Tue. Oct 26th, 2021

By Anonymous Investment Professional, guest contributor

My preference is anonymity, so let me provide you with a high-level history. I have spent my entire career as an investment professional and have learned by doing what I call “financial architecture design”. This is an investment approach with the return on investment of the beneficiary, net of friction costs (taxes, liabilities, commissions, etc.) as the main axis. In addition to a master’s degree in finance, I have allocated capital in virtually every asset class on my own behalf and on behalf of others. I have advised a small group of individuals and families who guarded more than $ 1 billion in assets, from generational planning, financial modeling, the creation and design of family offices, charitable giving, and capital allocation. . In some cases, experienced CPAs and attorneys call me to discuss ideas and brainstorm about other clients ’situations.

What you need to know about financial advisors

All of this, this is what I would like to be able to incorporate into all people who are rich or wealthy:

# 1 Your advisors are all salespeople

“Show me the incentive and I’ll show you the result.” – Charlie Munger

Your advisors are salespeople. I will repeat it again, your advisors (CPA, lawyers, financial advisor, etc.) are ALL sellers. All of them. Your CPA, your financial advisor, your lawyer, even someone like me when you ask me this unique question at a dinner party … we are selling you or we will sell you something now or in the future. I know, I know, your _______ is different. Are not. They receive a fee when you give them some form of capital and their job is ultimately to convince you to do so (i.e. a salesperson). I am sure all your friends are such because you are very nice to be around. But what I see, seeing how advisors work, these advisors are put in your orbit (and others like you). Your school, your church, your club, your pool, your dinner. Good actors and bad actors make friends with you and would ultimately enjoy selling you their services. It is called relational selling and most medical professionals are blind to it, as it is not the practice of sellers or their own businesses. Listen to me loud and clear, this is not always bad. Just keep in mind. Keep this in mind when evaluating your services. Please note that this is a business relationship. Unless they have a differentiated business model, they receive a commission, usually a residual commission on the asset base or infrastructure created, to allocate your resources.

# 2 You need them

“When a person with money meets an experienced person, the person with experience ends up with money and the person with money ends up with experience.” – Harvey Mackay

You need them. You need all of the above. You need good advisors. You created your wealth by doing X. It is very unlikely that it will translate into you being able to grow and protect your wealth by managing your finances without help. The above critical word is a GOOD advisor. I know of a CPA who received a call from a client doctor. The doctor asked him something like this: “Hey CPA, my neighbor (who is also a surgeon) has just met with his CPA and is making some changes. They are doing the following …”. He then proceeded to step on a lot of complex financial machinations that his financial advisor and CPA were designing and asked “… Should I do the same? I keep so much, if not more than him.” This CPA knew, without to be told, who designed the plan for the neighbor and said very simply that it was not necessary and what it would cost his neighbor to keep all this financial engineering against his benefit.Complexity is not always the best or the right , so just because your advisor is taking the details of a complex trust system, or whatever, doesn’t mean they’re the best advisor for your situation, always ask, the more experienced you are. advisor, better.They usually don’t need new business, so they don’t need to be aggressive in representing their potential value to a client.

# 3 Ask the right questions

“If the only tool you have is a hammer, you tend to treat everything like it’s a nail.” – Abraham Maslow

Advisors are paid to think of you inside the box that is their job and only when they are in front, because they don’t think of you as much as you think of yourself. You have to learn to ask the right questions … or you will never get their best advice. Advisors have hundreds of clients. One of the best advisors I know tells new clients: “I am a mirror. If you are aggressive, I can be aggressive. If you want to be passive, I can be passive ”. This is a fantastic and honest approach. If someone turns to a financial advisor and says, “Hey, I read about a Roth IRA from the back door to The White Coat Investor. What do you think? “I suspect that most, if not all, of the advisers in any term have heard of it and probably did. Now, why didn’t that adviser call you and advise you to implement it? in my experience, a small minority does this part and exposes new ideas to all the right clientele.It is simply a cost-benefit function of time.Ask yourself, how much time do doctors spend calling all their patients to suggest new health tips and wait for them to come up with the right symptom or problem?

“Never miss a good opportunity to shut up.” – Will Rogers

So, with that, I would encourage you to do so

  1. Do your homework when someone sells you something
  2. Get second opinions, especially when adding complexity and
  3. Remember that your advisor doesn’t always have the full picture (it’s usually your fault), so ask the right questions.

Do you agree? What other critical details do you recommend people know about financial advisors? Comment below!

[Editor’s Note: This article was submitted and approved according to our Guest Post Policy. We have no financial relationship.]

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