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Top Myths About Wealth Manager

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Top Myths About Financial Advisors Financial Advice is All About the Numbers Many people equate financial advice to some mathematical formula about determining what stocks, bonds, or mutual funds to invest in. Then they watch these investments and buy or sell based on how their prices rise and fall. This perception is a more accurate description of a mutual fund manager rather than a financial advisor who is managing an individual’s money. When your client is sitting across the table from you and investing for a purpose, his future depends on you as the advisor doing your job. The Human Side of Financial Advice So let’s start with the “simple” scenario of a couple who is in their early fifties and need their portfolio managed so they can retire comfortably. These numbers turn very human, and very emotional, quite fast. To begin with, how long will this couple live? Imagine being the advisor and having to look at this couple and ask in one way or another, “So, Mr. and Mrs. Jones, when will you both die? I have to understand how long the money needs to last, after all, and your life expectancy needs to be estimated.” This question used to be pretty simple years ago, when life spans were rather fixed and did not change much. Today, however, modern medicine is changing so fast that big jumps in life span are likely. That needs to be factored in, because running out of money in retirement is one of the basic concepts every advisor and investor seeks to avoid; the subject makes for an emotionally charged interaction. A related issue is the clients’ health. Having these conversations with a client can be difficult, especially if the client is also facing serious medical issues. Financial advice becomes an emotional journey because the things people use their money for are human and affect their loved ones. College Planning and Other Emotional Decisions Let us discuss a not so simple question your advisor will ask you, assuming you have children: “Where do you want your kids to go to college?” Saving money now, possibly affecting your retirement savings, is going to factor into what kind of university your children go to. How much to save, what rate of return to assume the college savings account will generate, and what financial aid programs will exist in the future, are all questions that can generate an enormity of emotions. Moreover, most couples will have strife and anxiety and argue about saving for college, which adds to emotional angst. Non-Numerical Advice Issues Are Emotional The dreaded life insurance talk. For advisors, it’s like the sex talk with their kids. Every parent dreads it and really hopes the high school guidance counselor or some documentary handles it before they have to. Advisors hate the life insurance talk because their clients resist it so much. Over 30 percent of American families do not have life insurance, according to LIMRAs 2016 Trends in Life Insurance Ownership study. Life insurance is sold—not purchased—because people hate talking about their death. It is wildly frustrating for an advisor to hammer into their client’s head that the client needs life insurance because if they die early, their family is screwed and there is nothing worse than making that mistake. Even after the heartfelt plea, the charts, and the horror stories, 30 percent of clients refuse to follow through. If the advisor does their job correctly, emotional stress from the life insurance talk should make the consumer very uncomfortable until they actually sign the contract and make the first payment. Very emotional indeed, but one of the basics. Your parents, if alive, are an emotional topic. Who will take care of them as they age? Do they have the money to have in-home care? Did they prepare for someone taking care of them? Are they going to move in with you? Are they going into a home? Will the guilt of any of these issues create incredible anxiety for you? Will this topic impact your marriage? Is the shoe on other foot, and are you the reader at an age where you do not want to burden your children? These can be very complex issues that involve law, taxes, investments, but more so, emotional issues of how to grapple with the decisions to make. Family and the Numbers Most financial planners will tell you to have between six and twelve months of living expenses saved in case of emergency. In order to accomplish that savings number, families need to make weekly and monthly decisions on what to not spend money on. That discussion is most often a highly charged issue between couples. If you have young children, that conversation becomes even more charged as demands from children become more acute and they approach their pre-teen years. The bigger discussion is to even discuss money in the first place as a family. One of the main reasons for financial illiteracy is the fact that in the United States it is taboo to discuss money among family, friends, and children. Financial advisors have become part-time psychologists in order to get people to even begin the discussion to get to the numbers. There are entire books and courses written on the topic of financial illiteracy in the United States, and it is one of the reasons advisors’ jobs have become even more needed, and more important. The very basics are unknown to so many, because of the stigma around money and what to do with it. The numbers are only a small part of financial advisors do, and for some client families, the least important part of the job. Advisors Are Slick and Rich Salespeople The Rich Fallacy As shown in other chapters, most of the nation’s financial advisors work for firms that are called “independent broker dealers,” which are