How much does your financial planner’s lifestyle matter?
Question: Is it a bad sign if my financial adviser lives in an apartment? I know he has many high-net-worth clients, because before the pandemic, I attended a dinner he hosted at a five-star hotel, and over the last few years he has done a decent job investing on my behalf. But I looked up his address when he mailed his family’s holiday card to my house, and I was disappointed that he’s not living a more lavish lifestyle considering he’s giving me advice about where to put my money to hopefully make it grow. Am I being shallow or should your financial adviser be living in a way that makes it seem like they’re taking their own investing advice and making money? (You can use this tool from SmartAsset to connect with a financial adviser who might meet your needs.)
Answer: It’s complicated. On the one hand, “things are not always what they seem. If your adviser lived in a palace it could indeed be a sign of affluence and great financial success, or it could simply be a sign of excessive overspending and debt,” says Lisa Weil, certified financial planner at Clarity Northwest Wealth Management. And consider this: “Wealth is usually what you don’t see. You don’t get rich by spending money living a lavish lifestyle. You become wealthy because of what you keep and through wise financial planning. Living in an apartment may be part of their own wise financial plan,” says certified financial planner Adam K. Wright.
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That said, there are some other potential warning signs to what you said in your note that you might not even see as warning signs. Weil says while your adviser may indeed have a number of high-net-worth individuals as clients, if he’s spending money on a five-star hotel dinner, he has capacity in his practice and he needs more clients. “Referrals from hugely satisfied clients either aren’t happening or just aren’t enough. Additionally, he’s spending good money to market himself and create the illusion of success,” says Weil. Again, like the apartment, not a dealbreaker, but may be something to think about.
It certainly could be that while you may define success as owning a big home, your financial advisor defines success differently. Bottom line: “The best financial adviser helps you align your money to your personal values, and thus one would expect …….