On Financial Advisors
Financial advisors are a necessity for almost all folks with wealth. As a philanthropic advisor and money coach, I hear a lot of secondhand information folks have received from their financial advisors.
And quite frankly, some of it is super frustrating to hear.
Does this mean that all financial advisors are terrible? Definitely not.
But these themes happen enough that you should be thinking about it when you go into these meetings. It’s good to understand where they are coming from, what their goals are, and what questions you want to ask.
1. It’s your money.
First and foremost, the money that is being managed belongs to you. I can’t tell you how many times I hear “well, my financial advisor said I can’t” or “they don’t want me to do x y or z.”
It’s good to hear their perspective, but in the end the decisions are yours to make.
If you want to invest in B-corps or impact investments, you can do that. If you don’t want your money to be invested in fossil fuels or the NRA, you can do that. If you want to give away a ton of money to charity, you can do that.
IT. IS. YOUR. MONEY.
A financial advisor has a fiduciary responsibility to help you grow and preserve your wealth. So that is what they are going to advise you to do. Is that your ultimate goal too? If not, you’re going to have to push back and help them understand your actual goals.
2. A downturn in the stock market is normal, not a time for panic. It’s cyclical, it can’t always be on it’s way up.
Here’s what I see: When the stock market is going up, folks can go about their daily business, and believe all is wonderful in the world. But when it starts to go down, the panic sets in. We can no longer use this money, we must conserve everything so it doesn’t drop below whatever number we’ve arbitrarily set as the “new bottom line.”
Scarcity mentality is a real thing, and something we all go through in our lives. When we get into this place, it’s hard to see past what we need to survive. The “what ifs” dominate our thinking, and the idea of giving money away feels impossible.
Unfortunately, I often find that financial advisors are perpetuating this scarcity mentality that one needs to hold onto whatever they have, and panic anytime the stock market goes down.
I’ve seen this from folks with $400,000 in savings, and from people with $15 million in the bank. Either way, financial advisors tell us that “It can’t drop below this bottom line. We can’t give away money, we should wait on that big purchase or trip.”
Look, the stock market is a volatile place. Prices go up and down regularly, and there is a level of risk involved. We have to be okay with both the increases and decreases in the market. (I’m not saying this is easy, just saying that we each need to work on it!)
3. If we are genuinely interested in fixing wealth inequality in this country, wealthy people need to talk about spending down.
That arbitrary bottom line of not tapping into the principal balance is just that: ARBITRARY.
If you agree that we are in a state of extreme wealth inequality, and also understand that you are one of the better-off ones, you’re going to have to share some of that abundance. Who am I talking to? Generally speaking, if your net wealth is more than a million dollars (that’s all your assets added up, minus your debts), you are in the Top 10% of wealth. (More data here)
We can’t lift up those on the bottom 90% of the spectrum without handing over some of the power that has been accumulated at the top.
In the end
Yes, you’re probably going to need to work with a financial advisor at some point. And they are going to have a lot of great ideas and options for you to grow, protect, and preserve your wealth. But if you want to fix a broken system of runaway capitalism, you’re going to need to push back and educate your advisor. Or find a new one.
Questions on how to get there or who to hire? Get at me on Instagram.