firms that do not have household name recognition. These advisors have clients that are generally small. Most advisors have two hundred or fewer clients, so when doing the math, these advisors simply do not become fabulously wealthy. The narrative that follows, of course, is supposedly advisors get rich at the expense of their clients. The numbers simply do not add up. It is true that financial advisors in general make a decent living. Generally speaking, the larger the firm an advisor works for, the better they tend to do. The vast majority of financial advisors, however, do not become incredibly rich in short spans of time—as many hedge fund managers, who can make millions of dollars per year, do. Research done by noted firms such as Cerulli, FRC, and others prove this. According to the 2016 U.S. News and World Reports Best Jobs Rankings, the median salary in dollars for financial advisors was 90,530, with the lowest at 41,150 and the highest at two hundred eight thousand. Bonuses could increase the figures. Slick No More The “slick factor” was much higher thirty years ago. The industry has changed dramatically, so much so that the industry trade publications and events now are offering training to help advisors be more social and gregarious. This is an effort to combat the last twenty-year trend of advisors being so technical about wealth management in their effort to show competency that many investors no longer understand what their advisors are trying to communicate due to the use of jargon and technical investment and planning terms. Salespeople a Dying Breed Thirty years ago, nearly all financial advisors sold securities to their clients. I, for a short time, was one of them. Stockbrokers existed for more than a hundred years prior to my short stint as one, but that was the industry then. Since the 1980s, the industry has changed dramatically, and there are far fewer pure salespeople left in the industry today. Now, at FINRA firms, over 39 percent of all money invested on behalf of investors is in fee-based programs according to the 2017 Aite Group Study whereby the advisor is a representative of the FINRA firms’ Registered Investment Adviser entity. Another consulting firm, Cerulli, has stated the percentage of client money being held in advisory accounts among traditional financial advisors had risen to 42 percent at the end of 2016 from 25 percent twelve years earlier. In plain English, many advisors today are suggesting clients invest in a program not dependent on making an individual security sale, rather managing a selection of investments in mutual funds, stocks, or other investment managers for an annual flat fee, generally 1–2 percent per year. This progression coupled with the growth of financial planning or wealth management has resulted in far fewer advisors who are making individual security sales. Financial Advisors Are in the Pockets of Wall Street Firms Approximately fifty thousand advisors work for the four largest brokerage firms that are considered “Wall Street.” But there are close to eight hundred thousand financial advisors that compete with them at the other types of firms, and 1.2 million insurance professionals that are separate from both. Given these numbers, one can no longer say financial advisors are employed by Wall Street or heavily influenced by Wall Street. Further proof is the reality that financial advisors come in all shapes and sizes, belong to dozens of competing trade organizations, and directly compete against each other. These independent financial advisors are not shy about broadcasting their perceived advantages over “Wall Street” firms and the advisors that work for them. Advisors are no longer this homogenous group. Moreover, the financial products that most advisors recommend are now also less connected—or in some cases, completely unrelated to—Wall Street firms. Essentially, these days any advisor can obtain any type of investment for their client. The crowning example is Vanguard Funds, which is one of the world’s largest mutual fund companies. Anyone can invest in a Vanguard fund, and in fact, many advisors at all types of competing firms have been putting their clients’ money into Vanguard. Here is what people don’t realize: Vanguard is owned by its shareholders—a mutually owned company. If you have one thousand dollars in a Vanguard fund, you technically are one of the owners of the company. Its stock is not traded on an exchange and its funds were not available through broker-dealers for most of its history. At over three trillion dollars in assets as of July 2017, Vanguard is almost twice the size of American Funds, which is the most beloved Broker-sold mutual fund. That is an amazing shift, and compelling proof that the power and influence shift has been dramatic. “I’m Simple, so I Don’t Need an Advisor” Are You Indeed “Simple”? Very few people are truly introspective. It is very difficult—if not impossible—to have a truly objective view of yourself. If we could, there would be no reason for psychologists, psychologists, therapists, or clergy, for that matter. Financial issues are no different. Without perspective, one cannot even know if they are “simple.” The Complexity of Financial Decisions Let’s review the “simplest of simple” types of people. A young person, right out of college, and—to make this hypothetical person even “simpler”—they have no college debt. This person might say they do not need a financial advisor. No spouse, no kids, no real debt. However, there are many questions they need to answer if they want to lead a maximally fulfilled life. When do you want to retire? Do you want to have a family? Are your parents living, if so, will you be called upon to help them later in life? Do you want to own your own home? Do you want to go on at least one