Rethinking Wealth
I became a stockbroker and financial advisor twenty-six years ago. At the time, I was looking to get rich and be successful like many other people. The dot-com boom was making people millionaires, and there were stories of people picking stocks with a dartboard and making money. It was a very different time in the financial industry.
When I started as a financial advisor, we would give clients a questionnaire to determine their risk tolerance. After that, the computer would provide a list of mutual funds that fit their risk range and investment mix. Each mutual fund had different commissions depending on the company and the asset management team. Some investment firms had their own mutual funds, while others charged a fixed percentage based on the Assets Under Management model.
I had clients with a few hundred dollars invested and others with hundreds of thousands of dollars. Some had a mix of mutual funds, and others had actively managed accounts. Either way, the client was paying a fee whether the investment went up or down. I also worked with brokerage firms that had different investment models and others where the client had more control and paid lower fees or commissions.
When you are new in the business, you think about how things are supposed to work based on what you're being taught and what you see around you. As I became more experienced, I realized that a full-service investment firm wasn't always providing as much additional value as I once thought.
Wealth Management Has Changed
Wealth management has changed a lot over the years. Full-service brokerage houses still exist, but today there are also many ways to invest yourself with reduced costs and fees. Some people don't want to handle their own investments for one reason or another, so there will always be a need for full-service investment firms and financial advisors.
What has changed is the amount of information available to everyone.
Individual investors today have access to investment information, research, technology, and options that weren't as easily available when I started. I've done my own investing and advising over the years, and I've seen more people use lower-cost strategies and index funds, while others keep some money with a full-service broker and some with a discount brokerage firm.
Wealth management also needs to consider more than investments. Taxes are a major expense and factor when dealing with investments and income. Having a good accountant and tax advisor can help you understand the pros and cons of investments, dividends, income, liabilities, and real estate transactions over time. Today, we're also seeing accountants, tax advisors, attorneys, and other professionals become more involved in wealth planning.
Every person's situation is different. The important thing is to stay informed and be open to different options and opinions when considering how your money is being managed.
Knowing Where Your Money Is
Most successful people don't keep all of their money in cash. Their money may be in investments, businesses, real estate, retirement accounts, company stock, or other places where they hope it will create income or appreciate over time.
Some people have most of their money in a few stocks or in the company they have worked for for many years. If that stock has increased significantly, it can become a large part of their wealth. It can also pose a risk if too much of their financial future depends on a single investment. The more money you have and the more complicated your finances become, the more important it is to have a plan for your investments and retirement savings.
One question people should ask is whether they're getting enough value from the investment fees they're paying. Is the growth, service, or advice you're receiving worth what you're paying for it? Finance has become more complicated over the years, but we also have more information than we've ever had as investors. That doesn't mean everyone should manage their money themselves. It means we should understand what we're paying for and ask questions.
Taking More Ownership
As I've gotten older, my own approach to money has changed. I'm now focusing more on creating additional income streams and revenue, so I have more investment options and capital to use. Passive income and dividends have become more interesting to me instead of only working with existing investments and retirement accounts.
When I was younger, I had a rough relationship with working for money. Now I'm trying to take more control over my finances and make money work for me.
Part of the reason for creating Only One Life was my taking ownership and control of my life. For years, I let people or employers dictate my finances. Today, I'm taking more responsibility for my financial well-being. It's important to have mentors and people you can trust to guide and assist you where needed, but in the end, we are responsible for our own finances.
My perspective on money has also been shaped by experiences unrelated to investing.
Twenty-five years ago, I went to New York City for training with Quick & Reilly. I arrived on a rainy Monday and wanted to see the World Trade Center, but the weather wasn't good. I decided to wait because I was planning to meet my brother and a friend there later that week.
Tuesday morning was my first day of training, and September 11, 2001. Our training time had changed, so we had to get to the office earlier than originally planned. We were on the 17th floor when we heard what had happened and began watching the news. We stayed in the building until later that day and eventually made our way out of the city through Penn Station. Friends of people in our training class gave us somewhere to stay. We were very lucky not to have been hurt and to have had good people in New York help us. So many others that day were not as lucky.
That experience has stayed with me. Each year, it affects me differently. I get angry, sad, or even apathetic at times. Life took me to New York City that day, and it will stay with me for the rest of my life.
Twenty-six years ago, I entered finance wanting to get rich and be successful. Today, I still want to grow financially, but I also think much more about what money allows me to do. Money can give us freedom and more time with the people we love. Taking ownership of my finances is really about taking more ownership of my life.
I'm still learning, looking at different options, asking questions, and figuring out what makes sense for me. I don't expect everyone to approach money the same way I do. Every person's situation is different, and this is simply what I've learned from my own experience.
That's why finance will always have a place in my life. And that's why it has a place here at Only One Life.
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