This started with a post on Seedly a few weeks where a contributor, Jiang Jun - shared his negative experience with losing $3600.
In part, he took some responsibility and in part, he blamed his Financial Advisor for a variety of reasons. The fair attribution of those reasons as well as how the money was ‘lost’ was quite debatable, so there was an interesting discussion…
I contributed to pointing out the potential fallacies in that argument as well, but I genuinely bore no ill will personally. It’s something I see across my industry all the time.
Anyway, one of the comments was a sentence that I’d almost forgotten about, mostly because Alan Kor blocked me on Facebook – it was this fairly infamous phrase…
‘Nobody Cares More About Your Money Than You Do.’
I saw this about 2 years back - when I was first starting out my career - and something about this sent shivers down my spine.
Like there was something inherently wrong, but I couldn’t explain it.
Worse, I couldn’t intellectually justify this feeling without coming across as a bitter, angry Financial Advisor who wasn’t that knowledgeable in the first place (which was certainly true at the time, I was very noob).
Why this needs to be addressed
Objectively: because a part of me certainly believes this is true but and its based on my own circumstance. As a result, my job as a Financial Advisor isn’t necessarily compromised.
Additionally, speaking up on such a popularized statement will inevitably lead to unpopular results. Unpopularity affects my income negatively. There is no benefit for me in the pursuit of the truth, but I’m doing so anyway – and I think that’s as objective as it can get.
And urgently – because if this statement is factually wrong and many people believe it, it’s detrimental.
That’s generally what it means to not be living in truth – you feel self-confident about something that you have no real basis, arguably no RIGHT to be confident about and you subsequently become very surprised when it all goes to hell.
Some of you know that I have a degree in Psychology and Statistics, so a lot of my approach towards Finance is based on this foundation. And a similar detrimental result tends to appear in very common, seemingly unharmful scenarios.
For example, when groups of several hundred drivers (both men and women) are interviewed and asked if they believe they are in the top 50% of drivers, over 95% of them will say yes.
And this is obviously impossible, because someone certainly has to be in the bottom, but it’s a completely unjustifiable opinion that’s based on popular belief – much like the statement above. It's statistically and psychologically unsound, and the evidence against it is displayed worldwide.
How do you get justification for that belief, then?
Breaking it down
The sentence is ‘Nobody Cares More About Your Money Than You Do.’
The rest of the words are quite straightforward definitively, but the others not so. I’ll go through it.
1) Nobody – This implies that there is a range of people outside of you who cares about your money.
Common Examples are typically people like your parents, the government (especially taxes), the people who keep trying to borrow money from you, financial bloggers, literally every single person who’s tried to sell you something from clothing to an iPhone, bankers and financial advisors and other people in the finance line, etc.
2) Money – In reference to not just your cash on hand, but the management of your assets and liabilities ranging from your properties to credit cards, etc.
It also refers a range of financial knowledge and application – such as your ability to earn money and the foundation for that ability to earn money, via your job or investing or any other source of income.
3) Cares – Quantifiable by ability, interest, information stored, and time spent applying that information. This is easily the most important definition. If you claim to care about your money…
I) Time – do you spend more time thinking about your money? Or are there a range of people who spend considerably more time thinking about it than you do?
II) Knowledge – what do you know and understand about money? What is your relationship with it?
Do you understand your basics – CPF, Mortgage, Taxes, Insurance – and onto the accumulation options such as secondary income sources, investing (asset allocation) and the like? And is your information up to date?
III) Interest – if you already possess some knowledge, does your interest impact your relationship with money? Is your interest with your money a growing or waning one, and will it affect your outcome positively?
Not is all interest positive (e.g. tracking the market obsessively and trading recklessly) and disinterest is generally negative (opportunity costs, inability to keep up with better vehicles such as better UT structures or cheaper ETFs, etc). How do you channel your interest?
IV) Application – do you apply what you’ve learnt or what you’re reading? Are you entirely sure of the definitions of the essential financial terms and how to apply them? Are you already doing so?
I’ve had people who didn’t know that you need to use a whole life plan to Buy Term, Invest the Rest, and studies have shown that people generally don’t invest the rest (even though I frankly encourage it as well, I’m both selfishly and professionally motivated to do so).
If you’ve looked at these questions and answered them, now you can honestly ask yourself – do you care about your money more than somebody else does?
And is it really so surprising that somebody else might, at least as a factual observation? Your parents certainly care a lot more about your money than you do for the first quarter of your life.
Reviewing the multi-variate factors involved, there’s actually a very statistically decent chance that somebody literally cares more about your money than you do.
Then you really have to ask yourself these questions:
What’s the most efficient use of my time?
Am I generally interested in money as a financial concept?
If I am or if I’m not, what are the potential benefits and repercussions?
Does your Financial Advisor care more about your money than you do?
I’m a Financial Consultant, so I had to get to this at some point. Because typically if your Financial Advisor shows they ‘care’ (according to the definitions above) more about your money than you do, usually people leave their money in the care of those Financial Advisors. I’m just stating an observational fact here – not driving it.