vacation per year? Do you have the best possible job right now and is it paying you what you need, or better yet, deserve? For each of the above six questions, there are a whole lot of potential answers that will each require different actions to take to get you financially in the right place to address them. An advisor can answer these questions—can you? Do you want to run the risk that you will get the answers correct? In reality, “simple” never exists. You Don’t Know What You Don’t Know To further answer the “simple” question, you must ask yourself another series of questions. Almost all of us do not even know what questions to ask...we literally do not know what we are ignorant of. As a twenty-something, how many have asked themselves about their family health history as it relates to personal finance? Not many, but it’s a smart question to ask, as locking in low cost disability or life insurance while young and very healthy is one of many very smart things to think about before truly significant responsibilities come to you. For your most recent job offer, did the employer offer a matching 401(k)? If so, did you calculate the dollar value over five years of that match and compare it to another job offer to see the literal dollar value of the retirement benefit? These are things that are not intuitive to consider, and when one thinks they have a straightforward circumstance, a financial professional will bring up questions that you never would have thought of yourself. Do You Have Dreams and Goals? For argument’s sake, let’s pretend that today you are indeed very simple from a financial and wealth perspective. Do you have ambitions for the next five or ten years? Do you have visions of accomplishing something that you feel is out of touch, but would love to attempt it? Many people do, and the reality is that money and wealth impact your ability to achieve those dreams and goals. You Can Do It Yourself Maybe, But... There are self-directed investors that have done very well for themselves, and this is an undeniable fact. There is a vast amount of content available, and brokerage firms like Schwab, Fidelity, and TD Ameritrade have so much content that you can make it a full-time job to read all their information to increase your expertise. But, there is not one professional advisor who has mastery over every wealth topic. The most telling story that illustrates this is when Paul Sullivan of the New York Times wrote of his meeting as a guest at the Tiger 21 club. The club is an exclusive group whose members gather regularly to discuss all things finance and wealth. Members must have ten million dollars in investable assets and the annual dues are thirty thousand dollars. Paul wrote of his surprising experience, and in short, showed up with brokerage statements in hand expecting the group to highly criticize his investment portfolio. Instead the group of multi-millionaires pointed out he had no disability insurance, spent too much money on dog walkers and an underused vacation property, and other items that one would think are fairly pedestrian. Paul’s experience points to the notion that everyone can benefit from a coach, even if you are capable at a task. Just because you can do something capably doesn’t mean that you won’t benefit from coaching. Name a professional and there is a coach behind that person making him or her better. Finally, why take the risk that there is some very beneficial aspect of wealth that you either are not aware of or miss? I’ll give you another concrete example. I know of a retired, reserve military officer—a very accomplished professional in his area of expertise. He had worked in mostly large companies his entire life, but also a few small ones. Later in his life, he hired a financial advisor to do a comprehensive financial plan. He learned he could have been getting free health care from the military insurance provider, Tri-Care. He thought that as a reservist, he was not eligible, but he was. I don’t know how much money he and his wife could have saved themselves and his employers over the years, but the savings might have been as much as twelve thousand dollars per year for him and his family. We can all do things ourselves theoretically, but is it indeed being penny-wise and pound foolish? I have another personal experience that illustrates this in another way. When I bought my first home, a small ranch house, I decided to have a second story added on and to convert it to a center-hall colonial. I wanted to save as much money as I could, so I designed the addition myself. My contractor, who had re-done my kitchen before, was going to do this major addition—but asked me to hire an architect. I resisted hiring an architect for many weeks, but the contractor kept imploring me to do so. Finally, I relented and hired an architect. My contractor was very relieved. I think the architect charged me about two thousand dollars. I do recall it not being much relative to the cost of the addition, which was six figures. What she did was added a front porch, changed the direction of the new staircase, and designed a large bay window on the back of the house. The design was simple but looked amazing. And when I compared it to what I drew up for my contractor, I felt like an idiot. Had I not finally listened to my contractor and hired an architect, I would have been living in two ranch homes stacked on top of each other. Simply hideous. And years later when I sold the house, I made a significant profit, which I can confidently say was because of my architect’s design. The house would have been livable, yes—and ugly. Hiring a professional is usually worth the expense in ways that may pleasantly surprise you.
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Debunking Common Myths About Financial Advisors

