Summertime brings thoughts of vacation and leisure activities for financial advisors and their clients. But it might not occur to financial advisors for wealthier clients—especially individuals who are highly driven and self-made professionals—that summertime frequently brings an internal struggle over whether to sacrifice their quality of life out of devotion to fiscal responsibility.
So the thinking goes, if the first generation “millionaires next door” in the $2 million to $20 million net worth range adhered to clichés such as “stop and smell the flowers” and “money can’t buy you happiness,” how would these people have gotten to where they currently are in life now?
But the truth is that successful, highly motivated individuals such as these are less at risk of losing their ambition than they are of losing their way due to poor decision-making.
There is an opportunity for financial advisors who can evolve towards a democratized family office model that aligns the high touch solutions that such clients need, without all of the overhead and structural costs that come with the traditional family office space, to drive significant value in the lives of these individuals and their loved ones.
The Money Myth
One of the biggest causes of poor decision-making for ambitious clients is buying into the money myth. Because the high-net-worth advisors for this segment of the wealth management space are ideally both strategic consultants and personal confidantes, part of the job involves dispelling that myth for clients.
Most high-net-worth advisors have seen the money myth in action. Clients who believe there’s some fictitious dollar amount they can achieve that will grant them everlasting happiness may torture themselves with grueling workloads or engage in risky investments in hopes of getting there. These clients may cast aside friendships and family connections in single-minded pursuit of promotions or raises. Other clients have gambled with market-timing or high-risk investments to hit that magic number.
What they don’t realize is that real wealth and happiness comes from fulfilling their unique dreams and goals. As hard as it might be for the financial advice industry to accept, advisors who knowingly allow their clients to remain trapped by the money myth are not doing all they can to help clients lead better, richer and fuller lives.
Needs And Wants
Showing your clients how to break free of the money myth demands that you get real with them about distinguishing their needs from their wants, so they can strike a balance. This necessarily involves discussing numbers—lots of numbers.