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Should Clients Know Their Advisor ’ s Net Worth ?
Advisors agree that they should be open with their clients about their personal finances .
By Jacqueline Sergeant
SHOULD CLIENTS BE CONCERNED WHEN advisors don ’ t want to talk about their own personal finances ? “ I would say it ’ s a red flag ,” says author and certified financial therapist Rick Kahler . “ You want a planner that ’ s transparent .”
Kahler , president of Kahler Financial Group in Rapid City , S . D ., says advisors might be surprised if clients start probing into their wealth , but an outright refusal to answer and say things like “ That ’ s my private business ” or “ I don ’ t know ” is problematic . “ I think it ’ s definitely good if you have a planner that ’ s going to appropriately share some of their information .”
Quoting what he refers to as one of the most profound Bible scriptures , “ But be ye doers of the word and not hearers only ,” Kahler says that this is something that clients expect when they hire an advisor — because advisors are supposed to follow the advice they give to clients . “ I don ’ t think I would want a financial planner that says , ‘ Do as I say and not as I do .’”
Kahler ’ s views echo those of other advisors who spoke with Financial Advisor .
“ If a client really wants to know that information , while it might be a little uncomfortable , it is an opportunity for advisors to demonstrate that they put their money where their mouth is ,” says Vance Barse , wealth strategist and founder of Your Dedicated Fiduciary in San Diego . A good practitioner , Barse adds , knows “ every single dollar sign-related detail , from tax returns to estate planning documents to liquid total net worth about our clients . So , it ’ s only fair for [ clients ] to ask questions .”
“ Honesty and transparency are imperatives in the relationship between advisor and client , and frankly in most relationships ,” adds Paul Karger , co-founder and managing partner at TwinFocus , a Boston-based wealth advisory firm for ultra-high-net-worth individuals and families . “ We have fiduciary duties to our clients to act in their best interests .”
Kahler recalls an investing and financial planning workshop he gave several months ago at the gym he attends . One of the topics was how people could begin saving to become millionaires by age 65 . He said if someone in their early 20s invested $ 6,000 a year in stocks in an IRA for the next seven years and then stopped , there is a reasonable probability they would have $ 1 million at age 65 , taking into account stocks ’ historical return of 8 %.
As he explained the math , Kahler says , a 20-something gym coach paused and said , “ Well , Rick , are you a millionaire ?”
Kahler was initially taken aback by the question , but later thought it was a great one . “ She ’ s got every right in the world to know if the guy who just told her , ‘ Hey , I ’ ll show you how to be a millionaire ’ followed his own advice ,” he says , noting that it didn ’ t take him long to say , “ Yes , I am .”
NOVEMBER 2023 | FINANCIAL ADVISOR MAGAZINE | 29