By Scott Ronalds

Seth Godin is a renowned author, marketer and blogger. He has great insights and observations on human behavior and the business world. In a recent blog, Hunters and Farmers, he examines the differences between the two types of individuals.

In Seth’s words, “Farmers [are those who] spend time sweating the details, worrying about the weather, making smart choices about seeds and breeding and working hard to avoid a bad crop. Hunters, on the other hand, have long periods of distracted noticing interrupted by brief moments of frenzied panic.”

He goes on to suggest that both groups have strengths and weaknesses, but they are very different from each other and they should be marketed to (and taught) in different ways. Hunters are impulsive and can change gears instantly; farmers are methodical and absorbed. Mark Cuban is a hunter. Warren Buffett is a farmer.

Godin’s key observation is that marketers often confuse the two groups. Some companies sell products designed for farmers but hope that hunters will buy them.

This is becoming very evident in our business. The key attributes of successful investors, as motherhood as they may be, are patience, discipline and long-term thinking. Investing is a practice that is not designed for hunters. A mutual fund, ETF, or any other investment product should not be an impulse buy. Investors need to do some research and hard thinking to become comfortable with a product and make sure it’s a good fit. And they should be prepared to stick with it for a while before ‘rotating the crop’.

Yet, the industry markets to hunters. Companies sell flashy short-term returns and products that are focused on the hottest trend or fad. Little heed is paid to the investment philosophy or process that is designed to produce the bumper crop over time.

The industry knows that it’s easier to sell to hunters than it is to farmers. And because marketing efforts are targeted towards the former, more farmers are putting down their hoes and taking up spears. The mentality and behavior of investors is changing. We’ve seen this in the average holding period of mutual funds, which has fallen noticeably over the past few decades; and in the increased number of products that investors own in their portfolios (which often include lots of last year’s winners, or perhaps next year’s carcasses).

But investors who take a hunting mentality will often be disappointed with their longer-term returns. There are times to act swiftly on opportunities, but those who jump from product to product and constantly change gears will do their portfolio more harm than good. Investment firms that market to hunters will also see much more volatility in their sales and redemptions, which hurts all their clients at the end of the day.

Marketing to farmers is difficult. It’s a much longer sales cycle and the rewards aren’t as instantaneous. We’re happy, nonetheless, to keep planting the seeds.