There is an odd paradox in the world of Wealth Management: investors tend not to ask difficult questions and, in some cases, ask no questions at all of their current or prospective financial advisor when they do not understand something. Missed opportunities or making a serious mistake can happen when you do not truly understand what you are buying.
Investors from the very rich to middle income to low income are not nearly as inquisitive about the services they buy from the wealth management industry as they are from other purveyors of products and services. Most people ask very intelligent questions when purchasing a new car, a new phone, or a new streaming service. However, when it comes to their money and wealth, they suddenly lose all their appetite for drilling down into features and benefits.
A Schwab television ad perfectly shows this odd and detrimental behavior. A well-off couple are shown through several vignettes of the buying experience. They are seen lobbing very smart and hard questions at their sales person at a car dealership, then a garden shop, but then when sitting down in front of their financial advisor who says “I think we should put you into our new fund”, the couple simply look at each blankly, then turn to the advisor and say “Ok”.
More Than Just Education
Financial education in the United States is poor, and most are aware of this fact. It is not taught in most schools and is not taught with regularity when it is in the curriculum. This can only explain a small part of why most don’t engage with their financial advisor or financial providers.
For many, they are embarrassed by a one of a variety of issues. Some investors are embarrassed by their lack of knowledge and as a result don’t engage for fear of being found out by their peers, advisors, or family. For others, they are embarrassed by what they believe to be their lack of financial success and don’t want others to know how little they have in savings. Whatever the underlying reason, these insecurities can have costly results.
Wealth Trumps Ego
Investors need to park their ego at the proverbial door, because the cost to being ignorant can be significant. In the cases of working with an ill-intended financial person or provider, people can buy the wrong product, get taken into a ponzi or pay more than they should be for comparable products or services. Anyone that consumes a financial product or financial advice needs to realize that these topics are highly technical, change often, and not exciting. Admitting you are ignorant is actually smart and getting the answers to questions is smarter.
They key to understanding wealth management topics is to get actual answers to your questions, and don’t give up asking questions until you do. Financial Advisors and other financial providers should readily continue to answer your questions about their services and products and if they don’t, find a different provider, as there is no shortage of advice.
When you get a reply to your question, and that reply is not understandable, keep asking. Ask the advisor to use different, less jargon-filled terms. Ask them to dumb it down for you. Whatever you do, do not give up, get exhausted or feel bad. Its your money, your wealth, your future and you deserve to get answers you understand.
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