Crazy enough, but I’ve been a financial planner, financial advisor, wealth advisor (the list goes on and on) for 16 years now. I’ve seen a lot over that time frame, both good and bad.
Getting into this industry in 2001 when the tech bubble was beginning to burst was quite an interesting time. I didn’t think I would see anything like it again, but then came the housing bubble of 08-09. Yet, since that time we have seen quite the run-up and one that we’re still riding to this day.
Over those years, I’ve seen a few clients do some crazy things, but I’ve also learned a lot from them as well. What I wanted to do today was reflect back on a few things that have stood out to me.
It’s pretty interesting how so many people are terrified of the word budget. To many, it is the “b” word. I’ve seen people’s skin crawl at even the mention of it.
I’m not sure what it is, but it’s rare I ever see someone embrace a budget – and stick with it. From much experience, I believe it stems from not wanting to know where their money is going. Out of sight, out of mind and everything will be fine is the mantra for many individuals. Along with that, I also believe it stems from lack of financial education.
If we actually had financial education classes for children K-12 that embraced the importance of cash flow management and having a budget, I don’t think we would have close to the amount of credit card debt we currently have in this country. I will refrain from my lack of financial education in our school system soapbox, but you can see where I’m headed.
Cash flow is king and the foundation for which all other financial decisions should be made. It’s crazy to me that people would rather be left in the dark than to know where they’re spending money and how they can better manage it.
I will continue my cash flow crusade and bring budgeting to the people. It’s a bit of a difficult habit to form, but it will completely change your financial life for the better…MUCH BETTER. Embrace the budget and your future self will thank you.
Everyone is guilty of this one, me included. For some reason, we all think our buddy, colleague, neighbor, etc. is an investment genius and their recommendations are well thought out.I hate to get back on my soapbox again, but it comes back to lack of financial education. If there were better personal finance curriculum in our school systems, then we wouldn’t be so open to our buddy’s brilliant investment ideas - that never seem to work.
We would already have a plan in place with a well-diversified portfolio of low-cost mutual funds or ETF’s. We wouldn’t have to invest in the new hottest technology company that’s bound to be the next Apple – or not.
Take your neighbors next hot investment tip with a grain of salt. Do your own research before investing. Investments in “hot stocks” should only be for a “fun money” account. That account should make up a very small part ( <10%) of your portfolio.
While it may sound like they know more than you, they probably do not. It’s more likely they heard it from someone else as well. We all played the “whisper a secret to your neighbor game” in elementary school and know how that ends. Learn from your younger self and don’t fall for it!
Well, guess what? It’s not the 80’s anymore. Financial advisors aren’t supposed to be stock brokers nor are they supposed to act like it to impress their clients. Client’s don’t care about how brilliant you think you are when it comes to picking stocks and how closely you watch the market every day.
They don’t care about all the fancy industry jargon you spout every time you talk to them. And they definitely don't understand your boring data filled newsletters you send out.
In the end, all client’s want to know is if they’re saving enough money and if it’s going to last them the rest of their life. Certainly, there’s a little more to it than that, but that’s the gist of it.
Be a financial advisor and help your client’s with their overall financial picture. This does include investing, but it also includes behavioral counseling, retirement planning, insurance, taxes, estate planning, etc. Investing is a commoditized market today (a computer can do it), so please stop trying to impress your clients with your investment knowledge.
I’m pretty sure I got back on my soapbox for that one. We better move on.
Let’s face it, it takes time to build trust and even more time when it involves personal finances. While I wish this trust could be forged overnight, it sadly cannot. It takes time to build that trust in the relationship.
While I could try to push things along at a faster pace, I always revert back to what would make me comfortable. I’m much more a believer in organic sales rather than pushy sales.
It may take a little longer, but it’s the right thing to do for the client. Some relationships may only take a few weeks while others may take a few years. It truly depends on the client and their own personality.
Relationships and trust are what my business is all about. They’re something you can’t force. If you let it happen naturally, the bond will be much stronger.
I would much rather run lower returns and then happily surprise my clients when things have performed better than expected. I could overpromise all day long, but the one year that an investment underperforms and doesn’t live up to the client’s expectations, they’re going to be looking for a new financial advisor.
When I err on the side of caution, I’m providing a safety net for my client’s. Trust me, I’ve learned that clients like safety when it comes to their investments. Also, it will make your compliance department much happier – and life is much better with a happy compliance department.
NextGen Wealth, LLC is a registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities product, service, or investment strategy. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, or attorney before implementing any strategy or recommendation discussed herein.
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