Family And The Numbers
Most financial planners will tell you to have between six and 12 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.
2. Advisors Are Slick And Rich Salespeople
The Rich Fallacy
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 200 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 208,000. Bonuses could increase the figures.
Slick No More