30 Lessons in my 30 Years as a Wealth Advisor

Thirty years! I can’t believe it. The adage, time flies when you’re having fun, really checks the box here. I really do love what I do and honestly can’t believe how quickly the years have passed. In the time I’ve been a wealth advisor, I’ve watched my family grow, my kids graduate and celebrated our oldest son getting married. I’m still working with many of the wonderful clients who started with me as well as many new ones I’ve met along the way.

I’d like to think that I have learned a few good lessons throughout my career. So, I thought that, in honour of my 30 years as a wealth advisor, I’d share my top 30 tips. To keep it simple, I’ll break it into three sections: Building Your Wealth, Smart Investing, and Lessons from a Wealth Advisor.

My Top 8 Tips To Build Your Wealth

These first tips seem really basic but they are truly the foundation of building wealth. And while they may seem simple, I can’t tell you how many people don’t follow these rules. When young people ask my advice, these are the top eight things I tell them to do. Without a foundation, an investment strategy is worthless.

1. Start saving early. Compounding is a powerful tool that works best when you give your investments time to grow. In one of my very first podcasts, I tell the story of Grace Groner, who, through consistency and the power of compounding ended up a multi-millionaire.

2. Live within your means and prioritize your financial goals. I always tell clients – if your outflows are greater than your inflows, your upkeep will be your downfall.

3. Pay yourself first. Designate a certain amount of your earnings to yourself before you pay your bills or anyone else. You decide the amount but the important part is that you pay yourself first rather than last. Most people pay their bills first and then tend to spend whatever is left over.

4. Automate your savings. Set up automatic transfers to your savings and investment accounts to ensure consistent contributions. Consistency in saving and investing is truly the key to building wealth.

5. Have an emergency fund. As Mike Tyson famously said, “Everyone has a plan until they get punched in the mouth.” Having an emergency fund in place for unexpected expenses helps you avoid going into debt during tough times.

6. Don’t take on high-interest debt. Pay off credit cards and other high-interest loans as quickly as possible to minimize interest payments. If you can’t afford something, don’t buy it. Period.

7. Avoid lifestyle creep. I understand the urge to enjoy everything life has to offer, but resisting the urge to increase your spending proportionally and instead prioritizing saving and investing will go a long way in helping you secure a comfortable retirement.

8. Invest in yourself. This is one that I’ve personally embraced. Continuous learning and skill development can lead to increased earning potential and better financial opportunities.

These next 12 tips are for every investor, young or old. It doesn’t matter if you have a little or a lot. If you master these investing basics, you’ll be on your way to achieving your goals.

9. Start with your why. By taking the time to clarify your purpose and what you are working toward, it becomes much easier to stick to your plan and reach your goals.

10. Invest for the long term. Stay focused on your financial goals and avoid making impulsive decisions based on short-term market fluctuations.

11. Don't time the market. Trying to predict short-term market movements often leads to missed opportunities and unnecessary stress. I always tell clients it isn’t timing the market but time in the market that will bring you long-term success. Research shows that if you missed the market’s 10 best days over the past 30 years, your returns would be cut in half. And missing the best 30 days would have reduced your returns by an astonishing 83%.

12. Fear and greed can lead to poor investment choices. Stick to your strategy and avoid emotional reactions to market swings. This is where your wealth advisor should come in. One of their biggest roles is to help keep you on strategy and be your voice of reason when emotions run high.

13. Understand your risk tolerance. Knowing how much volatility you can stomach helps you choose investments that align with your comfort level. If you’re losing sleep, your investment strategy is not in sync with your values. If you want to try and quantify your risk tolerance, ask your advisor if they can provide you with a risk tolerance questionnaire. The results might surprise you.

14. Diversify your investments, by asset class, geography, economic sector and style. I’m sure you have heard the phrase, “Don’t put all your eggs in one basket.” Proper diversification reduces risk, which can improve long-term returns.

15. Maximize your contributions to tax advantaged accounts like RRSPs and TFSAs to reduce your tax bill and save for the future. Remember, it’s not what you make, but what you keep.

16. Take advantage of employer benefits by maximizing your contributions to employer-sponsored retirement plans. Who doesn’t love free money? But it’s shocking to me how many people don’t participate when this is offered. If you can get into a group RRSP, pension or stock savings plan with a matching component from your company, just do it.