Let’s set the record straight on some widespread myths about financial planning. One of the most common misconceptions is that you need to be a millionaire to work with a financial advisor. That couldn’t be further from the truth! A qualified advisor can assist anyone, no matter their financial situation. Whether you’re just beginning to navigate personal finance or you’re deep into estate planning, they’re there to guide you.

Another common myth is that financial advice is only for the wealthy. In reality, many financial advisors offer services tailored to your unique financial goals and circumstances. It’s also worth noting that budgeting isn’t just about crunching numbers—it’s about creating a clear roadmap for your financial future.

If you’re feeling uncertain about your finances, don’t hesitate to connect with a qualified financial professional. The right advisor can provide invaluable support, helping you take control of your financial journey and secure a brighter future.

Misconceptions About Financial Planning and Advisors

Many people believe financial planning is only for the wealthy, but that couldn’t be further from the truth. Another common myth is that financial advisors are solely focused on net worth. In reality, a good financial advisor helps you tackle money challenges and prepares you for a secure future, regardless of your income or assets.

Misunderstandings about financial advisors often extend to the idea that young people don’t need a financial plan. The truth is, financial planning takes time and consistent effort, and starting early can make a significant difference. Partnering with the right advisor can help you build a personalized strategy for managing retirement accounts, investments, and long-term goals.

While the process of working with a financial advisor may seem intimidating, it’s all about finding someone who understands your aspirations. A skilled advisor can guide you toward achieving major financial milestones. Don’t let the myths stop you from taking control of your financial future.

Debunking Myths About Retirement Planning

Retirement planning is surrounded by misconceptions. A common one is that you can “figure it out as you go” without professional guidance. However, working with a knowledgeable financial advisor can help you avoid costly mistakes and gaps in your retirement plan.

Another myth is that you need significant assets to start planning for retirement. In today’s world, that’s simply not true. Even with modest resources, you can build a strategy to secure your future. The key is creating a comprehensive plan tailored to your risk tolerance, cash flow, and long-term goals.

Technology also plays a vital role in simplifying the retirement planning process. Tools can assist with monitoring your IRA, exploring life insurance options, and tracking your overall progress. A good fiduciary advisor can provide not only valuable advice but also legal guidance, helping you navigate offerings from trusted firms like Vanguard.

Why Financial Advisors Aren’t Just for the Wealthy

The belief that financial advisors are only for the rich is a persistent myth, but it’s completely untrue. Financial advisors can help anyone—no matter their financial situation—make smarter decisions about their money. Their role is to ensure you’re not spending aimlessly and to guide you toward achieving meaningful, long-term financial goals.

You don’t need a large bank account to benefit from their expertise. Advisors provide valuable insights into managing specific aspects of your finances, such as budgeting, investing, and saving for retirement. Their knowledge can be transformative, helping you make informed decisions and improve your overall financial health.

Financial advisors aren’t just for the wealthy—they’re for anyone looking to create a strategy, gain clarity, and work toward financial success.

