Financial Advisors Share What Their Richest Clients Have in Common

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“Think different.” That was one of Apple’s first advertising slogans, but it’s also applicable to the way successful people handle their money. Since before the Stone Age, our brains have been wired for short-term thinking and immediate gratification, and those tendencies can be hard to shake. But training your brain to consider the future, decide on your priorities, and check in regularly with your finances can turn things around.

We asked financial advisors across the country what their wealthiest, most successful clients have in common — and what the rest of us can learn from them.

Be engaged.

The lesson: “Some clients look at us like going to the dentist — something they need to do, instead of want to do,” says Davon Barrett, analyst at Francis Financial. But the most successful ones come on time, prepare questions in advance, and even reach out in between meetings about how small or large changes in their lives could impact their financial plan. “They’re the clients we don’t have to chase around,” says Barrett.

Most of his company’s wealthiest and most successful clients also meticulously budget, logging in to their financial accounts daily and re-categorizing expenses to make sure they have enough wiggle room in different areas. “Regardless of how much they make, they want to see where every dollar is going and what it’s going to.”

Do this: Set a daily calendar reminder to log in to your accounts and see what’s what. Sign up for alerts on your bank/credit union and credit card websites for things like low balances, unusually large transaction, payment due date reminders, and daily account balances. And make a quarterly date with yourself (and your spouse or partner, if you’ve got one) to look at your financial picture.

Use the time to think about where your money is currently going, and what you’d like to change in the future.    

 Ask when you don’t know.

The lesson: “If you’re sick with something you don’t understand, you should ask a doctor,” says Chris Chen, wealth strategist at Massachusetts-based Insights Financial Strategists. The same idea applies to your finances. And if you’re worried about coming off as a financial newbie — “It’s the opposite,” says Barrett. He and other advisors we spoke with said their most savvy and financially literate clients tend to ask the most questions.

Do this: If you don’t understand a financial term, how something works, or the details of your financial plan, then don’t hesitate to ask. And if it’s still not clear to you, ask again until it’s made clear. And if your financial advisor’s (or financial institution representative’s) responses aren’t cutting it, seek out another that’s willing to make clarity a priority and speak your language.  

Spend your priorities.

The lesson: “You can’t have it all” is the pessimist’s way of looking at things. The optimists? “You can have what you value most.” That’s how many successful people look at their money, and it’s a big reason why their wealth has grown — instead of diminished — over time.

“They did not buy the biggest or most expensive house, they did not buy the biggest or most expensive car, and they did not buy the biggest or most expensive trip,” says Bill Losey, president at Bill Losey Retirement Solutions, LLC. “[But] they are certainly not depriving themselves.” Chen agrees. He remembers one client who used to have a $50,000 Mercedes, but sold it when he realized he valued other things more than cars. He switched to a $25,000 Toyota Camry, and used the extra funds to focus on things he cared more about.

Do this: If you’re going to spend less than you make and consistently put money aside for the future, it’s vital to rank your priorities. So make a list of what you value most — do your best to keep the list short! — and allow yourself extra wiggle room in those areas.

To compensate, cut corners on categories that don’t mean as much to you. If you’re not sure what you value, start logging your spending. A week after you make each purchase, go back and write down how you feel about it, then repeat the process after a month has elapsed. The patterns will start to become clear.

Hope for the best, and prepare for the worst.

The lesson: Historically and over the long term, the markets have returned about 7 percent annually on investments. At Barrett’s company, they usually assume 5 percent growth year over year. But he says the most successful clients want to see the worst-case scenario – like a year of 1 percent growth, or even a market crash. “They know things can turn in a second,” he says. It sounds a bit frightening, but knowing all possible outcomes — and preparing for a worst-case scenario that you’ll likely never see — can lead to a feeling of financial freedom. “You would think keeping these doom-and-gloom outlooks would cause you worry, but a lot of the times it’s the opposite,” says Barrett. “It can actually give you peace of mind.”

Do this: Follow Barrett’s lead and run retirement calculations assuming the stock market retracts and takes your portfolio with it. Would you be able to make it work at your current savings rate?

But also consider the other scary what-ifs. The biggie: What if something happened to the primary earner in your household?  Do you have enough life insurance to send your kids to college, continue paying the mortgage, and achieve your other life goals?  If not, that piece of your protection portfolio needs a revamp.

Have the discipline to follow through.

The lesson: Another quality of the successful and wealthy? Discipline and follow-through — in their careers, personal lives, and finances. When it comes to that last one, discipline especially comes into play during times of market volatility. “Once they develop the plan, they stick with the plan — even when things aren’t necessarily going well for a certain period,” says Shomari Hearn, managing vice president and certified financial planner at Atlanta-based Palisades Hudson Financial Group.

Exhibit A is the 2008-2009 financial crisis: The most successful clients stuck with their original plans and maintained the same asset allocations. That way, they were able to participate in the market recovery a few years down the line. “Their portfolios were back to what they were in prior heights and have since exceeded those values,” says Hearn. “Meanwhile, those who lack that discipline to stick with the strategy — more often than not, they continued to sit on sidelines as they saw the market recover.”

Do this: Create an actual financial plan, or if you don’t feel quite comfortable, discuss it with a financial advisor. If you don’t have an advisor, you may be able to work with one aligned with your retirement plan (sometimes they’re available for free help) or a fee-only financial advisor who charges by the hour (GarrettPlanningNetwork.com is a good source). 

Then do your best to ignore your money. That’s right: Refrain from monitoring the day-to-day movements of your portfolio, instead checking in quarterly, at most. You’ll be glad you did.

With Hayden Field