Life As a Financial Advisor: My Biggest Regret

Back in the late 90’s/early 2000’s I worked as a financial advisor for a small brokerage firm. This was before the internet and online trading. We got our clients by cold-calling, and clients had to mail checks to cover their trades.

I thoroughly enjoyed my time as a broker, if I could change one thing about it, I would have educated my clients about the many investment opportunities OUTSIDE of the stock market.

Our job was to discuss stocks, bonds, mutual funds, college 529 plans and other financial securities. Yes, it’s important to know how to invest, but we would have been more valuable as “financial advisors” if we could discuss all types of investments. In an attempt to do that, I also obtained my life, health and variable annuity licenses. I then thought I was fully ready to cover all my client’s financial needs.

Capitals Gains

I was totally focused on paper investments, and that included capital gains and cash flow investments. Capital gains is the philosophy of “buy low, sell high.” When we told investors about stock ideas, we place emphasis on accumulating shares or a period of time at the lower prices. Once the investment reached a certain point, we’d lock in profits via a stop-loss, or liquidate the entire position outright. The foundation of my life as a broker was highlighting the potential growth or profits a person could make over time.

Cash Flow

While there’s nothing wrong with that, that’s not the only game in town. Another investment strategy we used was cash flow, which is another excellent way to invest as well. In this investment strategy, the idea is to accumulate assets and receive some form of income or cash flow from those investments.

When using a cash flow strategy, a person can buy stocks, bonds, and mutual funds that pay a dividend or pay interest. I placed many of my clients in various mutual funds, and educated people on dividend reinvestment programs. I also explained the benefits of a laddered bond portfolio with tax free municipal bonds, and how they could receive tax free income without touching their principle. The premise here is no matter what the market is doing, you still have the cash flow.

To see a previous post on cash flow click HERE.

At the time, not only did I think paper assets were the only game in town, I thought they were the best game. We never discussed other assets. As I look back, this was a mistake. I totally understand we weren’t licensed or qualified to discuss these other investments, but if we were able to, it would have been a great way to help our clients fully reach their investment goals.

As financial advisors, we focused on paper assets. In order to be truly diversified, it’s important to have tangible assets as well. Ideally, I could have discussed other investments including the following:

Precious metals. Gold and silver have been used as money for over 5,000 years. many consider them excellent ways to protect yourself from inflation and stock market crashes. Precious metals are outside the existing monetary system, and may protect a person from a reduction in a currency’s purchasing power.

Real estate. Rental property can provide a monthly cash flow. Unlike your IRA, which could dwindle down to zero, rental property can provide monthly cash flow for decades. In addition, the monies from rental received from rental property can be used before retirement as well, or allow a person to retire early.

Other assets. As financial advisors, we couldn’t talk about other assets that could make money or increase in value, such as fine art, antique cars, collectibles, or products like vending machines and monetized websites. While all these may not be suitable for all investors, there are some who could benefit from this information, especially if they are not familiar with it.

For example, how many investors would consider taking some of their profits from the stock market and investing in rental property, or purchasing a franchise? Some would, others wouldn’t. But would they like to know about the opportunities?

Multiple Streams of Income

This is one aspect of financial literacy and investing I wish I could have told my clients. While I did discuss bond interest and dividends from mutual funds, talking to them about creating multiple streams is ideal. The average person has one job and one source of income.

That one job is supposed to pay all your bills and living expenses:

  • Rent/mortgage
  • Food
  • Utilities
  • Transportation (car note, public transportation, etc.)
  • Entertainment
  • Childcare
  • Insurance (car, health, home, etc.)

In 2022 we are seeing a spike in prices on practically everything we use. This includes gas, rent, food and other essential. As prices rise and inflation increases, it can put a tremendous strain on a person’s budget, especially if they only have one source of income. By having multiple income streams, this can lessen the blow from inflation and other rising costs.

The average millionaire has over 7 streams of income. Here are a few popular forms of additional income streams:

  • Rental property
  • Dividend payments (bonds, mutual funds, REITS, bonds, etc.)
  • Royalty payments (books, publishing, music rights, etc.)
  • Vending machines
  • Monetized websites
  • Affiliate marketing
  • Franchises

Many people who have multiple streams of income also have several forms of passive income. These are income streams that a person receives even though they aren’t actively working to receive the income. In other words, this is money made while a person sleeps. Vending machines, rental property, dividend payments and monetized websites are example of passive income streams.

Having multiple streams of income and passive income are excellent ways to increase revenues and give a person the ability to retire early.

It’s critical we know about (and understand) the various investment opportunities out there that are NOT affiliated with the stock market. Unfortunately, your financial adviser is not properly licensed or trained to discuss these matters. It’s up to you to keep an open mind and learn these things on your own, or find a mentor who can educate you.

There is much more to finance and investing than the stock market. Take a look around. You might be pleasantly surprised at what you find. This information is not readily discussed in mainstream media, so it’s up to you to learn these things.

Many of the best life lessons are not taught in school. It’s critical you don’t rest on your laurels and continue learning. Get more great tips in my book Invest For Success: Winning Wealth Strategies Not Taught in School. Available on Amazon.

Teach your kids about assets as well. Many of the most important topics on business and entrepreneurship are not taught in school. Pick up a copy of Planting Seeds: The Children’s Guide to Entrepreneurship today. Available on Amazon in English, French and Spanish.

Register for our online course on generating passive income: Tired of the 9-5? How to Retire Early With Passive Income.

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