Over the course of my career as a financial advisor, I’ve discovered a lot of misconceptions (or “myths”) in the financial industry. One of the greatest, and perhaps most common myths is the belief that people with large portfolios have an innate understanding of the ins and outs of the financial world. A meeting with a successful and “affluent” businessman shattered this misconception for me. I wanted to share this story with you because I think there’s so much to be learned from it.
The Illusion of Financial Mastery
“Joe” was an incredibly successful businessman, who owned, operated, and sold a number of successful businesses in his lifetime. He set an appointment with me at the direction of his estate planning attorney. They were working on some complex planning to minimize estate taxes that required the assistance of a financial advisor.
I will admit to feeling some degree of nervousness as I prepared to meet with Joe that day. The very nature of the appointment suggested to me that Joe had a large portfolio and, given his success in business, I assessed that he was clearly a highly intelligent man. All of those assumptions were true. But the assumption I made next was absolutely wrong. Since he was an intelligent man with a large portfolio, I made the leap to assume that he must know a lot about investing.
We were probably 30 minutes into our meeting. I was laying out the details of my well constructed plan for him. (He was an investment guru so I was sure to impress him with details and impressive financial jargon, right?) After my fantastic presentation, I asked him what questions he might have. Expecting this powerful man to grill me, I felt prepared for whatever complex questions he might throw at me.
I was wrong.
I looked expectantly at Joe but he looked disappointed… maybe even sad!? A momentary surge of panic hit me before he said sounding defeated, “Richelle, I have to be honest with you. I have absolutely no idea what you’re talking about.”
Joe explained to me that he was an expert in his craft. In his early years of business he’d struggled, but once the money started flowing in, it came fast. He hired professionals to help him invest his money and attorneys to help him structure his wealth. Joe confided in me that although he was undeniably successful, he felt a bit like a fraud. He said “everyone assumes I know what I’m doing, but I have no idea what any of you are talking about. I just nod and go along so no one thinks I’m stupid.”
The Societal Pressure to Appear “Financially Savvy”
Status and Image
Somehow we all assume that financial knowledge goes hand in hand with being successful and smart. Even Joe himself assumed it! Because of this, we tend to feel compelled to project this image of expertise so that we don’t look dumb. This pressure is amplified because society places such a high value on material wealth and financial achievement.
Fear of Judgement
One of the biggest fears I see in people as it pertains to money is the fear of being judged. People fear being judged by others for not having enough money, for having TOO MUCH money, for the ways they choose to SPEND money, and for admitting that they just don’t know that much about money. No one wants to “fess up” to something that could bring the judgment of others down on them.
The Power of Delegation
My heart broke for Joe that day in my office. In spite of being a successful and respected businessman, for years he felt shame for his lack of understanding when it came to investing. He felt pressure to keep up an act so that he wouldn’t seem “dumb”. THAT is a tragedy.
But the truth is, Joe was WAY smarter than he was giving himself credit for.
Joe spent his time on things that he was really good at! He delegated the legal and financial tasks (that he knew he needed, but had no interest in) to professionals that he trusted. This gave Joe way more time and mental energy to do what he was good at. He was freed up to make even more money!
We all have strengths and expertise in certain areas. Spending time on the things that we’re good at and delegating where we lack knowledge (or interest) is a BRILLIANT strategy.
Shame is the fatal flaw.
I am a financial advisor. My dad taught me how to change my oil when I got a car, but I have never once since changed my own oil. All that I know about cars is what’s required in order to drive one. When I take my car to the shop, I don’t feel one ounce of shame that I don’t know the details of how my car works.
The big difference here is that the mechanic doesn’t expect that just because I drive a nice car, I must know a lot about cars. Society doesn’t expect me to know how my car works either. I don’t have to be ashamed for not knowing. I don’t feel pressured to fix the problem on my own, or research things before I go in so that it appears I know what I’m talking about. Because of this, I feel free to confess my lack of knowledge to the mechanic and the mechanic is free to speak in a language I understand.
This is how it’s supposed to work! Focus on what you’re good at. Where you lack knowledge or interest, delegate. Don’t be ashamed of not knowing it all. Be honest about your level of understanding and work with people who communicate well with you.
Challenging the Stereotype
My encounter with Joe taught me a valuable lesson about the myth of wealth and financial expertise. It shattered my assumption that the size of your portfolio is directly correlated to your inherent understanding of complex financial concepts. Instead, it emphasized the importance of recognizing your strengths, delegating tasks to experts, and focusing on what you are truly good at.
I hope that by sharing this story, there’s a shift in your perspective, too. Don’t be ashamed by your lack of financial knowledge. Put distance between you and people you feel judgement from. Prioritize the things you are great at and seek guidance from professionals when you need it.
At Impact Wealth Management, we work hard to create an environment where you can feel free to share your stories without the fear of judgement. We’ve long since rejected the stereo-type that just because you have a big portfolio, you must be a financial guru. We are firm believers that the more we know you, the better we can serve you. Transparency and clear communication are at the center of all we do. If you’re looking for a place where you can share your true self… your successes and failures, your dreams and goals, we’re here for it. We are committed to making sure you are seen and heard. Feeling confident in the partnership you have with your financial advisor is so important. That’s why we work hard to communicate in a way that is easy to understand.
We would be honored to visit with you!
Impact Wealth Management LLC is a fee-only Registered Investment Advisor (RIA). We are based in beautiful Sioux Falls, SD and regulated by the State of South Dakota. We changed the name and some details of this story to protect privacy.