Having your Cake and Eating it too?

I’ve educated, met with and advised thousands of people and households about money, finance and their wealth creation endeavors for many years now and on occasion I reflect on the many types of investors, their money management and investment habits as well as their general financial and personal goals and I thought it might make for some interesting reading regarding my observations.

In an effort to ensure this article is not my life’s work, I have opted to group and name the 5 types of people I have met, educated or advised.  But before I do embark on speaking some home truths about these types of people I think it is really important to document one absolutely definitive fact –

Every person if holding the desire to change and improve their financial affairs, can do it!, irrespective of socio-economic background.

Now don’t misquote me on this, I’m not saying they every person living below the poverty line can become millionaires, but they certainly can improve their current quality of life and standard of living through better money management and wealth planning over the long term.

Drum roll please as I announce the categories and my roll out is going to start from worst to best:

 

Head in the Sand

The most frustrating of all types of clients to work with.  These people or households go through life managing from pay cheque to pay cheque.  On occasion they find themselves in really great cashflow positions, but they simply have never grasp the concept that their money can work for them to produce more.  They are true spenders for today and let’s worry about tomorrow when it comes.

The extremes of this group want to blame someone like the government for the state of their financial position, yet they are rarely interested or committed in making or creating their own destiny.  They often resign themselves to their place in life and play the victim, rather than rectifying what is more than likely the outcome of their own decisions and doing.

The future looks grim, unless they pull their heads out of the sand and seek to get quality advice.  Even if the road is going to be long, they still have options to make their lives better and let’s face it most of us, at one time in our lives have had our ‘heads in the sand’ on one topic or another, so as I mentioned earlier, there is still hope even for this crowd.

 

The Pretenders

They are best summed up by their namesake.  They want all the spoils which financial well being provides them now, but they are not interested in applying themselves to get the outcomes that are within their reach.  They typically give you all the right indications they are willing to make it happen and they are focused, but the reality is they just never realise their true potential.  Their ‘wannabees’ and more often than not, they live beyond their means now to give the impression they are doing well.  This group has a huge amount of potential but lack the discipline in taking advice and the application is seeing it through.  This group is very frustrating really because deep down they aren’t happy about how things are playing out for them in their lives.

They need help and advice quick.

 

The Know it all’s

They think they have everything right and all is on track.  They have their financial plan and life goals down pat and they have done all the numbers but put simply, they will do it themselves instead of opening up their world for critique and possible criticism.  Let’s face it, they don’t respond well to getting it wrong, so they protect themselves by not sharing.

What’s always struck me about this group is, once the bravado and protective armour is removed, they are in fact really interested to know how they are actually going and if they are in fact making wise decisions.  But very few of them will let down this guard, so the majority of them will go through life always wondering if they did in fact make the best decisions with their money and investing.

They have real trust issues and usually don’t take advice well, even if it means improving their situation or if they did in fact listen, they will more than likely go off and try to replicate what was said to them, instead of working with someone who they feel threatens or challenges them on being smarter than they are.

 

The Will Be’s

This group has the most important component in their makeup that will see them succeed – desire.  They are willing to learn, listen and work towards their financial and personal goals.  They are committed to improving their place in life and understand that money is a means to an end and it’s not something that is going to define them, control them or limit them, if they can manage it better.

They are not where they want to be now, but they are willing to take the steps to get there.  Interesting for most this doesn’t require great sacrifice at all, as many would envisage.  They are not the people who are going to live of crackers and toast today, so they can enjoy a better life in 20 years from now. They are going to strive to get the balance right, meaning having an enjoyable life now with lasting experiences, but they are willing to put aside some of their surplus cash to build greater wealth.  They understand they will need to make some wise investments, not only in their actual investments, but also in the personnel, as they are who will be helping steer them on their journey.

They have the desire now, but they realise the ability for them to make it happen will require the knowledge and skills of others and what they can learn along the way.

 

The Jones’s

As the saying goes ‘trying to keep up with the Jones’s, well this group are the Jones.  They have worked out the balancing act of living today and also have plenty for tomorrow and that why everybody wants to be like them. We all envy what they have achieved and want to know how they have gone about it.  Their desire for a better quality of life and standard of living is match by their ability to make it happen.  As a money, finance and wealth advisor, these guys are dream clients, because they get it completely.

They know their time is a limited resource, so we envy them because they are always seen to have the time free to do stuff, because they get the value of having smart and trusted advisors to guide them and their finances onto bigger and better opportunities, which provides them with the money they need to do the things that are important to them.

They are not necessarily wealthier than other average Australians, but they are separated from the patch by how astute they are in picking their advisory team and also very importantly, they still take a keen interest in what’s happening to their money and investments and expect half year or annual updates depending on their position at that time.

Interestingly, these are the people most likely to take and pay for professional advice, yet when you look across all the generalised types I mentioned in this article, they are the people who appear to need the advice least of all.

They have learnt how to have your cake and eat it too!

 

So these are my five main types of investors. I’d like to wish you all a very happy and safe festive season and all the very best for a prosperous 2013.

Remember, Knowledge is empowering, if you act on it.