17. Don't neglect insurance. This is all about risk management. Protect yourself and your loved ones with appropriate insurance coverage for health, life, disability, critical illness and property. And as an aside, be sure to discuss some of the riders that the insurance might have. About 20 years ago, a client of ours had taken out a critical illness policy with a return of premium rider. Thankfully, she never had a critical illness. And last month, she received a cheque for close to $70,000 back from the insurance company. And that was tax-free by the way.

18. Consider the impact of inflation and factor it into your long-term financial planning. This will help ensure that your savings and investments maintain their purchasing power.

19. Don't neglect estate planning. Prepare for the future by creating a will, establishing powers of attorney, and planning for the distribution of your assets. It’s a shame when people work so hard to build a legacy for their family yet neglect to put the proper estate plan in place in order to execute their wishes.

20. Review and update your financial plan regularly. Life is constantly changing, so by regularly revisiting your financial goals, strategies, and priorities, they will stay relevant and achievable.

Top 10 Things Your Advisor Should Know

And finally, here are the top lessons I have learned as a wealth advisor, working with clients.

21. The only client question that matters is: “Am I going to be OK?”Each situation is unique in that everyone has their own set of fears and desires, but the answer everyone is looking for is the same: Just tell me I’m going to be OK.

22. A product is not a portfolio and a portfolio is not a plan. The longer I do this, the more strongly I believe that a strong focus on personal finance and financial planning are prerequisites for successful investing. Having a solid portfolio strategy in place is great, but it has to have a purpose. And determining the purpose is what planning is for.

23. Keep it simple. You won’t convince me that complex is better than simple. Too many investors assume complicated implies sophisticated when simplicity is the true form of sophistication when it comes to investment success. And if you don’t believe me, then take a lesson from the world’s greatest investor, Warren Buffett.

24. There is a big difference between being rich and being wealthy. Lots of wealthy people are miserable. These people are not rich, regardless of how much money they have. On the flipside, there are plenty of people who wouldn’t be considered wealthy based on their net worth, but are rich beyond their dreams because of their family, friends and contentment with their life.

25. People seem to hate paying taxes more than they like making more money. I’m only half kidding but the more money people have, the more they look for ways to avoid paying taxes. And too many use tax implications to guide their investment strategy. If you’ve been investing long enough to remember Nortel, it’s a perfect example of a situation where investors told me, “Do you know how much tax I would have to pay if I sold my Nortel?” Unfortunately, for those who held on, when the company collapsed, they didn’t have to worry about taxes. Don’t let tax take priority over a prudent investment strategy.

26. Overthinking can be just as debilitating as not thinking at all. Nothing is certain and nobody has a crystal ball. You have to become comfortable making investment decisions with imperfect information.

27. Doing nothing is a strategy. Build a balanced, well-diversified portfolio based on your goals, risk tolerance and time horizon. Once that’s in place, you shouldn’t need to make major changes to it on a regular basis. There’s an old saying that investments can be like a bar of soap. The more you handle it and play with it, the smaller it gets.

28. Swinging for the fences is a sure way to strike out. Buying high-risk stocks and hoping to make a quick fortune is really no different than putting all your money on black at the roulette table in Vegas. Sometimes you can get really lucky and win big – but most of the time, the house wins. I like to tell clients that instead of swinging for home runs, it’s a lot better in the long run to swing for singles and doubles and get on base.

29. Past performance is no guarantee for future returns. This is one that I’m sure you’ve heard countless times. And despite that, people still determine their return expectations based on what has happened in the rearview mirror. Too many people anchor to investments and sectors that have done well in the past or, contrarily, avoid those that may not have done as well. Building a disciplined and diversified portfolio will always bring you the strongest returns while reducing risk.

30. To become a successful do-er, become a successful teacher. This is called the protégé effect and it states that teaching allows us to better understand and retain knowledge. I guess that’s one of the reasons why I enjoy creating educational content. By helping others, I help myself, my team and my clients. So, share your learnings, talk about your investment strategy and help build the confidence of others. Teach others about the power of long-term compound returns and time in the market. Teach others about how diversification can help reduce risk or how swinging for singles and doubles will help to avoid striking out. As Roman philosopher Seneca put it simply: While we teach, we learn.

Ok – so there you have it – my top 30 lessons that I have learned in my 30 years as a wealth advisor. I’d love to hear from you about the things you have learned. By the time I hit 40 years, I hope to add more lessons under my belt!