Lawyers routinely hire other lawyers when it comes to their own legal situations as do doctors regarding their own personal medical issues so it stands to reason that financial advisors might want to do the same.
“Personally, if I were the client of an advisor who invested elsewhere, I would be like ‘WTF?’” New York City-based financial advisor Joshua Brown told Wealth Management author John Kador.
Kador asked the hypothetical question of Brown and others earlier this week and a majority of those answering his question were dead set against it.
“I talked to over 30 advisors for this story, and Brown’s opinion is typical—if a bit more abbreviated—of the responses my question drew,” wrote Kador. “Brown is like most advisors in that he eats his own cooking: his personal investments mirror the model portfolios he designs for his clients.”
End of story? Well, not exactly.
“I have another advisor in my office, my business partner [Mike Connon], and once every couple of years we review my plan and I’ve brought my wife in a few times to do that so she’s aware of what’s going on,” says Rob McClelland, an advisor with The McClelland Financial Group of Assante Capital Management Ltd. “Is it completely impartial? No, but the advisor understands the strategy and is able to look at things and say ‘you probably need to up your savings’ or ‘have you thought of doing this?’ But I still looking at the plan once a year and going in and making changes.”
McClelland clearly sees the upside of having someone else take an objective look at what he's doing.
As part of Kador’s examination of advisors seeking outside help for their own personal situations, the author reached out to a couple of wealth management advisors affiliated with Northwestern Mutual for some understanding as to third-party advice works.
Tom Weilert is based in Dallas and is on the receiving end of this advice while his Wichita Falls colleague Charlie Prothro does the giving.
“Even professional advisors have emotions. We are human and not exempt from having blind spots. What Charlie does is analyze our holistic plan, reveal potential weaknesses and, most importantly, offer perspective,” says Weilert. “I often don’t weigh the risks as much as I should. That’s not at all the way I behave with my clients. So, this relationship with Charlie represents a correction to [excess] optimism.”
After all, who doesn’t need objective advice occasionally? Well, according to advisors on both sides of the border – advisors don’t.
“Frankly, I’m of the belief that if you do not do for yourself what you do for your clients you are an absolute hypocrite,” says Pereira. “If you think you’re actually in need of someone else to run investments for you then what are doing running investments for anyone?”