Wealth Management Tips

In my last post I talked about the young millionaires, many 35 and younger, and the hidden risks of not seeking financial advice; opting instead for a do-it-yourself approach.  To the credit of this budding wealth creator crowd, the financial services industry has been big, slow, and expensive to work with, and as the next generation of wealth creators, you are demanding something better. If this is you, then what are the telltale signs of financial advice that can add value to your life AND be worth paying for? Here’s your grading guide:
  1. Access to information about subjects you care about and that can be consumed easily and quickly.  This would mean electronic newsletters, blogs, videos that address areas of need and that are in short bit sized nuggets.  The ability to create thought leadership that is timely and interesting.
  2. Information that is focused on you.  Valuable opinions and information about subjects that can improve your life instead of how important and successful the advisor or investment company is.
  3. Interested in finding and interacting in the places you like to be, when you want to.  This would suggest communicating with you in ways you enjoy, whether that be through twitter, email, Skype, and questions and comments via blogs.
  4. Transparent communication.  Do you really understand what they do, who they are, and why it matters?  If value isn’t communicated effectively then I would argue it isn’t present.
  5. Value that can be experienced in every interaction.  A clear willingness to help you get where you need to go, and not only if you buy something or sign a contract. If this happens, and you see tangible progress towards your goals, the cost will become less and less relevant.

Next-gen wealth creators (Gen X and Y), many in the technology industry, are opting for more self-directed financial advice than previous generations did. A recent survey done by Spectrem Group, the Chicago based research firm that focuses on the affluent and retirement markets, found that millionaires ages 45 and less were not as interested in seeking the advice of financial advisors, and felt it was too expensive; the younger the age (especially the group under 35) the stronger the belief. While this is concerning for the investment business as a whole, I believe it’s equally as dangerous for the next-gen wealth creators and here’s why:

Guest post written by Heather Tuininga, Advisor It’s that time of year when our mailboxes are full of letters from charities who are doing good work in our community and around the world.  They appeal to our hearts, our conscience and our wallets, with hopes that we care about their cause and still have room for another charitable contribution before the end of the year (to improve our tax situation). As you read through the deluge of appeals, do any of the following questions come up for you?
  1. Do we want to give?
  2. How do we decide which organizations to fund?
  3. How do we know if they are using our funds wisely?
  4. Are there other organizations/people that need our funds more, but can’t afford to send us a fancy end-of-year appeal letter?  If so, how do we find them?
  5. Am I giving out of guilt or joy?
As I sift through the letters, I find myself thankful that my husband and I put together a “generosity road map” back in January.  This annual plan enables us to direct our giving funds to the causes and people we care about all year, therefore alleviating any guilt or panic in December when the appeals start arriving and our financial picture/tax situation comes into clearer view.  (If John invites me back, I’ll share more on how to develop a generosity road map in a future blog post.)

Each one of us has weaknesses to accompany our strengths, and blind spots to offset our well-honed skills and abilities.  Wealth creators are no different here, and in my experience the missteps often fall into two categories: Not planning, or not planning effectively.  Here is a list of the top 10 foolish mistakes that wealth creators make: Not planning:  It’s painful, it’s not a priority, it’s not exciting.  It’s the “ostrich” approach (head in the sand)!  “Not planning” can sound like… 1.  “Why plan? It seems like I have plenty of money.” It’s common for people to underestimate the amount of assets required to create financial independence. Overspending is a risk at all wealth strata, especially in the U.S.  Lifestyle costs keep increasing over time without any restraints, and this can rapidly deplete your resource safety net. This has been especially pronounced during the financial market declines we have witnessed during the past decade. So, be aware of lifestyle costs and choices, and know what level of spending your wealth supports. 2.  “I don’t have wealth management needs because I don’t have liquidity.” This is the other side of the coin, and it is just not true, plain and simple.  Yes, you need liquidity at some point to pay for lifestyle and to enjoy your life, but many of the same planning issues need to be addressed regardless of whether you have a certain level of liquid assets.  Wealth creators, whether liquid or illiquid, need thoughtful wealth management.