Is Your Financial Advisor Broke?

Business man showing his empty pocketsOr maybe I should say, “Does your Financial Advisor practice what they preach?” I thought about this after a conversation with a friend whose brother is a financial advisor. He jokingly made a comment about how his brother has a pretty big practice, but he is actually broke. I probed a little to see what he meant and he explained that on the outside he looks the part. He has a nice car, nice wardrobe, great looking life on Facebook, but what that looked like behind closed doors was entirely different. He is living pay check to pay check, has no budget, is underfunded for retirement, and has too much debt. If these qualities were listed on your advisor’s resume would you still work with them?

I was 21 the first time someone told me, “fake it till you make it.” What a load of garbage! Unfortunately at 21, my brain didn’t work the way it does now and had I not recently read a book that warned me against this type of thought, I would have probably fell into the trap of trying to fund the lifestyle that made me look like I knew what I was doing when really I was going broke.

Now let me be clear – those young advisors that “fake it till they make it” aren’t doing it just because they want a luxury lifestyle. They are doing it because that’s what you want to see. If your advisor showed up to a meeting in a junky old car what would you think? Our culture celebrates the quantity of your wealth instead of the proper use of that wealth, and because of that, many people, including financial advisors are going broke.

There’s always two sides to any story, but I am going to address the fault on the financial advisor’s side. I am not making a blanket statement that says you can’t be in debt and have an underfunded retirement account and be a financial advisor. What I am saying is if a financial advisor has money problems, and that advisor is not following the same advice he gives his clients, then there is a problem. I encourage each of you to ask your financial advisor, “What is your current debt status and what is your plan?” Don’t ask them details. That may be none of your business, but at least know where they stand generally and do they have a plan to improve? You wouldn’t take fitness advice from someone who is out of shape, so don’t take financial advice from a financial advisor who is broke and unwilling to follow his own advice.