How a Financial Plan Can Transform Your Life

Why a Strong Financial Plan Matters

A well-constructed financial plan is crucial—it’s not just about avoiding impulsive spending but about creating a stable foundation for your future. With the right plan, you can unlock substantial long-term benefits, giving you the confidence and tools to navigate the often-complicated world of personal finance.

If you’re ready to take control of your finances, now’s the time to start planning. This isn’t just an informative exercise; it’s a life-changing step. Once you’ve embraced it, you’ll feel far more secure, empowered, and prepared for what lies ahead.

How Financial Advisors Tailor Plans to Your Needs

Think of financial advisors as your personal money strategists. They take a deep dive into your goals, lifestyle, income, and spending habits to craft a financial plan uniquely suited to you. Forget cookie-cutter solutions—this is a bespoke approach, designed to fit your specific needs.

Whether you’re saving for a home, planning for retirement, or just trying to manage your finances more effectively, they’ll create a roadmap to help you achieve your objectives. The ultimate goal? To make your money work harder for you, so you can focus on living the life you want.

Understanding Financial Goals and the Role of Planning

Defining your financial goals is like setting the blueprint for your dream life. Whether it’s a luxury vacation, a new car, or financial freedom, having clear objectives sets the direction.

Once your goals are established, the next step is creating a solid plan. Budgeting and saving become the tools to turn those dreams into reality—without draining your bank account. Setting these foundations early can make a significant difference to your journey.

What to Know Before Working with a Financial Advisor

Dispelling Common Myths About Financial Advisors

There’s a common misconception that financial advisors are only for the wealthy. That couldn’t be further from the truth! Their expertise is beneficial to everyone—regardless of income level. You also don’t need to have your finances fully sorted before reaching out—advisors are there to help you build that foundation.

Another myth? That hiring a financial advisor means surrendering control of your money. Not at all! It’s a collaborative partnership—they provide expert guidance, but you remain the decision-maker. Think of them as a trusted partner helping you navigate your financial journey.

What Makes a Great Financial Advisor?

A good financial advisor isn’t just knowledgeable—they’re someone you can trust. You’re sharing some of the most personal aspects of your life, so integrity is key. They should also be excellent communicators, able to simplify complex financial jargon into clear, actionable advice. Lastly, experience matters. A seasoned professional brings valuable insights to guide you through any situation.

Breaking Down Misconceptions About Financial Services

Financial services aren’t just for the wealthy—they’re for anyone looking to improve their financial health. From budgeting advice to saving strategies, there’s value for everyone. And while some worry about high costs, many affordable and accessible options are available.

Another misconception is that you need perfect credit to seek financial guidance. That’s not true! Financial experts are ready to help individuals at any stage, regardless of their credit standing. It’s also worth noting that financial planning isn’t exclusive to older generations—it’s incredibly beneficial for young adults, too. Starting early lays the groundwork for a secure and prosperous future. Trust us—your future self will thank you!

Do You Need a Financial Advisor at a Certain Age?

Debunking Retirement Planning Myths

When it comes to retirement planning, there are plenty of misconceptions—especially around age. Many believe retirement planning is something to worry about only in your 50s. Not true! The earlier you start, the better prepared you’ll be. Delaying your planning won’t magically solve financial challenges or make them disappear.

Another common myth? Assuming a good job in your 30s means you’re set for retirement. Reality check: life is unpredictable, and financial security doesn’t happen by chance. Regardless of your age, a well-thought-out plan is essential to build a strong financial foundation. Don’t let age fool you into thinking you can afford to procrastinate.

Why Financial Planning is Always Relevant

It’s never too early—or too late—to work with a financial advisor. Whether you’re just starting your career, building wealth, or approaching retirement, partnering with a professional can make a world of difference. Advisors help you organize your finances, set goals, and craft a roadmap to achieve them, giving you clarity and confidence at any stage of life.

