"Your banker has no more capability of predicting the future than you do"
Nov. 15, 2011
Trevor Pavitt and Alex Arnbäck are co-founders of Passive Investing, a Geneva-based wealth adviser specializing in passive investment strategies. They have just published their new book "Heal Your Investments". In this interview ex-Private Banker Trevor Pavitt speaks about what motivated him and co-author Arnbäck to write a book that challenges the philosophies and strategies of the existing wealth management industry.
MyPrivateBanking: What motivated you to write your new book “Heal Your Investments, A Story Your Banker Will Never Tell You”?
Trevor Pavitt: The traditional retail investment thinking is really destroying peoples' hard earned savings. Investors are not aware of what really goes on because they get their information from the overcommercialized thinking promoted by financial service companies and the press. Alex and I have seen too many abuses and we felt we needed to share what we know and make it accessible so people may protect their savings.
MyPrivateBanking: In your book you point out that many private investors are stressed by their wealth. What is the source of this stress in your opinion?
Trevor Pavitt: These last few years, investors have lost far more than they would have imagined. Now that the economy and markets seem so unstable and that they really need help to navigate their portfolios, they don’t know who to speak to, or what to do. Research shows that private investors don’t trust their advisors anymore. They have understood that most advisors have a conflict of interest. They don’t know what’s waiting for them and expect the worst.
MyPrivateBanking: How can private clients “heal” their investments?
Trevor Pavitt: Mainly two easy things a private client can do: First, understand the basic mechanics of the financial industry, very easy if you keep an helicopter view and stay away from the confusing details the “professionals” like to speak about. Second, use some of the easy tricks and respect the basic rules we give in our book, such as don’t invest your money based on predictions. Your banker has no more capability of predicting the future - ie: what will go up what will go down - than you do.
MyPrivateBanking: There are already thousands upon thousands of “doctors” - i.e. advisers and bankers - out there who all claim to know the best way to run their clients’ investments. What is it that sets your “therapy” apart and why are you so sure that your way is more successful?
Trevor Pavitt: I would like here to quote a broker who wrote to us. Unfortunately he didn’t give us his name but I would like to take this opportunity to thank him. 'The book - read the “therapy” - simply describes the only asset management concept one can recommend to his own family. Incompetent advisors will ignore this book/therapy as they are ignoring all conclusions from academic studies on financial markets. Dishonest advisors will disregard the usefulness of this book/therapy as they disregard the interests of their clients. In any case, this is a starting point for a constructive and intelligent discussion with all competent and honest advisors.'
MyPrivateBanking: What are the three most important, practical things a reader should take away from your book?
Trevor Pavitt: First, understand the financial industry and its weapons. Second, learn how to use them for one’s own benefit - be the “casino” not the “gambler”. Third, enter the very select club - less than 1% of all private investors - who systematically earn above average returns
MyPrivateBanking: Why are all authors’ profits going to Amnesty International?
Trevor Pavitt: Both Alex and I, after having had fantastic careers, think it is time to share. Share our experiences and our knowledge so that people may make intelligent decisions with their money. Share with Amnesty International who is dealing with far more important issues than just money.
You can buy the book here. Readers of MyPrivateBanking can claim a special 20% discount using the code HRE5YLLP.
It is also possible to download a sample chapter of the book via our website for free. The chapter title is "The Good, the Bad and the Ugly: Advisors, Fees and Conflicts of Interest."