Does Your Financial Adviser Practice What They Preach?

One of the most surprising things I’ve encountered in my career is that no client has ever asked me, “Kevin, tell me exactly what you do with your money.” To me, this is a fundamental question that every client should be asking. After all, wouldn’t you want to know if the person advising you on your financial future is following their own advice?

Why This Question Matters

It’s strange that clients don’t inquire about their adviser’s personal financial practices. This question is crucial because it speaks directly to the adviser’s credibility and confidence in their own strategies. If an adviser truly believes in the advice they’re giving, it stands to reason that they would apply those same principles to their own finances.

Moreover, asking this question can reveal whether your adviser is genuinely committed to the strategies they recommend. It’s easy to talk about financial principles, but it’s another thing entirely to put them into practice. An adviser who invests their own money in the same way they advise you to invest is someone who believes in the long-term success of those strategies.

The Reality in the Industry

You might be surprised—or perhaps not—to learn that many advisers and private bankers do not practice what they preach. Despite advising clients on the importance of diversification, risk management, and long-term planning, they may not follow these principles in their own lives. This disconnect raises questions about the integrity of the advice being given.

For example, if an adviser recommends a particular investment strategy but does not use it themselves, it could indicate a lack of faith in that strategy. Or, if they advise clients to be conservative with their investments but are overly aggressive with their own, it suggests a potential mismatch in the risk tolerance they are advocating.

Why You Should Ask

As a client, you have every right to ask your adviser how they manage their own money. It’s not just about ensuring that they practice what they preach—it’s also about understanding their risk tolerance, investment philosophy, and long-term financial goals. These insights can provide valuable context for the advice they give you and help you decide if their approach aligns with your own financial objectives.

Furthermore, asking this question can help you determine if your adviser is technically qualified to give the advice you need. Do they have the experience, knowledge, and confidence to manage their own wealth effectively? If so, they are likely to be better equipped to help you manage yours.

Conclusion: Know Who You’re Trusting with Your Wealth

In the world of financial advice, trust is paramount. Knowing that your adviser practices what they preach can provide peace of mind and reinforce your confidence in their recommendations. Don’t hesitate to ask your adviser about their personal financial practices—it’s an important step in building a trusting and transparent relationship.

If you’re working with an adviser, or considering one, take the time to ask the tough questions. After all, if your adviser truly believes in the advice they’re giving, they should have no problem sharing how they apply those same principles to their own finances.