Whether you’re fresh out of college or counting down the days to retirement, financial planning is for everyone. The earlier you start, the stronger your financial future can be. So why not sit down with an expert to explore how they can help you make the most of your money?

Financial Priorities for Every Stage of Life

Your financial goals evolve as life progresses. In your 20s, it’s often about exploring independence—navigating that first credit card or paying off student loans. Enter your 30s, and the focus may shift to saving for a home, building an emergency fund, or starting a family.

By your 40s, retirement planning usually takes center stage, with an emphasis on growing your investments and maximizing returns. By the time you hit your 50s, the focus moves toward future-proofing your finances, ensuring you have what you need for a comfortable retirement. Each stage comes with unique priorities, and consistently revisiting and updating your financial plans is key as life unfolds.

How Financial Advisors Enhance Investment Decisions

Dispelling Common Investing Myths

There are plenty of myths surrounding investing that can hold people back. First, you don’t need a fortune to get started—small, consistent contributions can grow significantly over time. Second, investing doesn’t require genius-level expertise. A bit of research and smart guidance can go a long way.

And forget about trying to “time the market.” This common misconception leads to stress and missed opportunities. Successful investing is about consistency, patience, and sticking to your long-term goals—despite market ups and downs.

The Role of Financial Advisors in Wealth Management

Think of financial advisors as your personal money strategists. They help you make smart decisions about saving, investing, and reducing taxes, while avoiding costly mistakes. With their guidance, you can create a comprehensive strategy to grow and protect your wealth over time.

From identifying the best investment opportunities to aligning your plan with your goals, financial advisors ensure you’re equipped to navigate life’s financial challenges with confidence.

Strategies for Successful Investing with an Advisor

Working with a financial advisor can elevate your investment strategy. Start by clearly outlining your goals and risk tolerance so they understand your priorities. Don’t hesitate to ask questions—knowledge is empowering.

Lastly, regularly review your portfolio together to adapt to life changes, market shifts, or evolving goals. With the right strategy and an advisor’s expertise, you can stay on track and build a secure financial future.

Financial planning isn’t reserved for a specific age—it’s a lifelong journey. The earlier you start and the more proactive you are, the better positioned you’ll be to reach your goals and adapt to whatever life throws your way. Whether it’s building wealth or preparing for retirement, a financial advisor can be your greatest ally in achieving financial freedom.

Dispelling Financial Planning Myths

Think financial planning is only for the wealthy? Think again. One of the biggest misconceptions is that financial planning is reserved for those with hefty bank accounts. In reality, anyone—regardless of income—can benefit from creating a solid financial plan.

Another common myth is that financial planning is all about investing. While investing plays a role, it’s just one piece of the puzzle. Effective financial planning begins with understanding your expenses, setting realistic goals, and building a foundation for your financial future.

And here’s another myth worth busting: you don’t need to be a math genius to manage your finances. It’s less about complex calculations and more about staying organized, making informed choices, and applying a bit of common sense.

How to Tackle Financial Planning Myths

Want to sort fact from fiction? Start by questioning what you hear. For example, just because someone claims you need a million dollars to retire doesn’t mean it’s true for everyone. Financial needs vary based on individual circumstances, so don’t take blanket advice at face value.

Next, educate yourself. Research credible sources and consult with a financial advisor who can provide clarity and guidance tailored to your situation.

Most importantly, remember that no two financial journeys are the same. What works for someone else might not suit your unique needs. Stay informed, take a personalized approach, and trust the process.

Demystifying Financial Jargon

Financial terms often sound intimidating, but they’re simpler than they seem. For instance, “assets” are just the things you own, and “liabilities” are what you owe. Once you strip away the complexity of the language, financial concepts become much easier to grasp.

Don’t let the jargon scare you off or make you feel unqualified. Many misconceptions stem from the assumption that you need an advanced degree to understand money matters. In truth, breaking down big words into manageable ideas shows that financial planning is really about practical decision-making and smart habits.

By understanding the basics, staying curious, and focusing on your goals, you’ll find that financial planning isn’t as daunting as it first appears.

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