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The Advice Business

“What do you do for a living?”

Me: “I’m in wealth management.”

(Glazed look… no response)

Me: “I’m a CFP®…ugh...a financial advisor.”

“Ahh, ok. So, you are a stockbroker?”

Me: (Smiles and sighs) “Something like that.”

It happens all the time when I’m introduced to someone new in a social setting, and we get into some small talk. I know the sales books say I should have a more edgy and clever response like, “I help people make work optional,” but I can’t bring myself to say cheesy things like that. And when I say, “I’m a financial advisor,” most people understandably associate that with handling stocks – either as a broker or a trader.

Yes, there were many decades when you needed a stockbroker to buy or sell stocks. It wasn’t until the 1990s and the emergence of electronic trading platforms that all this changed, and you no longer needed an intermediary to buy and sell stocks. Now, computers facilitate all the trades, matching buyers and sellers directly. And so, the traditional stockbroker, whose job was to facilitate trades for a client and make a hefty commission for the effort, slowly (and thankfully) became extinct. This paved the way for a much more valuable financial service to be offered to clients- the service of trusted advice. We are in the advice business of “all things money.” Like having a trusted family member to turn to when you need guidance on important money decisions. A fiduciary who is looking out for you, your family, and your money.

And yes, a large part of our fiduciary duty is allocated toward investment advice and portfolio management. Our clients permit our firm to research and trade stocks and bonds on their behalf and according to their goals and various risk levels. They don’t need us for trade executions; the computers still take care of that. Instead, they rely on our knowledge and experience to select which companies, indexes, and asset allocations we believe are best for them, and then we place the trades on their behalf without commissions.

However, wealth management is much more than picking the right stocks. Undoubtedly, investment management is one of the highest priorities for our clients and our firm. Yet, successful investing is only one spoke on a more significant financial wheel. If several other spokes of that wheel are overlooked and/or failing, it can affect the stability of the entire wheel. It doesn’t matter if your stock portfolio is up 30%, if you default on your debt, spend much more than you earn, get sued, get hit with IRS fines, etc. You get the point. All money decisions, big or small, compound into larger results over time. Successful long-term wealth management requires sound investing and a coordinated financial management approach.

I recommend that you imagine your personal wealth as a small business. Call it You Inc., where you are the president of this company. As president, you would regularly review your entire balance sheet and income statements, hire the right specialists for the various jobs, and oversee all the required tasks. A good president should also set goals, plan, track, and anticipate future events. Above all, you must ensure that everyone on your team is coordinating and communicating with each other, working toward You Inc.’s vision and mission. This scenario is what the term “wealth management” truly encompasses for your personal finances. And clearly, it is much more than simply investing in stocks.

Now, you may be very comfortable being president, leading in the center role, and managing it alone. Or you may need additional help keeping all the moving parts flowing together efficiently. Your success will depend on your available time, experience, and willingness. No matter your approach, there are basic services that require your focus in order to achieve long-term success with your money.

What services and specialists need to be coordinated for You Inc.? The chart below will illustrate.

As you can see in the illustration, many of these specialists work in their own space, rarely communicating with a specialist in another area. Centralized leadership acts as the hub to keep the entire wheel turning. The duties of the hub can certainly be filled by you alone, or you may hire a wealth manager to partner with. Your wealth manager will be experienced in the concepts and services of the various specialists and can speak tax, legal, and insurance languages quite fluently. A good wealth manager can also help build or update your team of specialists to ensure strong collaboration and open communication flows on your behalf. The wealth manager can keep the entire team accountable and hold each specialist to the highest standards. If one of your specialists is not performing, your wealth manager can help find a replacement.

At Ranch Capital Advisors, we do consider ourselves wealth managers. We provide certain services in-house, like that of an investment manager and financial planner, but we can also help you find the right CPA or attorney you may be looking for. One that we already have a strong line of communication with and has earned our trust from previous engagements. If you already have a great specialist in a specific area, we are happy to coordinate openly with them and work together to collectively pursue your goals and objectives.

We have a saying at our firm, “We are our client’s first point of contact for all important financial matters.” Perhaps I should say that next time someone asks me what I do for a living.


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