McFinance: Fast Food Investing

August 25, 2020

                It’s 6:30 on a Tuesday night and you are already ready for this week to be over. Your stomach grumbles to remind you that you have not eaten since breakfast. At home, you have a pantry full of groceries and healthy foods to cook with. However, you are tired and look for any easy option. That is about the time that you find yourself in the McDonalds drive thru. Oh McDonalds, the restaurant that no one actually admits to frequenting. The very symbol of processed food at the cheapest price possible. Actually, “food” might be an overstatement when considering the products of Mickey D’s and other chains like it. Yet, the home of Ronald McDonald and the Big Mac still rakes in hundreds of millions of dollars a year.

                Why is it that McDonalds is successful all over the world when it is widely agreed that the food they serve is largely unhealthy for you? We know that there are better, healthier options so why do we keep going back? It’s pretty simple really: convenience. McDonalds was really the first fast food chain to master convenience on a large scale in the food service space. Couple the convenience of the drive thru lane with the low prices of innovations like the dollar menu and you have a recipe for success!

                Even though the product of McDonalds is vastly inferior to a healthy home cooked meal, consumers still flock to the golden arches for their low prices and quick service. Fast food solves the problem of hunger in the short term by ceasing the growling of your stomach in short order. Long term, frequently eating fast food can lead to a host of health issues that one will likely come to regret in later life. But in the moment, it solves the problem with instant gratification.

                Many products and services are seeing similar shifts in consumer behavior. The world is constantly searching for better, cheaper, faster alternatives to the status quo. In some ways this is a good thing as it has led to more efficient ways of doing things. Amazon is a perfect example of taking an industry (retail) and making it cheaper, faster, and arguably better. But what about the financial advice industry? Has it been helped or hindered but this push for convenience and lower prices? Is it more Amazon or McDonalds?


The Dollar Menu

                Fast food is well known not only for its speed and ease of access but also, its rock bottom pricing. McDonald’s introduced its “dollar menu” in the early 2000s and ever since the fast food industry has been in a fierce price war. Unsurprisingly, this strategy has found its way into the world of financial advice. Although, advice is certainly a strong word when considering the bare bones approach to investing espoused by online investing platforms.

                Financial services firms have also been engaged in a vicious battle over who can charge the least in commissions. In some cases, this has resulted in commissions being driven to zero by firms like Charles Schwab, TD Ameritrade, Robinhood and others. These companies offer slick online platforms and do it yourself tools. If you are investment savvy and have a certain knowledge of the industry, then any one of these options could work for you. However, for the vast majority, using one of these “dollar menu services” amounts to ordering chicken nuggets when what you really need is homemade Sunday dinner. Cheap and easy is great but if it does not provide the guidance that you need then is far more detrimental to your finances than paying someone for expert advice.


The Drive Thru

                I clearly remember ordering at the drive thru of “Get-Em-N- Go” in Grand Rapids way back in the day (any of those still around?). That was probably my first drive through experience and was usually the meal that followed a day at the park or the beach when I was young. Of course, this was because it was quick and easy for my parents after a long day. Going through the drive thru doesn’t take any meal prep and is certainly faster than cooking a big dinner. However, faster certainly does not equal better and a home cooked meal is definitely better than fast food burgers.

                Much in the same way, the financial technology companies of today promote the convenience of their platforms. They present to the public, polished websites and shiny mobile apps that scream speed and cutting edge. After all, why would you want to sit with a stuck-up financial advisor and have a boring conversation about your budget needs when you could just trade stocks on your phone for free! Then again, what are you really accomplishing? Are you making wise investment decisions and developing a well thought out plan for your future? Or are you just cruising through the financial drive thru lane to satisfy your need to feel like you are on top of things? I would argue the latter.


An Unhealthy Diet

                By now, you probably have the impression of me that I am far too health conscious (or worse yet, pretentious) to eat fast food. Unfortunately, that could not be farther from the truth although my wife and I prefer Chick-Fil-A to the burger joints. But I also understand that if I am to stay healthy then I need to limit the amount of fast food I eat and continue to exercise and stay in shape.

                I have worked with several clients in the past who have informed me that they have a small online account that they invest themselves more for fun than anything else. If you have the financial means, then I have no problem with that! If you are not reckless and reserve the majority of your funds for serious financial planning, then this can be a fine hobby. However, if you slack off in your financial fitness and overindulge in careless trading, you are likely to find yourself in a difficult financial situation.



                In many ways, financial services have been helped by convenience and competitive pricing. It has opened the door to financial freedom for a great many who did not have that option before. However, it has also been detrimental to the end product by discouraging those same people from seeking financial advice and instead going it alone.

                Personally, I believe that as an advisor to my clients, it is important to embrace the technology that saves us and our client’s time and money. I also believe that it is important to provide value to my client’s above and beyond what they would expect from a fast food restaurant. Superior service without the steakhouse prices. Hey, that’s pretty catchy! Maybe that should be our new tag line?