The Baby in the Front Seat

“I really hope that’s a doll and not an actual baby,” I told Molly.

We were headed east on I-40 when I saw the baby’s head leaned up against the window. The van was in the lane to our left and a couple of car lengths ahead of us. There were two older kids in the back, but we just couldn’t quite tell if that was a real baby in the front seat or not.


We assumed that it was probably a doll because of the position of the head. If it was a baby, that would be a really awkward way to be holding it (as if there’s a way to hold a baby in the front seat of a minivan traveling 75 mph on the interstate that isn’t awkward).

So after an initial panic, we came to the conclusion that it was just a doll. No need to alert the authorities.

And then…it moved.

The baby’s head moved! It was now clear that this wasn’t a doll. This was a baby.

We started discussing our options. Are we supposed to alert the local gendarme? Do we just mind our own business and let these wildly irresponsible folks go about their day? What’s the protocol for this?

As we were mulling over our options, the van merged over in front of us. So I took the opportunity to pull over into the left lane and pull up beside them so that Molly could at least give them a nasty look.

As soon as we got right up beside them, Molly looked over, prepared to give her most scornful, judgmental you-can’t-possibly-be-serious scowl.

And then she started laughing hysterically.

“It’s his knee,” she said. “It’s not a baby, it’s the guy’s knee.”

Crisis averted. And we were pretty glad that we didn’t call the police to report these reprobates with an infant in the front seat.

So what’s the lesson here? The lesson is that sometimes you need to inspect the situation a little more deeply before you start jumping to conclusions.           And we see examples of that all the time in the financial world. Here’s just two of them….

1) “The market was up big but my account didn’t grow much last year!”

At first blush, this might seem problematic. But it’s important to take a step back and understand why your account didn’t grow much. Is it because it’s poorly allocated, or is the slow growth by design?

If you need that money in just a couple of years, you want it to be invested conservatively, instead of following the market. So that lack of growth should be coming with a trade-off in the form of reduced volatility or downside. Looking a little deeper will help you determine if the lack of growth is intentional, or the result of incompetence.

2) “My fees are too high—I found another advisor who will charge me less!”

Too often, people get too fixated on what fee their advisor is charging and don’t pay enough attention to what they’re actually getting in return.

Here’s a good example to illustrate the point. Suppose you’re looking for a landscaping company to take care of your yard. One company is going to charge $100/month, while the other one charges $135/month. Which one is better?

The answer seems obvious, right?

But what if we dig a little deeper and determine that the services aren’t exactly the same? The first company is going to show up once a week and mow the grass. That’s what you get for $100/month.

The second company is going to mow the grass, but they’re also going to run the edger around the driveway and the sidewalk, weed eat along the fence around the back of the house, and pick up trash by the road. They’re going to come by every week in the fall and rake leaves. They’ll re-seed in the winter and fertilize in the spring. And they’ll come by twice a year and trim the hedges.

Suddenly that $135/month fee sounds pretty good compared to the guy who’s charging $100, but only mowing the yard and nothing else.

So let’s put that in a financial context. Suppose you have an advisor who says they’ll manage your account for a 1% fee. Are they providing any other services in addition to managing that specific account?

What if somebody else is charging 1.25%, or maybe even 1.5% or 1.75%. Are those people also just managing the account? Or are they providing advice on how you should allocate your 401k? Helping you make decisions about Social Security or pensions? Helping you with cash management, long term care planning, or estate planning? Giving you tax advice?

There’s not a specific menu of services that automatically justifies a certain fee. But it’s important that you have an apples-to-apples discussion if you’re comparing one fee/advisor to another.

So before you freak out about the baby in the front seat of your portfolio, dig a little bit deeper. If it’s just a knee, there’s no need to work yourself into a lather.