Bond Yields are Low. So do you want the Truth?

There are two basic approaches. There is the honest approach, and there is the predatory approach. You can pick which one you want.

We are all acquainted with the fact that bond yields are low right now, and this can be frustrating. Low yields means less income from the bond portion of your portfolio.

So what do you do? 

I was treated to a presentation recently from William Bernstein. Another advisor in the audience asked this question of him. How do we help clients navigate this low interest rate environment?

His answer (which is also my approach) — to be brutally honest and straightforward with clients. We are in a low interest rate environment, and there is nothing you can do about it. Sometimes you just have to accept what the market gives you.

Or the other approach

There is another way to handle this low interest rate environment. You can use the investor’s frustration as a selling tool. You can fabricate a story that you have the “tools” to obtain higher income at less risk than the overall bond market.

It is totally dishonest, but it sure does sound good to the investor that is frustrated with their bond holdings. And it definatly sounds a lot better than William Bernstein telling you that there is nothing you can do — just accept the low yields for the moment.

Of course, the promise of better returns with less risk is questionable at best – and dishonest at worst. Unfortunately most investors aren’t concerned with getting the truth from their money managers. They just want the money managers to sound good.

Here is one such ad from Blackrock (click here)

So if you want your money managers to “sound nice,” go work with Blackrock. If you want honesty and long term results for you and your family, work with a firm like Foster Wealth or William Bernstein. It’s your choice.

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