Don't take wealth advice from a financial advisor

Most financial advisors will destroy your wealth, not build it. This episode is a sequel to a previous episode that I delivered called Don't Take This is Advice from Your Accountant. If you haven't already listened to it, go and check it out. It had a record of a million downloads and I got a significant amount of engagement and words of thanks from founders that have fallen guilty into pleasant too much trust. Above and beyond the basic requirements of their accountants when it comes to making decisions around growth, investing, and pivots. So I wanted to see him with this podcast. What makes me qualified to talk about this? Well, I've invested a considerable amount of money into the stock market over the years. I have also been burnt by a financial advisor. I've also been heavily rewarded and energized, and gifted with some amazing financial advisors. And at the same time, I speak with thousands of founders every single year that quite frankly have wasted a lot of valuable cash that they could have used to grow their business into investments that ultimately don't return anywhere near what they could make in their business. Now here's the punchline. Most founders are paying a financial advisor between one and two percent a year for the rest of their lives to do something they could do themselves in ten minutes on their phone. That's the financial advisor industry in one sentence. Now let me give you my personal experience of this. Whenever I first started growing my business and it really started taking off, I had a lot of surplus cash. And I was panicking a lot about the word "inflation" that the buying part of my money was going down. And as you know, you work so hard to make the money and ultimately you want to know that it's sift. But most importantly, you want to know that you're multiplying that money with little effort. And the idea of putting money into a vehicle that would return 68% a year without me having to lift a finger and tax-free was very lucrative. And I was sold the whole graphs and here's what it could be and here's what might happen. Here's our fees on top and here's what you'll still make in a bass-kissed scenario. Anyway, I put money into an ISA, which is a personal vehicle to appreciate tax-free. And then I also put money into a pension with a specific advisor. This was my first interaction with one. And lo and behold, they came in, suit, fancy watch, fancy company, merc car, all the documents, nicely branded pencils, nicely branded notebooks and diaries and paperwork and, you know, glossy brochures with stock imagery on them, of happy families, like clapping each other on the beach. You know the drill, you've probably been sold the same thing. Anyway, lo and behold, I committed to investing in a set of money with a set individual. There was platform charges, there were their fees and then there was the actual investment itself. And then I liked the idea of being able to log on and look at it and see what was up and then the old time it was dying. By the way, if you do that, especially if you're going into something over 20 years, there's nothing that plays more with your emotions. And then you're investing your investments go up and down and for the most part it's just noise. Anyway, separate point. A couple of months later, I ended up taking on a new client and turns out that they were a financial advisor. And they said to me, what did you invest in? Who did you go with? What did you pay? As you would. People hold I shared what I was paying and they said, Phil, you are being ripped off. We could do it for half thought, if not less. In fact, I'm just going to tell you the truth. You really just need to park it into global diversified fund or SMP and let it sit. You can do that yourself. We're only really good with the paperwork, the administrative side and setting up bets and pieces. And in fact, we can agree on consultancy fee. It just so happened that I'd help this financial advisor a lot with life stuff, business stuff. And they basically just give me the loot on. Anyway, here's what happened. I decided to cancel my contract with the existing financial advisor and go all in and doing it myself. Put it into Vanguard, pick my fund, put it in, let it sit, let it pick. And that was it. And it maybe realize a couple of things. Number one, financial advisors have a large margin that they can charge you. And the fact that somebody could go down half, if not less with it, spoke a lot. Number two, the fact that I'm putting this money into something for 20 years, 30 years. What am I actually paying for on a monthly basis on a yearly basis? Somebody to like, "Glance at my account every night again and tell me, oh, the market's dying. It'll come back." Or to provide me with a fancy spreadsheet at the end of the year going, "You're up, you're dying." This was criminal. And the hard thing was is that I didn't really understand it. I was great at business, but I didn't understand all these financial tools, these financial vehicles. And that's what made it complex. That's what made it appealing. And the worst thing about this was is that after a couple of years of learning this stuff, I then started to look at my parents finances. And I started to realize, "All right, you've been paying a financial advisor, X amount per year, on all this stuff, what have they done?" And to my horror, it was, "We have a six months check-in, he comes out to the house, he sits down and has a coffee, brings us a latest diary, and just runs us through what's up and what's dying." And that was it. So, guys, this is a message for you, it's a message for your parents, it's a message for any of your siblings. That I kind of just want to put out there, I think it's really important. Financial advisors are