I recently finished reading The Big Short by Michael Lewis, which explores the key people and events leading up to the market crash of 2008. One of the surface issues that lead to the crash was that lending standards for mortgages were extremely loose in the mid-2000s. One of the examples of those loose standards referenced in the book was a Mexican strawberry picker in California who was making $14,000 a year, spoke no English, and was given a loan of $724,000 to buy a home! It would be easy to place the blame of the market crash on the lending standards, but the book goes on to explore an underlying issue that was the real driver of the collapse.
Simply stated, the issue was one of trust and transparency. The market had created new investment products that were tied to the housing market, but these products were complex and opaque. Many of the investment banks acted on blind faith that the housing markets would continue to soar and failed to do their proper due diligence on the mortgage-backed securities they were purchasing.
Trust and transparency are keys to any successful financial relationship. At Master’s we know that trust takes time, and we strive to create relationships with our clients that are long lasting and deep rooted. We want our clients to see us as their partners in their financial planning.
Part of transparency includes making complex products or concepts clear and simple. Although there may be many moving parts in investment products, these products can be explained in a simple and clear manner, and this is what we strive to do at Master’s. It is our job to make our clients feel comfortable in the financial products they choose and confident that their decisions will help them pursue their financial goals.
