MILLION DOLLAR MANAGEMENT
Simple Lessons to Use Wealth Management Principles for Your Family Investments
by
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Let’s pretend you’ve just won the lottery. Your first check will be delivered tomorrow and it runs to seven digits. How will you handle the money? Chances are good that you’ll seek out a trusted relative or advisor and ask for help. Not having faced this issue before, it’s a logical approach. But, it’s terribly flawed. Why? Because there’s a good chance your advisor has never faced this issue before either. Few relatives, lawyers, accountants, bankers, even stockbrokers or business-owners, have a million dollars sitting in invested accounts. Sure, they have opinions, perhaps strong opinions, but opinions based on ignorance are worse than nothing at all. Much of their advice should be ignored. When I teach college classes on personal finance, I always raise the question, "Where did you learn the things you know about money?" Almost everyone identifies some family member as their first money teacher. "And how are they doing financially?" I press. It suddenly dawns; our usual money teachers know relatively little about money and investing. Surprisingly few professionals work in this realm, either. The typical stockbroker or insurance agent may never have a million-dollar client. Lawyers and accountants often see millions of dollars, but rarely get involved in managing them. Most avoid the legal responsibilities of managing money for someone else (called "fiduciary" responsibility). A few of us do know how to invest a million dollars. There’s an amazingly large body of research on the subject and some of us devote our professional lives to helping others manage wealth. It’s not rocket science but it seems complicated, a notion fortified by many investment people and firms. Most of these people and firms specialize in the retail management of smaller accounts (selling investment products).
Lesson Five Most of us learn our early values – including money values – from our parents. Our first lessons come from them. Even if they neglected financial responsibilities, or knew little about investing, they still taught powerful money lessons. We carry those memory imprints forever. Maybe your parents made a concerted effort to teach the right things about money (a minority of cases). Some of those lessons require substantial revision to fit today’s world. Truth is, my parents faced few good options for family savings. They could put money in a passbook account at the bank or buy $25.00 U.S. Savings bonds. No legitimate mutual funds. Stocks weren’t easily accessible to smaller investors. Government bonds required a $10,000 minimum purchase. Financial behavior for our parents was dictated by necessity. Today is quite different. Savers today face a multitude of options – over 13,000 mutual funds at last count. Information is plentiful and investing has never been simpler or more convenient. If you’re still operating on money values proffered by your parents (accidentally or on purpose), your financial outlook needs a serious update.
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About the Book
Most investments are peddled by salespeople. Madison Avenue meets Wall Street to create and sell investment products and services. Families face a broad array of options, usually confusing, often disappointing. This is a liberating financial book. There is science to genuine investment management, but it’s often reserved for wealthy families or large endowment funds. In Million Dollar Management, wealth management principles are explained in simple terms for use by family investors. In fact, the process is often easier and more rewarding than usual strategies and methods. Danford and Myers offer the basics in twelve brief lessons. Concepts are easy to grasp and the reading is lively, even fun. Readers learn how wealth management professionals manage money, but that’s just part of the message. Though readily accomplished, they also learn some important reasons why typical family investors never reach this level of knowledge or skill. The book’s not timid, either. It tackles some moral and ethical reasons for using great care in managing investments. It challenges families and nonprofit groups to bring true stewardship to the care of money. A special section contains a revealing interview with Danford about Christian issues in having and investing money.
About the Author
Dan Danford and Gary L. Myers own and operate Family Investment Center in St. Joseph, Missouri, a fee-only Registered Investment Advisor. The firm offers investment management and other financial services to families, companies, and nonprofit groups. Danford entered the investment business in 1983 as a bank trust officer. He’s spent the intervening years as a senior executive for several banks and investment firms, including two successful start-ups. He holds an MBA and teaches personal finance and investing at a local state college. Over 100 of his articles on investing, marketing, and management have been published in a variety of professional and general interest magazines. Myers is an attorney with offices in St. Joseph, Missouri and Overland Park, Kansas. He specializes in corporate and estate-planning law and serves on a number of professional and civic boards. For over twenty years, he was internal counsel for a New York Stock Exchange-listed company in St. Joseph.