Do you want to renovate your kitchen yourself or hire a contractor? The same question applies when it comes to managing My Wealth, Inc. Discovering what is best for your unique set of skills and preferences is the first order of business. By taking a short quiz (page 20), you will know whether you even need to read the rest of this book!

If it turns out that you are a do‐it‐yourselfer, you need not continue to read. If, however, you are like most of us, and would appreciate an advisor’s guidance, this book will unlock several keys to your future success in working with an advisor.

Think of entering Home Depot with no idea how to renovate a kitchen. You do not yet know the tools you will need, the materials, or even the design you want. Suddenly, an employee in a golf cart cruises up to you and says: “Hi! My name is Joe, and I am here to help you. Not only will I ensure that you only buy what you need, I’ll help you get it home—and show you exactly how to renovate that kitchen! But before we begin, let’s talk about how your family uses the kitchen—and see which design will work best for you.” If you tell Joe thanks, but no thanks, is it because you don’t trust him? Or because you know exactly how to renovate your kitchen? Your reasoning could go either way, and that is important for you to discover, too. Not hiring an advisor because you don’t trust anyone to care as much about your wealth as you do is like not going to a doctor when you’re sick because you don’t like the conflicts within the healthcare industry.

How will I know?

Whether doing it yourself or hiring an advisor appeals to you more is determined by your level of knowledge and sophistication as well as your need to be in control.

If you don’t like reading all those footnotes in a mutual fund prospectus, you should probably hire an advisor. You are unlikely to stay awake trying to learn what you need just to renovate that kitchen. If you love reading the Wall Street Journal every day and find the markets utterly fascinating, you are more likely a do‐it‐yourselfer. However, everyone has a different way of reading material—and a different level of comprehension. Consider keeping fit at a local gym. Twice a week, I hire a personal trainer to do a circuit with me, performing exercises that I know by heart. Why on earth should I pay for a trainer when I could just as easily do this all by myself? Because I wouldn’t! I need the discipline and reinforcement of a trainer in order to meet my workout goals each week. Similarly, even if I love reading the financial news every day, I still might want to employ an advisor as a second pair of eyes on my decision making—or as a reinforcement to encourage me to stick to my own goals and not be lured by the siren song of quick riches.

Assess yourself

This short quiz will start you on the path to greater self‐awareness. Then plot (just like algebra class!) your scores onto the chart that follows. You will see where you fall on the quadrants of sophistication and control,¹ and know when, and if, you should hire an advisor.

After you add up each score for knowledge/sophistication and control, plot each number (control is the horizontal axis and knowledge/sophistication is the vertical axis) to find out which quadrant you fall into.

If you are high in the upper right‐hand quadrant, you may be more comfortable acting as your own advisor.² You are the one who faithfully goes to the gym every day, knows the circuits by heart, and never misses a workout!

If you fall in the lower quadrant of knowledge, you risk being fooled into trusting the wrong advisor. If you fall into the higher quadrants of knowledge and sophistication, though, you can’t be smug, either.

If your score places you into the lower‐left‐hand quadrant, watch out! You are the most vulnerable. You buy the sales pitch because you do not know enough to see through the banter. And worse, you don’t take the time to do any due diligence because you don’t think you need to. In short, you are an irresponsible CEO of My Wealth, Inc.

If you fall in the lower‐right‐hand quadrant, you are the client no advisor wants. You think you know enough to be in charge, but you actually don’t. You will engage in Monday‐morning quarterbacking and second‐guess every decision of your advisor. The reality is you know too little to fully grasp portfolio analysis.

If you are in the upper‐left‐hand quadrant, you risk being overly drawn to others who think just like you do about the markets—which makes you far less likely to hear the contrary case. You are just as much at risk from overconfidence, and might be too sure you are right. As the late Peter Bernstein, renowned thinker about investment risk and author of Against the Gods, once explained, “The greatest risks we take are when we are certain of the outcome.”

Ideally, you want to be in the middle. You may need to learn a little more, respect what you don’t yet know, and control a little less. As you work with an advisor, you often become more confident. You feed your need for control by getting more meaningful reports. You gain knowledge when you request a no‐jargon zone, and insist on hearing how the concept of risk applies to you.

Making sense of all the choices

Many of the terms in wealth management are almost synonymous, so don’t be alarmed by the terminology. An advisor tells you which funds, money managers, or assets to invest in. A money manager or fund manager actually invests on your behalf. As you might expect, an advisor can also be a money manager—and a money manager might become your trusted advisor. A broker might act as your advisor and your money manager simultaneously. A financial planner and consultant might act as your advisors, too. This is where conflicts of interest arise, and you need to know enough to avoid the pitfalls. In many cases, the confusion over terminology has worked to the advantage of unscrupulous advisors. While this might seem petty and technical, terms like fiduciary are critical to your success.

Whom can you trust?

The terminology used by the person you’re interviewing does in fact make a difference. Remember, you want someone who puts your interests first.

Putting your interests first is a simpler phrase for acting as a fiduciary. Without using complex language of regulation or technical jargon, use this recap instead:

As my advisor, are you accepting these Core Duties of a Fiduciary³?

1. Serve the client’s best interest.
2. Act in utmost good faith.
3. Act prudently—with the care, skill, and judgment of a professional.
4. Avoid conflicts of interest.
5. Disclose all material facts.
6. Control investment expenses.

One caveat: Many advisors might use this language in a brochure or website, implying that acting as your fiduciary is akin to the legal standard of care required of your physician or attorney. While comparing your advisor to a lawyer or doctor is valid, recall that even if a doctor takes the Hippocratic Oath, he or she may not be ethical. Character counts here. Some advisors may not automatically put your best interests above their own. A fiduciary standard may require certain behavior, but you should still verify actual behavior. You can learn how if you keep on reading.

There is hope!

You don’t have to panic, or worry that you’ll never learn enough—or that you will find the learning to be drudgery. At a private meeting with a group of fellow investors several years ago, one investor drew a graph to depict how much she had originally thought she needed to learn in order to be a prudent overseer of her wealth. She was dismayed and distressed! Then over time, she came to a different realization.

Before sharing her experience these two graphs⁴ with her fellow investors, this investor had taken charge. She began to feel confident because she knew enough to ask the right questions and insist on straightforward answers. Much of wealth management is simply common sense: “I really am the expert on my own needs and goals for this money!”

There are also courses you can take. Multiday residential programs in Private Wealth Management at Wharton, Columbia University, or the University of Chicago⁵ provide you with the knowledge and power to fully assume CEO duties—and take charge of your own wealth. Consider this analogy: Imagine a CEO personally doing the elaborate wiring for a company‐wide telecommunications system instead of delegating the task. A smart CEO learns just enough to oversee the operation without learning how to switch routers.

Because you are a conscientious CEO of My Wealth, Inc., you resist your natural inclination to fall into one of the more extreme quadrants. Instead, you take action, learn more, and implement better management tools—just like any successful CEO does in any business.