Rick, Are You Worth $1 Million

One day at the gym, talking with another member who is a woman in her 20s, I mentioned that I was leading a workshop on investing and financial planning. I said, “Why don’t you come? I can teach you how to become a millionaire.” Then I went into some of the numbers that showed how, given her age, she could have a high probability of accumulating a million dollars over time with regular maximum contributions to an IRA.

Then she asked me, “Rick, are you a millionaire?”

That stopped me for a second. Now, financial professionals like myself think nothing of asking clients what they earn, what they own, what they owe, and what is their net worth. We’re not used to clients turning the tables and asking us for the same information. Many financial planners seem to think that their net worth is none of their clients’ business. Some see it as a fair question, but have concerns that simply sharing a single net worth number could be incomplete and possibly misleading information.

Knowing that a financial professional has a net worth of say, $10 million, doesn’t mean the person is trustworthy, capable, or puts clients’ best interests first. Over the decades I’ve worked with a number of multimillionaires who were skilled at making money but were horrible money managers and inept at investing it and making sound financial decisions. On the flip side, a young planner could be highly skilled and trustworthy, but simply not have had time to accumulate a large net worth. 

My hunch is that the question my gym friend was asking actually had a deeper intention. Given my age, had I started investing in my 20s the way I was recommending to her, I certainly ought to have at least a million dollars. So I think she really wanted to know whether I followed my own advice.

That is a fair question, and one that I suggest asking any financial professional before you engage them. Just imagine if you found out a financial planner didn’t have a retirement plan or had not made a will, or that a financial therapist was a compulsive spender. Someone who says, “Do as I say, not as I do,” is not going to inspire trust or confidence. 

In addition, asking for some appropriate financial disclosure can tell you whether an advisor is financially stable and likely to be around for the future. It can tell you whether an advisor has experience that is relevant to your particular financial issues. Rather than inquiring about someone’s net worth, it’s more useful to ask other, more specific, questions like the following.

“Do you follow the same advice you give clients? Please give me some examples.”

“Tell me a little bit about your relationship with money.”

“Tell me a little bit about what you are doing to secure your financial future.”

“Do you have six months of living expenses in an emergency account.”

“If I were to run a credit report on you, what would it tell me?”

“What are some financial mistakes you’ve made, and what did you learn from them?”

“Does your firm have a succession plan in case you would suddenly pass on or become disabled?”

While these are all legitimate questions, I understand that you are likely to be reluctant to ask them. It makes sense that parts of you would feel you might be rejected or that the financial professional may think less of you if you ask these things. It is similar to a couple when they come together and they don’t talk about the elephant in the room, which is the money. This is talking about the elephant in the room with your financial professionals.

If a planner or a financial therapist is offended by these questions or dances around answering them, that could be a red flag. If they offer answers freely and transparently, you may have found someone who is well suited to support you in working toward financial and emotional wellbeing.

And what did I tell my friend from the gym? I told her the truth: yes, I have saved over a million dollars.

Check out The Financial Therapy Podcast by Rick Kahler concerning this topic.

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