“It’s getting exciting now, two and one-half. Think of everything we’ve accomplished, man. Out these windows, we will view the collapse of financial history. One step closer to economic equilibrium.” – Fight Club
My financial adviser checked my balance – she didn’t manage to push me over. I’m sturdy and built low to the ground, The Mrs. says.
One of my biggest joys of having children is giving them unsolicited advice. For example, my daughter, Alia S. Wilder texted me the other day:
The Unsuspecting Alia S. Wilder: “ . . . also, Lars Úmlåüt (her boyfriend) and I met with a financial adviser about retirement and investment portfolios.”
The Evil John Wilder: (I Swear This Was My Actual Text Answer) “That’s like talking to a mechanic about your Gulfstream® jet. You don’t have any money. And this will be in next week’s blog.”
Yes, I really said that to her. The idea of needing a financial adviser when you don’t have any money is like buying flowers when you don’t have a girlfriend, at least until the restraining order expires. And The Mrs. was the one that christened Lars. After he cuts his hair, we’ll have to think of another name. Although if they get married, Alia S. Úmlåüt does have a ring to it.
It’s rare that a picture describes a concept so completely.
But the financial conversation continued.
The Still Hasn’t Seen It Coming Alia S. Wilder: “We have very little (money) but the financial adviser will help get us going in the right direction. Life is going to suck financially, but you gotta live like no one else wants to, so you can have the future everyone dreams of.”
The part that I’ve italicized above is the part that scared me when I read it in her text message. That’s nothing but pure sales pitch. It’s a good sales pitch, too. It sells the virtue of sacrifice now for future rewards. And it is a philosophy I fundamentally agree with. Deferred gratification is the key to most success – work hard now, and the benefits accrue over time. I wrote about that here (“Be so good they can’t ignore you.”-Steve Martin Plus? A sniper joke.). Steve Martin spent a decade learning and four years refining before he ended up in wild success.
To be great, you have to put in the time. You have to work. But the very best sales pitch will be like a virus – it will work into your brain. When you have your potential client quoting you? You have an effective sales pitch. Back to the texting.
The Sage of Wisdom John Wilder: “Get a 401k. Invest in stocks. Don’t mess with it. Ten words. It’s all you need to know right now.”
Alia and I had already talked about other investments – having a month’s worth of food around the house. Being prepared for emergencies. Having a set of jumper cables in the car. These are small things, but they can do everything from making your life more convenient when you accidentally leave the lights on, to saving your life when that first aid kit pays off.
The Probably Getting Irritated Daughter Alia: “We have a 401k. We are starting the stocks. And we’re treating investments like an expense.”
Investments like an expense? Where did I hear that before? Just from every financial adviser that tried to convince a Young John Wilder Who Had No Money to sign up for some sort of financial product. Strong the sales force is in this one. His sales technique was so good he’d managed to get a second slogan injected into Alia’s mind.
The force commissions are strong in this one.
Not Going to Let it Drop John Wilder: “No. Just the 401K. No other stocks. Pay off your debt first.”
As someone in the “Alia owes money to” category, I think I’d be a bit irritated if my loan wasn’t being paid back while Alia was investing in Elon Musk’s latest venture, a time machine that only Elon Musk’s hairline uses. But investing in stocks when you owe money (outside of a mortgage) is, well, silly.
Or was it the future? Musk’s mane mangles moments in the multiverse.
A 401k is different.
Why? Many employers match some percentage of what you put in one. The most common amount I’ve seen is a 50% match up to 6% of your wages. Said differently, if you put in 6%, the company will put in 3%. This is a good investment – you make an immediate 50% return.
Irritated As A Yak That Just Got Called A Weasel Noggin Alia S. Wilder: “That’s what (Financial Adviser) is there for. He works for (Company Name).”
Cool Voice of Experience John Wilder: “No. Don’t trust him. No individual stocks. Just 401k, and pay down your debt, until the debt is gone. Then add more to your 401k. Financial advisers are salesmen. And this company (After Looking It Up)? Whole Life Insurance? STAY AWAY.”
Whole life insurance has two components – life insurance and some sort of investment. It costs a LOT more than regular “term” life, but has the benefit of paying you back if you don’t use it. How can I tell that whole life is a bad deal? The salesmen get huge commissions.
For the record, he’s also sad he got caught.
The Feeling Like Napoleon Retreating from Moscow Alia S. Wilder: “No. They do more than investments. They look at the whole picture. He said he was going for more investments if we moved forward.”
The Not Needing to be a Psychic John Wilder: “No. Stay away. I’m sure he’s a nice guy, good sales patter, but you will regret dealing with people like that.”
Now As Defensive as the Maginot Line Alia S. Wilder: “It doesn’t hurt to get information and a direction on our future. (Company) is a Christian company for Christians to help with money management on all fronts.”
Rolling Like a Panzer Through The Ardennes John Wilder: “Sure. Just don’t give them any money or sign anything. He’s not doing this for his own health or because he’s a Christian. He’s doing it so you can help make his car payment.”
Enough of this Nonsense Now, Has to Go Back to Work Alia S. Wilder: “I appreciate your advice, Dad. I love you lots.”
Won’t Let It Rest Because Apparently She Kept Thinking About It During Lunch Alia S. Wilder: “So why are you so against investments? If you don’t mind me asking.”
Sweaty Back from the Treadmill And Smelling Like Teen Spirit John Wilder: “A 401k is an investment. I’m in favor. Paying off debts. Also an investment. Investments are smart, but individual stocks aren’t an investment, they’re speculation. Stock funds before your debt is gone? Stupid. Using Christianity to sell a service? Awful.”
What is an investment? When you’re young and paying off debt, pay off the debt. You need a financial adviser like you need a staff for your private lair underneath the volcano in the South Pacific. And for most people, buying individual stocks is similar to gambling. I heard one person make the comment – “I only invest in individual stocks if I can change the outcome.” As I recall, he was on the board of several companies, so he yes, he really could change the outcomes.
The overall market is different. It has had up years, and down years. If I’m going to invest in stocks, I’m going to invest in aggregated stocks, like an index fund or a targeted fund, which is what I have in my 401k. Yes, I have bought individual stocks. And, yes, I’ve lost money on them – not enough to change my life, but enough to change my philosophy.
There’s an eternity of good deals!
I’m not against Christian businesses – not at all. I’m not even against Christian financial advisers – Dave Ramsey (at least on radio) talks about his faith, but doesn’t use it to sell his products. Heck, the guy gives away his ideas on the radio daily. Does he make money? Absolutely.
What about Chick-fil-A©? I love Chick-fil-A®. The chicken sandwich is the best I’ve ever tasted, and it amuses me how people get bent out of shape that they give up a day’s worth of revenue every week because of their principles. When I’m in a big city do I go to Chick-fil-A™ because they’re Christian? No. I go there because the food is great. I go there because the employees are uniformly polite and neat. I go there because the stores are spotless.
I’m not even against financial advisers in general – but when a financial adviser is attempting to “help” people who don’t have money invest? I’m not a fan. I’d prefer they charged a fee like other professionals – that’s upfront, and I think those people really are on your side.
I later called up Alia. “Did you sign anything?”
“No.”
I relaxed. The world isn’t short of people who want your money. In some cases, they work really hard for it, like Chick-fil-A©. In other cases, well, commissions are powerful motivators.
I’ll stick with the chicken sandwiches, they’re better with mayo.
Dang. Now I’m hungry.
John Wilder is not a licensed professional adviser and you should probably think twice about taking his advice and consult with a competent adviser. Unless you’re his kid, which you’re probably not.