🔖My Financial Advisor’s Top 5 Tips Working With Her Most Affluent Clients

What’s fascinating about the wealthy is that most of them are open to revealing their secrets, strategies, life lessons and habits all over the internet.

According to research, the wealthier one is, the less likely they are to use social media, even for marketing efforts and leveraging their brand yet they are still open about their tricks of the trade and how they got to where they are now through other outlets. The world feels a unique connection with them, able to get in touch with the richest via a snappy DM anytime.

They have nothing to hide and the world is attracted to the top 1%. Millions follow motivational Instagram pages, would pay thousands to hear Bezos speak in person and dream to be in their spot yet when it comes to practicing and applying the words of wisdom, most don’t bother.

People have this allusion that those who are worth more have irreplaceable special talents, skills, IQ and a crazy unique spirit yet in reality, they are as boring and average as the rest of us.

As someone who grew up in an immigrant household where my parents rose their way up to Wall Street and Silicon Valley through a mix of trial and error, luck, preparation, timing and networking, I’m extremely fortunate to have learned invaluable lessons from them in order to build up a precious community to help me become the best version of myself.

Although my support system has certainly propelled me, I had to do most of the work. Reputation is everything and is derived from building and spreading impact and value yourself that no one can do for you.

Overall, to have an impressive lifestyle, you would’ve had to have done something to benefit society in some way. You could argue Google which sells customer data for ads that generates them billions per year or Coke a producer of processed sugary drinks which increase the risk for diabetes, high cholesterol, obesity and a variety of other health problems aren’t progressing society but in a way they always are. As long as someone is profiting off of your business or enjoying it, for a good or bad reason, it sadly works. I wouldn’t recommended it from a legal standpoint but it is a proven method that has generated billions in pocket wealth and where a majority of my advisor’s clients wealth is derived from.

80%+ of millionaires and above are self-made and the rest either inherited their wealth or got lucky through the lottery which is the most dangerous method since the lump sum won’t last long. To become self-made and make it is a grueling painfully slow process that takes years.

This is a traditional plan immigrants tend to master best.

One of the first pointers to keep in mind to set yourself up on the right path is to realize that it’s not about how much you earn or make, it’s how much you keep.

That’s where the real secrets lie.

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Affluence 101

An affluent person in the U.S. in 2021 is considered to have a net worth of nearly $2 million. This is surprisingly less than the prior year’s net worth requirement of $2.6 million according to Schwab’s Modern Wealth Survey.

If you compare an individual under this category to a fresh college grad or an indebted entrepreneur, right away you could not tell who’s worth more and that’s a good thing because you shouldn’t flaunt your wealth or advertise yourself. Assuming they all wore the same basic Zuckerberg gray t-shirt and drive a Honda, it would be very difficult to differentiate the rich since that’s their plan.

What differentiates the rich from the rest is investment thesis, risk tolerance, perception, use of time, environment, community, downgraded image and what they focus on.

My family has been working with my advisor for a couple years now and although we were hesitant on working with one due to recurring fees, it was the best decision when my father passed. My mother and I had to transfer assets, become familiar with the process of wills, trusts, inheritance, probate, social security, retirement, Roth IRA, 529C and understand all the extra costs that come with loosing a loved one.

A funeral is a costly painful process. I would suggest setting up a whole life insurance policy plan once you have dependents which provides them a cash benefit term payout, death benefit payment and support cushion to prepare for the worst.

My father’s passing was a major learning lesson for the both of us. One, it reminded my mother and I to never be dependent on anyone and secondly, always plan for the worst, hope for the best, something our advisor, a conservative (risk tolerance term not political party) female immediately advised us upon.

One of the main reasons we chose to work with her was due to the fact that we wanted to know what our short and long term goals were, our risk tolerance, how to realistically plan and enjoy life again and seek the opportunities to enjoy the fruits of our labor.

After all, we’re so caught up in investing and letting our money work for us sometimes that we forget to live and appropriately use it!

Another selling point with our advisor is that she is a fiduciary, female and has a wide range of diverse clients. She doesn’t just work with those within our similar net worth rage or set of funds, she advises different size families, institutional clients (pension funds, insurance companies, college endowments), teenagers, retail clients, you name it. That made us even more confident and let us forget about the fees a bit more.

Out of these years working with her, one thing she’s always noted to all her clients is to NEVER EVER put all your eggs in one basket. She even advised us to not put all our funds under her management! I don’t know any brokerage that would say that and have never heard of that advice on social media!

Majority of her high-net-worth individual clients (HNWI) only invest about 50% of their net worth with her office. Just like with us, the rest of their funds are tied up in other accounts, brokerage firms, retail trading apps, hedge funds, mutual funds, banks, etc.

It’s very important to diversify because even billion trillion dollar banks can go bust any moment taking too high bets with their clients.

Just look at Bear Sterns or Lehman Brothers in ’08. They were practically the same size as the rest of the institutionalized bulge bracket banks on the street. The others just got lucky, not taking as much risk lending out faulty mortgages to bankrupt Americans!

As we’ve learned throughout history, it does itself so I would suggest to never put all your net worth in one bank, especially under one advisor cough cough Bernie Madoff.

