Is now a good time to invest? Ask a wealth manager this question and they’ll turn on the charm. Invest your money with them and anything is possible. Meanwhile, trustworthy financial planners will utter the same three words: “I don’t know”.
For those not in the know, wealth managers are very different from financial planners. While a wealth manager specialises in managing assets, financial planners focus on the whole picture: we use our expertise in taxes, budgeting, pensions and investments to create an overarching strategy for your finances. Working with us puts you in control of your finances, providing you with clarity and confidence in your financial future.
A wealth manager provides one part of the puzzle, but their approach is very different. A wealth manager will sell you the illusion that markets are predictable. A financial planner will teach you how to harness market chaos through following a process... a financial plan.
New clients are often surprised when I admit there are limits to human knowledge. They hired me for certainty. They want to know exactly what will happen in the market and when.
Unfortunately, I don’t have a crystal ball allowing me to see into the future. Despite wealth managers’ confidence and charisma, neither do they.
The wealth management industry is built on assurance, technical jargon, and complex predictions — unfortunately, such bold promises and aspirations don’t always materialise.
If you began investing in the last 2-3 years, your portfolio probably doesn’t look particularly inspiring right now. Last year in particular was an absolute stinker!
You may be wondering if you made the right decision. You can find yourself lying awake at night, wishing you’d invested less or poured your money into property instead.
If you made your investments based on advice from a financial planner, you might even be pointing the finger at them. “You’re supposed to be an expert! Why have I lost money?”
If you’ve hired a wealth manager and they gave you unrealistic expectations, volatility can be even harder to come to terms with.
The stock market consists of a random sequence of events with billions of micro movements that we can’t possibly predict, but when a wealth manager says they know what will happen, people believe it. It’s easier to pull the wool over people’s eyes if they’re a novice.
This won’t be what you want to hear, but when you invest in the stock market, there are no guarantees — especially not in the short term. But when we look at its performance over the long term, it’s easy to see its benefits. $100 placed in the S&P 500 at the beginning of 1920 would be worth $2,420,538.69 at the end of 2023, assuming all dividends had been reinvested. This is a return on investment of 2,420,438.69%, or 10.29% per year.
Neither financial planners or wealth managers can predict the future or tell you exactly how your investments will perform. But financial planners can take multiple possibilities into account and factor it all into one big plan.
When you hire a financial planner, rather than a wealth manager, they’ll look at your income, savings, investments, pensions, insurance policies, estate plans, hopes, dreams and fears before presenting you with a plan for the future.
What if you lose your job? They’ll have planned for that.
What if a loved one gets sick? They’ll have considered that too.
What if the stock market crashes? It’s in the plan.
If you give me a series of objectives, I can tell you which tax wrapper is most appropriate. Want to buy a house abroad in 5 years? I’ll help you get there. But if you want to know how much your pension will be worth at 60, I can’t offer any guarantees.
What I can do is create a financial plan that offers protection from all sides. It’s my job to manage chaos and handle whatever life throws your way.
One of the hardest things about investing in the stock market is that you can do everything right and still lose sleep over it.
When you look at your portfolio, particularly during times of political or economic uncertainty, it’s only natural to feel stressed and anxious. Even if you’re debt free, have a 12-month emergency fund, and savings set aside for short-term goals.
If you’ve listened to your financial planner, you’ll know that volatility is normal. You’ll remind yourself that you’ve got enough. But we’re not always rational beings. It’s only natural to go into fight or flight mode, panic selling your investments because you’re terrified of losing money.
Again, this is where a financial planner has an edge over a wealth manager. My job isn’t to just take your money and make it grow. It’s to listen, reassure and coach you. I want you to make informed and educated decisions, especially when the going gets tough.
During times of crisis, some people turn to fortune tellers. People want to know what the future holds and psychics take advantage of that. It’s normal to crave reassurance that everything will be alright in the end.
Perhaps this is why people are so drawn to wealth managers too. They impress you with fancy offices, reports you don’t have time to read, and complicated terminology that you’re too scared to admit you don’t understand. You don’t know what any of it means but since they talk the talk and walk the walk, you trust that they do.
I can’t see anything in the tea leaves, unfortunately. I won’t tell you what you want to hear.
But I will create a thorough financial plan that not only takes into account your current circumstances, but also explores multiple possibilities for the future.
I won’t blindside you with jargon or data. I’ll speak to you on your level. I’ll listen to your problems, address your concerns and from time to time say the dreaded three words: “I don’t know what the future holds. But I know how to manage the chaos.”
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