administrators in a good suit. They are genuinely brilliant at, like, setup, wrappers, the paperwork, the compliance, the structure. If you don't want to do it. And if you need a pension set up properly, they'll do it. Sip, sauce, all of it, dialed in. If you need life insurance, they'll actually do the whole thing. That protects your family, they'll structure it. If you need inheritance planning, so the taxman doesn't take half of what you've built, they'll work with your accountant and handle it. If you need the right iser oper, they'll point you in the right direction. If you need someone to navigate the complex edge cases where tax rules and pension rules and inheritance rules all collide. Yeah, they earn their fee in those moments, and this is real valuable work, don't dismiss it. The mistake isn't using a financial advisor. The mistake is using them for the wrong thing, because here's what happens. You hire them for the admin, and then because they're in the room, you start asking them about wealth, about your investments, about your strategy, about where to put your money to grow it. And do not be pulled in by the bit of put this money in here, it'll grow it per cent every year, tax free, and you just do absolutely nothing. It's not as simple as that, right? So understand the core insights here. Number one, their job is to protect what exists. Yours is to build what doesn't. The same truth as your accountant, their opposite jobs. Don't let the person pay to preserve your capital, tell you how to multiply it. The number one thing that you can control is your business. You cannot control the stock market. Even if a financial advisor website agrofen says, look, it per cent a year, it per cent a year. Yeah, all it takes is a tax from Donald Trump to crash the market. If you put all of your money into a pension, into an isa, and let's just say that you need it and lo and behold, Donald Trump's just decided to decabute and put out a threat to Iran or whatever. Like we've just seen recently and everything fucking tanks and you need that cash, you don't control fuck all right. So understand that you control your business to me in generator of your wealth. You don't control the stock market. Number two, ask every financial advisor that you work with one question and watch their reaction. Have you ever made a client seriously wealthy with your advice? Most of them will say I can't share that because I'm not lied to share results. I'm not factual. That's true. But if you speak to any wealthy person that you know, did you build your wealth in the stock market? Did you build your wealth with your pension? Did you build your wealth with your isa? I haven't heard a yes yet. I've heard people that said, hey, I made a bit of a turn when the market dipped and I put money in. But I said of that I've never ever heard somebody say that their mean source of wealth was coming from working with a financial advisor. Most haven't they kept people stable and stability is not wealth. The highest return on capital you'll ever make is your own business. Your financial advisor cannot tell you that because there's no fee in it for them when you back yourself. So they'll quietly steer you towards the products they earn on. Fourth, most financial advisors will tell you to diversify and there's nothing wrong with diversifying particularly in a large global fund. But when you diversify the capital that you've worked so hard to get and gain, ultimately you end up depleting your business of valuable cash you could use for advertising, new team, new tools, new equipment, new locations. Diversification is how you preserve wealth once you've built it. Concentration is how you build it in the first place. If you diversify your capital too early, you dilute the very thing that creates the fortune, which is a finder going all in on their business. not only do you split your money, you split your. your attention because now you know that you've got money elsewhere. And I have spoken to so many finders that have put like 40 grand, 80 grand, 100 grand into a property or into their pension. And they crave it years later because they've taken a dying turn or taken their eyes off the ball. The number one thing in business that is going to de-risk you is building fucking war chest. Right? That is the first thing that I built whenever I built my business. All I focused on was building a war chest. Why? Because I realized that I couldn't take anything for granted in business. Everything has cycles. Everything goes up and everything also must go down. There is life and there is death in your business. Markets have life and markets have death. And you need to build a war chest. So I said, what am I to money? Do I need to build in order to feel safe so that I can take risks, survive a bad season or grow during a transition? And that wasn't going to come with me forking all my money out into the stock market. Five, they've never priced real risk. Their own career is a salary, a commission structure and a compliance handbook. They've never had to make payroll out of their own personal account. They've never sweated a tax belt. They've never bet the house on a pivot. They can't coach you on risk because they've never lived one. Or they've never taken one. So in business, it's a game of risk. You're constantly analyzing risk on how to protect yourself. You're constantly looking at moves that are irreversible. Most of these guys haven't done that. So it's very hard for them to actually talk you into something around risk when they haven't actually felt it in their own bones. Don't understand this. 0.6, a pension for 20 years isn't a plan. It's a spreadsheet. It's the extent of the advice. Just put it into a sip and don't look at it for two decades. You're paying a lot of money for something. Your 