The $500,000 Error & The Clients I Want to Work With

99% of my prospective clients fall cleanly into one of two buckets:

1. “Jesse – I want to hand you everything. You’re analyzing my life, proposing ideas, and then you are pushing the buttons to enact these changes. I, the client, don’t want to push the buttons.”
2. “Jesse – I’m only asking you for advice. You’re analyzing and proposing, sure. But then I, the client, will choose what advice to accept, and I’ll push those buttons if and when I choose to.”

It’s like flying.

Bucket 1 wants me to be their pilot. They’re the passenger. Clean separation. You relax in your seat and read your book. We’ll be in Palm Springs in 3 hours.

Bucket 2 wants a flight instructor, with them (the client) as the student pilot. I’m the expert, but they’re flying the plane. They could misunderstand me – or ignore me – and do something dangerous, dumb, etc.

I have a clean personal preference – I want to be the pilot.

There are important and simple reasons why:

1. I want my advice to be implemented. If I’m the pilot, then my advice gets implemented every time. But if I’m just the instructor, then perhaps you forget to implement my advice. Or you delay. Or you choose not to implement it at all. All problematic.
2. You’ll make mistakes. I’ve seen too many overconfident DIYers make startlingly bad mistakes. Here’s an example that a “flight instructor” advisor recently shared in an industry forum:

The client intended to do a $300,000 Roth conversion but instead did a $3.5M Roth conversion. The advisor made the recommendation (“convert $300K”), but the client pushed the (wrong) buttons ($3.5M).

I would estimate this was a $400,000 – $600,000 mistake. The client converted $3.2M too much, at total tax rates 12-20% more than intended.

Obviously, I am cherry-picking an example. Plenty of people DIY their finances every day without making mistakes. I chose a startling story.

But the fact remains – I believe more can (and does) go wrong during “flight instructor” financial advice relationships.

There’s a similar saying in the trades. “I can do the job for $20,000. If you want to help, it’s $30,000.” Because when a homeowner wants to “pitch in,” it’ll mean that the professional needs to:

• Fix mistakes made by well-meaning amateurs.
• Stop and explain things instead of just doing them.
• Wait on the client’s schedule instead of working straight through.
• Manage the client’s opinions/change requests along the way.

It’s a damn close analogy to financial planning.

I love my work, and I’m happy to show my clients “around the cockpit,” as it were. I’ll give away free wings all day.

But when it’s time to fly, I want to be the pilot.

Thank you for reading! Here are three quick notes for you:

First – If you enjoyed this article, join 1000’s of subscribers who read Jesse’s free weekly email, where he send you links to the smartest financial content I find online every week. 100% free, unsubscribe anytime.

Second – Jesse’s podcast “Personal Finance for Long-Term Investors” has grown ~10x over the past couple years, now helping ~10,000 people per month. Tune in and check it out.

Last – Jesse works full-time for a fiduciary wealth management firm in Upstate NY. Jesse and his colleagues help families solve the expensive problems he writes and podcasts about. Schedule a free call with Jesse to see if you’re a good fit for his practice.

We’ll talk to you soon!