If you ask ten financial advisors for a financial plan, you’ll probably get ten different responses. Only a handful of people in the world have interacted with thousands of financial advisors. I’m one of those people, and I’d like to share the most important finance tips I’ve learned from them.
Who Am I?
My name is James Pollard. I’m the founder of a company called The Advisor Coach, a marketing consultancy that helps financial advisors get more clients.
I’m also the host of a podcast called “Financial Advisor Marketing,” which is about – you guessed it – helping financial advisors improve their marketing. ?
Since starting my business, I’ve been fortunate enough to build a reasonably large audience. My personal marketing channels include an email list with tens of thousands of financial advisors to a smaller, more intimate monthly paper-and-ink newsletter.
As a result, I’ve seen the best of the best and the worst of the worst. I’ve gotten exposed to various philosophies, advice, and beliefs about money.
In doing so, I’ve seen the best of the best and the worst of the worst.
Here are the five most essential money tips I’ve ever learned.
Finance Tip 1: Wealth is what you don’t see.
When you see someone driving a $250,000 supercar, you know one thing for sure: that person HAD money in the past. Does that person still have money? No idea.
We tend to be visual creatures and assign more weight to what we see. If someone is rocking a Rolex and designer fashion, we are more likely to assume that person has wealth. Sadly, this isn’t the case.
For example, did you know that the median annual income of a luxury car owner in the United States is only $99,364? This is disheartening because it means that even an entry-level luxury vehicle starts at around half the average owner’s income. This is in stark contrast to the popular financial rule of thumb that you should spend no more than 10% of your annual income on a car.
The wealthiest person I know drives an old Ford F-150 pickup truck. And, I’ve heard many financial advisors tell similar stories. For example, their most affluent clients tend to drive Toyotas, Hondas, and Jeeps.
Real wealth tends to be invisible. We can drive by houses and see the cars in the driveway. But, we can’t see brokerage statements or tax returns. Don’t let the bling fool you.
Finance Tip 2: Saving money is sexy, but making money is the workhorse.
Personal finance articles love telling you how to cut expenses and whittle down your budget, but this is only a tiny part of the equation.
It might seem like blasphemy to the “personal finance” crowd, but I don’t even use a budget.
Never have, and probably never will.
It’s not that I don’t think budgets aren’t helpful. They are. It’s just that you can only be so frugal.
One popular example involves a daily latte habit. At five bucks a day, it can add up to a king’s ransom over time, right?
But why not figure out a way to make an extra ten dollars per day? Then, you can have your latte and save the five bucks.
Because opportunity doesn’t lie in budgeting and cost-cutting, some people spend so much time trying to save money that they forget about increasing their income.
The best financial advisors I’ve encountered emphasize both. They tell their clients to strive for a higher income while saving money and enjoying life. A great piece of advice is to save 50% of every pay raise. By doing that, you will not only save money, but you will also give yourself some room to enjoy life.
Finance Tip 3: Conservative estimates can save your butt.
According to a 2018 Life Is Good Optimism and Positivity Survey, 85% of Americans consider themselves optimists. However, financial planning and optimism are a dangerous combination. A good rule of thumb is to expect the best but plan for the worst.
For instance, your retirement spending is NOT something you want to get wrong. If you conservatively estimate that you’ll spend $3,000 per month, only to realize you can’t live on less than $4,000 per month, your plans will have to get altered for the worse. A much better approach is to be as conservative. List every expense you can think of and add an even bigger buffer than historical rates of inflation.
This advice has helped me in many areas, including my business. When hiring team members, I budget more money than necessary. When drafting out projects, I give myself more time than I think I’ll need. And when I’m trying something new, I tell myself it will be more difficult than expected.
Related read: How to Ensure Financial Security
Finance Tip 4: Dogma is dangerous.
Dogma is everywhere in the personal finance world.
Some people will tell you that you should invest all your money in an index fund. Other people say whole life insurance is the best thing since sliced bread. Others will dig in their heels and scream that real estate is the way to go.
Blindly following any one strategy is stupid and dangerous. For example, I’ve lost count of how many people I’ve seen who invest far beyond their risk capacity because they’re following some “expert’s” teachings. I’ve also lost count of how many people have missed out on potential tax savings, gains, and portfolio efficiency because they’ve glued their eyes shut.
Mark Twain once quipped, “To a man with a hammer, everything looks like a nail.” You want to make sure you have many tools in your toolbox, not just a hammer.
Finance Tip 5: Personal finance truly is personal.
Personal finance articles love clickbait titles like “10 Reasons You Should NEVER Buy A Home (Reason 4 Will Shock You)” because they get clicks and engagement. However, the best personal finance articles should have titles like “Should You Buy Or Rent? We Have No Idea Because It’s Unique To Your Situation”.
The best financial advisors will examine your situation and craft a plan that’s right for you. I consider this to be my most important money tip, and it’s closely related to avoiding dogma but unique enough to warrant its own tip.
Examine your spending habits. Your savings habits. Your investing habits. You may be surprised at what you find, and I promise that your findings will be different from what everyone else finds. Until you know your situation inside and out, it will be difficult for you to be more successful with your money.
Knowing yourself is a never-ending process. People’s goals and desires change over time, which means there is no such thing as a “set it and forget it” money plan.
I hope that helps you become better with your money. I wish you nothing but the best.
2 thoughts on “5 Best Personal Finance Tips From The Man Who Helps Financial Advisors”
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