Lastly, although advisor fees can get costly and eat into returns, realize it is a personalized decision based on a cost-benefit analysis of your time and effort since anyone can trade its just a matter of if you want to spend the time to do the research brokerages do for you.

Traditionally the fees come from either taking a percentage of AUM or charging per hour for advise. In our case, we thought it was best and most logical if the brokerage earned more when we earned more on a yearly basis with rates lowering as our funds increase up to a certain point.

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Simpler the Better

Now that we’ve set the stage for the basics on what to consider when choosing an advisor, let’s dive into the 5 nuggets of wisdom my advisor has revealed.

PS: Get ready to NOT be blown away since they are boring and so obvious most people disregard them believing they don’t work. The stock market isn’t a gambling game it’s a patient marathon!

My portfolio advisor has worked with a variety of clients. Ranging from people with a net worth of half a million to over forty billion dollars in AUM. She certainly knows what she’s up to and has gotten to know them and what their money entails really well over these years, something that clearly differentiates retail amateurs from the big guys.

How does she know her larger clients better?

The rich care a lot about how their assets are preserved and kept because that’s how they’ve kept them! You would think they spend left and right and just thrown it into the hands of an advisor yet it’s the complete opposite.

My advisor has stated numerous times her wealthiest clients are the most hands on aggressive with their funds. She insists on charging extra for all the babysitting. Any day they would rather invest than spend it.

I suppose since they are older and wiser, possibly bored, they take the time to handle their money. In addition, most affluent people are lonely. They have fake friends and just want to strike up conversation with their advisor, a sign that brings me to my first point.

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#1 Banish the Money Taboo

If you aren’t comfortable talking about money, where it came from, confess your mistakes, your plans about the future and open about it, then you are making your life harder for yourself.

Avoiding it will never help.

Money shouldn’t be a taboo and research proves families who feel threatened or anxious intentionally avoiding the money talk are more likely to be in debt and have problems down the road.

My advisor’s digital calendar meeting sessions are usually booked in blocks of 2 to 3 hours at the end of the day and early, early 5,4 am early morning assuming since the higher the net worth one has, the more open they are and ironically the more they want to spend discussing it.

I’m impressed they would spend this much time but at the same time it makes sense. Not all rich people are so busy! They just work different hours and get up 3 hours before the average Joe.

This is their baby and the more risk you take the more reward you gain or can lose it all. But remember this isn’t the same as tinkering and charting stock prices or momentum through active trading. They prefer the slow passive approach towards long-term wealth. They enjoy striking up a conversation with my advisor, something they’ve clearly excelled at to get this far in life as communication skills are a true asset in life.

#2 They Are Fearful When Others Are Greedy and Greedy When Others Are Fearful

My advisor and I stole this from the legendary investor Warren Buffett but it’s so true and applies to high net worth individuals who admire this frugal minimalist investor. High net worth individuals know the power of blocking emotions, Reddit boards, retail trader feed and meme stocks. They have a game plan and stick to it. They might not have time to read 50 financial reports like Warren every morning with a Coke, but they have their own ways to building wealth which clearly include having a full-course meal and lecture with their portfolio manager bi-weekly. Spending time on something will eventually lead you to get better at it and that’s where they choose to devote their attention. After work they don’t choose Netflix, they choose investment briefings.

#3 Risk Whatever You’re Willing to Lose

Never put all your eggs in 1 basket. Diversification is by far the best tool you can use to always stay afloat. This applies in the same way for everyone. It’s so simple but most disregard it since they are obsessed with the glam and the rich quick life to a lump sum that more often than not vanishes.

The more you risk, the more you CAN gain or LOSE.

#4 Boring Is Best

My advisor mentioned majority of her clients with holdings above ~$800m are 50+. They didn’t play any games in Vegas or gamble in the markets to get to this point. They started investing in themselves the right and painfully yet rewarding way when they were young. They know their most precious asset is time because it compounds especially in a Roth IRA and in the markets in general since the major indexes go up as individuals get wealthier, companies grow and more people participate in the market. No rich schemes or rags to riches overnight. They lived a comfortable life and built their impressive living overtime on their own and now get to enjoy it. Delay that instant gratification and your short attention span to live freely forever.

#5 The Grass Isn’t Always Greener on the Other Side

Jealousy and comparison is the theft of joy. The true wealthy understand perception is not reality and know what it means to split assets, diversify and not follow the crowd. Majority of millionaires are frugal. They own a $80 suit not $200 one and don’t drive the fancy sports cars.

The real wealthy know what it means to solidify and strengthen relationships, focus on education and utilize their precious energy and attention in the right way. The last thing you want to do to keep connections is to brag about your new Lambo or eat junk or shop all day.

Things are not always great as they seem and they have tapped into that mentality to stay ahead. It’s all a mental game with the toughest battle against yourself.

Do what no one else does now to live like no one else later. 

The affluent are open and happy to share their secrets because it’s not a zero sum game or competition. Musk has an open usable patent on all his inventions for a reason to sincerely make the world a better place.

The affluent treat investing like a curious investigation and relationship. They guard their money, status, power and assets. It’s harder than ever to identify these folks on the street and that’s exactly their goal.