14 year old could set up. Go on to vongards, set it up yourself in minutes. Seven, the best investment you'll ever make sits inside your own company. Your team, your product, your marketing, your skill, your brand, nothing in the open market performs that. The financial advisor will never set out low because they cannot monetize it. The greatest return on any money that I ever invested was put into skills. It was put into masterminds, events, courses, learning skills, speaking with consultants around my biggest challenge. If I said you right now, what is the biggest challenge in your business? Like the one thing that keeps you awake at night, we don't have enough leads. We're not converting enough. We've got bad team members. Our customer journey isn't right. What would it be worth for you to fix that? It's significant. It's massive. That's why you need to build the skills around it. So let me leave you with this. If you want exposure to the stock market, you don't need the financial advisor to get it. Yes, you can still have one. They'll do your paperwork if you don't want to go through the hustle of all that, but it is way less complicated than you think. Open it up on yourself. Put your money in. I've put my money into the SMP on a diversified global fund like the VWRL. On a handful of the biggest companies inside those rappers drive most of the returns anyway. You're not going to beat that by paying someone 1% plus a year to pick it for you. And here's three rules. Number one, only use surplus cash. Money you can genuinely afford to lose. Not your rainy day fund. Not your tax pot. Not money. Earmarked for the next moving your business. Next advert. Next hire. Money you use surplus cash that you cannot spend in your business. So if you have a ton of cash right now, you're worried about inflation heading it. Honestly, don't be pressurized into putting it into the market. Sit and actually go, right, where's my business at? Where could I take it? And if you want to know where you can take it, go and look at the best in the industry, compare yourself to them. Go and look at the biggest challenges that you have right now and sit down and actually go, what are these costing me every single year to not be fixed? And then start seeing where you can take your business to. Get your business to that level, preserve your capital. And whenever you get it to that level, then you can start putting it off because you're doing it from a much stronger position. When you know in your mind that you've ticked every box off, you know that you've invested in absolutely everything. And that you know that you can actually invest money into things like property and the investment world without losing sleep. Where we lose sleep is whenever we literally give away 20, 30, 40 grand, 100 grand. And we know that, okay, that might put us back down to a mindset of scarcity and a level that quite frankly feels uncomfortable. And we still have hires and we still have ads and we still have things to buy for our business. That's just stupid. Number two, don't treat it as your mean wealth building strategy. It isn't your businesses. The stock market is where you park profit. It's not where you create it. Therefore you need to be looking at doing everything possible to grow your business, getting advice, getting strategy, getting in rooms where you're going to be essentially put into a very high level of accountability and proximity to people that have done the very thing that you want. Like, I cannot stress that enough. If you want to get strong, you train with strong people. And if you want to grow this business to levels that nobody else has, you need to be amongst people that are going to hold you accountable to it. And it is worth paying to get into those rooms. Number three, watch your fees like a hawk, 1% here and 0.5% there, a platform charge on top over 20 years that combines into hundreds of thousands of pounds, euros, dollars, whatever current you're in that never belonged to you in the first place. These are the silent tax on your wealth and most people never notice them until it's too lit. If you don't want to do the setup yourself, that's fine. Pay a financial advisor, a one-off consultancy fee to get you set up properly, pensions, wrappers, life cover, inheritance planning, the complex pieces and let them earn a flat fee for that work then walk away. Because the simple question is this, I want a pension setup, I want this setup. Can you do it for me? What is a one-off consultancy fee? And then if I say, well, look, we have a fee to manage it in the background and give you reports on a lot, 1%, 1.5% for 20 years to just give you a glossy PDF and an annual diary. Like it's not worth that. No way. Your financial advisor is not your wealth creator. You are. Your business is the engine. The stock market is the storage unit. Do not confuse the two. Back yourself, build the business, keep the fees low and let the index do its quiet work in the background. The people who build real wealth aren't the ones handing it over to someone else to manage. The ones who understand where wealth actually gets created and they protect that position with everything that they've got. So before you take a call with your financial advisor, ask yourself one question. Have they ever built the thing that I'm trying to build? If the answer is no, then you need to tread carefully because there's a very good chance that you are paying above and beyond what you should be for something very simple that you could do yourself. Don't be afraid to do a one-off consultancy fee or a check-in every two to three or four or five years in order to check in if you want that level of accountability. But just be mindful because that money is your future and you want to make sure that it's steered properly.