December 31, 2024

Episode 80: Common Money Mistakes Advisors See Clients Make

28 minutes

In this episode of Stuff About Money They Didn't Teach You in School, host Erik Garcia, CFP®, teams up with Brenton Harrison, the host of the New Money, New Problems podcast, to discuss the most common financial mistakes clients make. Recorded live at Osaic's annual Connected conference in Orlando, they explore the emotional factors that influence poor investment decisions, the critical differences between risk tolerance and risk capacity, and the myths surrounding passive income.

Erik and Brenton share real-world examples and insights from their practices as financial advisors, highlighting how emotions like fear and greed can derail sound financial planning. They stress the importance of defining financial purpose and aligning investment strategies with personal goals. Tune in for actionable tips and a deeper understanding of how to make informed financial decisions for a more secure future.

Episode Highlights:

Erik discusses how emotional decisions, driven by greed and fear, often lead to poor financial outcomes. (02:13)

Benton explains the concept of risk capacity and how it differs from risk tolerance, emphasizing its role in long-term investment strategies. (04:48)

Benton emphasizes the misconception that real estate is a passive investment and explains the realities of managing properties. (10:52)

Erik explains the importance of attaching purpose to investments, such as distinguishing between cash flow and capital appreciation strategies. (13:15)

Benton discusses the mistake of buying homes too big or too small for one’s financial situation and shares tailored advice based on income potential. (15:26)

Erik highlights the value of a "statement of financial purpose" to align financial decisions with personal values and long-term goals. (18:27)

Benton emphasizes the importance of starting financial plans that align with long-term objectives, avoiding unsustainable patterns. (23:11)

Benton shares the mistake of perpetually budgeting for car loans. (25:45)

Key Quotes:

“People act counter to what they say they feel as an investor. I will come across people who are so conservative and they are so afraid of the market that they'll be in their forties before they invest in anything outside their 401k.” - Brenton Harrison

“Don't start some plan of action that doesn't tie into what you want to be doing 10, 15 years from now.” - Brenton Harrison

Resources Mentioned:

Brenton Harrison

New Money, New Problems podcast

Erik Garcia, CFP®, BFA

Xavier Angel, CFP®, ChFC, CLTC

Plan Wisely Wealth Advisors

...more

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By Erik Garcia, CFP®, Xavier Angel

88 ratings