It’s why there are so many of us, but more importantly – why there’s a ton of people who have a bunch of free time on their hands that should be using it to improve their earned income. That’s actually my secondary preposition – not only is it very likely that someone else cares about your money more than you do, but it’s a good thing when done right.
Time not spent managing your money is time that you can pursue your interests, usually to the advancement of your emotional and financial health.
You might say – well that’s just an excuse for me, a greedy financial advisor, aka the Money Maverick - to try and get my grubby hands on your money. And that’s possible. But it would also likely be factually inaccurate.
Because you would merely be treating ‘money’ (again, refer to definition) like how you treat anything which you just don’t have as much interest in or time for.
For example, you certainly wouldn’t do your chores if you could afford to outsource it (maids, service line people) or cook (every single place that offers food) or almost any other thing that you handle on a regular basis which isn’t as interesting or time-worthy as what you enjoy doing or excel at.
Managing money is no exception. It’s important, but it really isn’t. There’s been no evidence for that – if anything, it’s the contrary - which is why our local Financials market is the largest amongst sectors, and how Financials has evolved rapidly in the last few decades rather than decline. There is money, and an overwhelming amount of demand for it to be managed externally.
And it takes plenty of hours to manage on your own, especially during bigger events like marriage, property, children… That’s a lot of time across your lifetime.
Conversely, it would be quite hard for most people to say they care about their money more than I do. I live, eat and breathe this stuff – and I have to improve every single day, or I starve. The time I spend managing others finances and my own is easily more hours in a month than some people think about in a lifetime.
There are exceptions of course – I wouldn’t prospect Kyith of Investment Moats or Christopher of ToP without likely getting burnt because they could probably easily demonstrate that they certainly care more about their money than I do…
…But I’m sidetracking.
Obviously, part of what inspired this post in the first place was a distaste for a Financial Advisor, and by no means am I suggesting that through this information, go throw your money at me or your present advisor.
In fact, you should be monitoring your own standards for who you outsource this job to, and you can do so through some of the tips below.
Traits of people worth outsourcing your financial management to
Is it beneficial to outsource your money management to someone?
Have the benefits been clearly explained to you where you find such an action worthwhile? Or are the benefits one-sided?
Have you accounted for factors like personal time spent, consistency in your analysis of its overall value? Are there additional factors that are emotionally or logically pleasing? For example, you’d pay $4 for a coke at a restaurant for a number of reasons – the ambience, the quality of the service, comfort level, the reduction in time and effort to go out and attain the coke yourself… Even if it costs $1 at a supermarket.
Similarly, an external service has to either be i) more beneficial than without, ii) more convenient even if it costs more, or iii) both.
How good are you at Finance?
Financial management has a wide range. Some things you may have read and some you may have developed through experience – especially taxes and credit card stuff. Personally, I am the last person you want to ask for credit card experience because not only do I have little interest, but I can’t even own one yet.
Investing and insurance is a different matter, naturally – and you can distinguish competence through a variety of conversations and the building of the relationship. Which is why they also refer to my line of workers as relationship managers, and why I always encourage you dropping me a non-obligatory message just to test the waters, not to buy anything.
Ultimately, you obviously want to outsource your financial issues to people who are MORE competent than you in an area that you desire that competence…Not less.
Otherwise, what would be the point? You only need so much convenience.
3) Consistent Growth
Are you consistently growing in your financial knowledge and ability?
One of the things that I enjoyed most about Jiang Jun’s post was how clearly he displayed his growth versus his Financial Advisor (FA). In the two short years, his FA’s negligence in improving his ability caused him to lose his client.
It’s not like I’m pro-FA or something – I’m on the side of whatever creates the most mutual benefit, and the relationship became unbalanced due to his growth.
Has your FA or any external manager shown the capacity and willingness to continue growing and improving themselves?
Otherwise, you may end up in a situation where you make your Advisor redundant – and while that can be kind of satisfying, may not solve the problems you had initially.
How reliable are you?
I'm serious. It sounds like a ridiculous question, but if you're not the kind of person who doesn't even pay their bills, Medisave or taxes on time, you may want to consider if you really care more about your money than anybody else.
It's not a question or insult to your intelligence, power or career ability. There are plenty of client's who make a lot more money than me in their competent fields - it's just not in their interest, and thus they become less reliable at it.
Conversely, is who you outsource that money to reliable? Do they reply you when you message? Do they have sincerity and integrity? Do they address questions which you send them later, even if they don't have the answers on hand?
If you've asked yourself all the questions above, it shouldn't be so obvious whether nobody cares more about your money than you. Statistically and psychologically, it isn't true for the majority of people anyway.
At the same time, the mistake that we've largely made in contrast - is blindly trusting, which went on for decades before our 'Information Age' in the last two. So doing that isn't very good either.
Much like we've raised our standard of living historically, we have to raise our standards for where we outsource our money to. For some of the especially individualistic ones, it's FSM or SGX or a Robo. For others who want automation and management, there's platforms that emphasize relationships. There's plenty of people who care more about your money than you do. Just make sure that the right people have it.
Thanks to Jiang Jun for giving me his permission to use his name and video. It was good inspiration for this article.