlike fixed income investments, provide very little downside protection in times of market volatility. “Granted, you may miss out on some of the upside, but at least you will be cushioned on the downside.”

For investors with a long-term horizon and surplus net worth, 100% equity will always work, added a participant called “My 2 cents.” However, the advisor also said it’s become clear over the past few years that clients will sacrifice performance for downside protection.

“Providing clients with advice and recommendations that will achieve their goals will always win long-term, regardless of the portfolio,” said My 2 cents. “Markets are irrelevant, knowing your clients and providing them comfort of mind is what is important.”

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Join the Nick Murray debate in the “Free For All” forum of the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca