I’m a Financial Advisor: 10 Things I Wish All My Wealthy Clients Knew
Wealthy people are fortunate to count on a wide array of resources that contribute to their success. And chief among them? Savvy financial advisors who know how to guide them.
Yet, there are still some things these advisors wish all their wealthy clients knew.
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GOBankingRates spoke with Stoy Hall, certified financial planner and CEO of Black Mammoth, and Jake Skelhorn, certified financial planner and partner and wealth advisor at Spark Wealth Advisors, to discuss the top things their affluent clients aren’t paying enough attention to.
Be Savvy About Taxes
“There’s only so much you can do to reduce your taxes, especially for those still working as a W-2 employee,” said Skelhorn. “Max out your tax-deferred accounts, take the appropriate deduction–standard or itemized–and move on is often all we can do.”
“On the other hand, business owners do have a lot more they can do to reduce taxes, but often forget about the downsides, like being able to prove a certain level of income to a lender,” Skelhorn added. “If you deduct so much of your expenses that your net income is artificially low, then it may be harder to get approved for mortgages and other loans.”
“I also see a lot of business owners that look for ways to spend money–and deduct from business income–just to avoid paying taxes on it, when the reality is they’d have more cash on hand if they just paid the taxes instead of buying something they don’t actually need.”
Don’t Overlook Umbrella Insurance
“For wealthy individuals and families, umbrella insurance is often overlooked,” said Skelhorn. “It can cover you well above and beyond your home/auto coverage in the event of a bad accident where someone can sue you for lost income and other damages. It’s a low-cost way to insure against a potentially devastating event.”
You Can’t Take It With You
“This might be contrary to what most advisors tell their clients,” said Skelhorn, “It’s usually trying to see how we can make their savings last, rather than getting them to spend more. While some wealthy people have legacies they want to leave to their kids or other family, I see others who don’t, but have trouble shifting from a saving mindset to a spending mindset when they get to retirement.”
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“They are afraid they are still going to run out at some point,” said Skelhorn. “One of the most satisfying parts of being an advisor in these situations is showing these clients how they can really afford to spend more and get the most out of life while they’re here, without much risk of outliving their nest egg.”
Being Rich and “Truly Wealthy” Are Different Things
“True wealth means living life on your own terms, not being driven by societal expectations or the relentless pursuit of money,” Hall said. “First and foremost, your wealth–your money–doesn’t define who you are.”
He added: “Your ‘true wealth’ is about your happiness, joy, and your ability to give back to others. It’s about living life on your terms. Money is just a tool, not a character trait.”
“In today’s society, we’re often taught that being wealthy means having a lot of money,” Hall explained. “The media pushes this narrative, making us think that being rich is synonymous with being successful. But that’s not the full picture. The first step, especially with my wealthy clients, is to distinguish between being rich and being truly wealthy.”
Money Can’t Buy Happiness and Joy
“Money can buy comfort, security, and even some forms of happiness, but it can’t buy true joy,” said Hall. “True joy comes from meaningful relationships, personal growth, and experiences that resonate with your core values. Investing time and energy in what truly makes you happy will pay dividends far beyond any financial investment.”
Giving Back Gives You Purpose
One of the most fulfilling aspects of having wealth, according to Hall, is the ability to give back.
“Whether it’s through charitable donations, mentoring, or supporting community initiatives, using your resources to help others can bring immense satisfaction and purpose to your life,” Hall said. “It’s not just about writing a check; it’s about making a tangible difference.”
True Success Means Living On Your Own Terms
“Society often dictates what success looks like–big houses, fancy cars, and luxurious vacations,” Hall said. “But true success is living life on your own terms.”
“Define what success means to you personally,” he noted.
“Maybe it’s spending more time with family, pursuing a passion project, or traveling the world,” Hall said. “Whatever it is, ensure that your financial goals align with your personal goals.”
Money Is A Tool to Enhance Your Life and the Lives of Others
“Many rich people mistakenly treat money as a character trait,” said Hall. “They believe wealth is about class and social standing.”
“But true wealth is about humanity and people,” he continued. “It’s about using money as a tool to enhance your life and the lives of others, not letting it define you or your values.”
Place Balance and Well-Being Above All
“With great wealth comes great responsibility, and it’s crucial to maintain balance,” Hall explained. “Wealth can easily lead to stress, anxiety, and an unhealthy focus on accumulating more. Prioritize your well-being by finding a balance between financial pursuits and personal happiness.”
“Invest in your health, relationships, and personal development,” Hall said.
Leave Behind A Rich Legacy
“Consider the legacy you want to leave behind,” Hall advised. “Wealth allows you to create a lasting impact on the world. Think about how you can use your resources to build a legacy that reflects your values and aspirations.”
He says this could be through philanthropy, creating sustainable businesses, or supporting education and innovation.
“Your true wealth is measured by your happiness, your contributions to the world, and living authentically.” Hall said. “Money is just a means to those ends. Use it wisely, live purposefully, and ensure that your financial success translates into a fulfilling and meaningful life.”
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This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: 10 Things I Wish All My Wealthy Clients Knew
