Hire Someone Who Says No
The most useful person on your money team may be the one you least want to hear from.
"Pick the financial advisor who can tell you no."
Meet Peter. He sold his company for $169 million and did what everyone advises when you come into sudden wealth like that: find someone to manage your money.
After we sold the company, I was 27 years old, and I had to pick a financial advisor. I was deciding between two professionals.
One was a friend of mine at a big brokerage firm, about my age. The other was a woman at another firm, older, more experienced, and with no relationship to me at all. I went with my friend. He was a peer, I liked him, and I wanted to help him out.
That decision probably cost me $20 million over the next ten years.
Not because he was bad at the job. He allocated the money into stocks and bonds just fine. The problem was that he took orders, with no pushback and no questions. Every time I called and said send me money, he sent me money. I could ask him to wire me $2 million and it would just show up, which actually happened more times than I'd like to admit.
I was a young founder fresh off an exit with an abundance of investment opportunities. I needed guardrails. My friend never built any, because a peer doesn't do that to a peer.
The woman at the other firm probably would have. She'd spent years dealing with people exactly like me: young, suddenly rich, with unlimited investment opportunities. She would have pushed back and discussed how each decision would impact my plan and my future family. Yes, an advisor ultimately has to do what the client says. But an advisor with more experience can at least challenge your thinking and decisions first.
If you're young when you become wealthy, like I was, don't hire a peer as your financial advisor. Hire someone with a couple of decades on you, someone who has watched this movie before.
I picked the friend who always said yes. What I needed was the mentor who could tell me no, or at least challenge me.
Up next · Lesson 07 The Monthly Payment Trap Why a purchase that feels small each month can be the biggest mistake of the year. Read next →