One of the biggest surprises of my career is that some of the smartest people I have met struggled the most with managing their own wealth.
Over more than three decades serving clients, I participated in hundreds of meetings with prospective clients seeking financial guidance. Simply taking the step to meet with a wealth manager is significant, and in most cases, it quickly became apparent that there were opportunities to improve their financial situation. This was particularly true for do-it-yourself (“DIY”) investors.
In nearly every case, a common pattern emerged. Despite their intelligence, education, and success in other areas of life, most lacked one or more of what I call the “Three T’s” of successful wealth management: Time, Talent, and Temperament.
Understanding these traits can help you determine whether managing your own financial affairs is the right choice—or whether partnering with a trusted advisor may lead to better outcomes.
Time
Most of us are overwhelmed by information and competing priorities. Family, careers, community involvement, and personal interests leave little time for thoughtful financial planning.
Many people underestimate the time required to coordinate investments, retirement planning, taxes, estate planning, insurance, charitable giving, and major financial decisions. Creating an integrated wealth management plan that aligns your resources with your values is real work—not a hobby.
Professional advisors devote substantial time to these issues every day. They maintain systems, processes, and ongoing education designed to help clients make informed decisions and stay on track toward their goals.
Talent
Even individuals who have the time to manage their finances often struggle to develop expertise across the many disciplines that affect long-term financial success.
Asset allocation, retirement income planning, income tax planning, asset protection, estate planning, philanthropy, and behavioral finance are all specialized fields. Mastering any one of them takes significant effort. Understanding how they work together is even more challenging.
A DIY investor has experience managing one financial life: their own.
A seasoned advisor has helped hundreds of individuals and families navigate market cycles, inheritances, retirements, business sales, charitable goals, family challenges, and unexpected life events. That accumulated experience can be invaluable in an increasingly complex world.
Temperament
Of the Three T’s, this is the most important.
As human beings, we are wired with powerful emotions such as fear and greed. Those emotions often drive us toward the wrong decision at precisely the wrong time. When markets are rising and confidence is high, investors feel compelled to buy more.
When markets decline and uncertainty increases, they feel pressure to sell. Unfortunately, this behavior is the opposite of what typically leads to long-term success.
Temperament is the ability to remain disciplined when others are emotional. It is the ability to stay focused on long-term goals when short-term events dominate the headlines. It is the willingness to avoid action simply for the sake of action.
Over the course of my career, I have become convinced that temperament is often more important than intelligence when it comes to successful wealth management.
What’s an Investor to Do?
Wealth management can be complicated, but the solution is often straightforward.
Find an advisor who demonstrates the Three T’s and who can help you build an integrated plan that aligns your financial resources with what matters most to you.
Throughout my career, I continued studying not only financial planning and investing, but also behavioral finance—the science of how people make decisions. Understanding how we are wired to think, react, and sometimes overreact has been one of the most valuable lessons of all.
Takeaway
The most successful clients I have known were not necessarily the smartest.
They were the ones who honestly understood their strengths and weaknesses.
Many advisors possess the time and talent to provide financial guidance. The more important question is whether they possess the temperament to think clearly under pressure, remain disciplined during difficult periods, and exercise patience when patience is required.
As you consider how you will move forward with managing your finances, ask yourself which of the Three T’s you possess—and which ones you may be missing.
Recognizing that reality may be one of the most important financial decisions you ever make.