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A recent Kiplinger article lists ten questions to ask your financial advisor. This one caught my eye.
“6. Check out what car the adviser drives.
Hope that Lamborghini in the parking lot belongs to the doctor next door, not your adviser. A car can indicate how the adviser deals with his or her own money, and that will influence how they will approach managing your investments. “Clients don’t want to see you driving sports cars,” says Richard Rosso, director of financial planning at Real Investment Advice. “I manage myself frugally… I drive a Toyota hybrid. It lasts forever, and it’s safe.”
Being the contrarian, could it just be the adviser is a great investor, a good advisor with lots of clients?🤑. Would you have more confidence if your advisor is a frugal, very used, car buyer?
Frankly, I’d be more worried if the Lamborghini belonged to the doctor who either charges high fees and/or provides a large number of health care services, neither of which is an indication of better quality.
While a Mercedes is many steps below a Lamborghini, it sure isn’t representative of how I (mostly) manage investments- and as many HD readers frequently observe, it’s not particularly well.
By the way, a Lamborghini starts at around $230,000 and goes up to $700,000 with add ons up to an additional $100,000.
NOW, that’s my kind of financial advisor.
Don’t judge a book by its cover. I think this applies to people too.
I agree. There sure seemed like a lot of conclusions were jumped to real fast.
My comment was about the irony. That in trying to paint a negative picture you accidentally described someone that has been a great asset manager.
Personally I’d head away from the super car owner, I’d be worried that they’re chasing thrills, which isn’t a great recipe for investment management.
I like Johny and Scott’s comments regarding the millionaire next door and Warren Buffett.
Generally speaking, I think an advisor should drive and dress in a manner that is similar or slightly better than his average client.
Perception is everything I guess. I wonder the perception of the advisor dressed like he has been out of work for months? should have nothing to do with qualifications or performance.
One of the smartest people I know was the maintenance guy for our old condo association. If you recall Larry, Darrell, and Darrell from the Newhart Show, that’s Kurt. That guy could fix or build anything, converse intelligently about most any subject, and had a degree in chemical engineering.
Part of working with an advisor is feeling a level of trust and comfort with them. If their choice of car really doesn’t make you feel comfortable about their approach to money management, they probably aren’t the right fit.
I’d rather pass on the Lambo-type advisor and go with a The Millionaire Next Door-type advisor.
I’m sure it’s possible the Lambo adviser charges very modest fees and the reason he is able to afford one is that he is so tremendously successful at increasing clients’ wealth that he has an enormous book yet provides highly personalised tailored advice to everyone.
Or playing averages is he the archetype that is very good at marketing and selling himself while putting clients into what are effectively generic robo-portfolios and either maximising his cut through frequent churn or high AUM fees?
The latter feels more likely, the former feels like they would see the crassness of driving a Lambo.
My dentist wanted to show me his Porsche (not sure what model) and he spoke of his indecision over upgrading it with a custom exhaust system that cost about what I paid for my second-hand Canyon pickup truck, or simply buying a new Porsche. At least I know where what I pay for my crowns and implants is going.
My wife operates her own portfolio with the help of a “wealth manager.” Recently, when setting up an annuity, she had to meet him at a coffee shop. I tagged along to the meeting, which we walked to. Unfortunately, the café’s coffee machine was getting serviced, and we needed to go to a different venue further away. Suzie’s wealth manager offered us a lift, and we had to walk to the very back of an empty car park where he had hidden his Porsche Taycan Sport Turismo. List price $220,000.00. I know that because I looked it up after he dropped us home 😂, and there were lots of spaces in front of the original café.
I park my car as far away from other cars as I can for no other reason that I try to minimize dents and scratches.
Would you feel more comfortable if he was driving a beat up 1969 VW beetle?
I would feel more comfortable if Suzie invested with a low cost platform like Vanguard 😁
Remember “Where Are The Customers’ Yachts”? Now, if the advisor’s clients also drive fancy cars you might have a point, otherwise the advisor is getting rich at his clients’ expense.
That doesn’t seem like a logical conclusion, at least not the only one. Why couldn’t he be a great investor or simply be leasing the car with payments higher than we would want to pay.
If he were that great an investor either he wouldn’t need to work, or all his customers would be able to drive fancy cars. If he has a high priced lease I don’t want his advice. In any case, research has shown that hardly anyone is a consistently excellent investor, that’s how index funds became popular.
Doesn’t the second kind of describe Warren Buffett?