Ron Malhotra became obsessed with learning about wealth creation after seeing his own parents struggle in their later years despite having relatively successful working careers. He went on to spend years devouring over 400 books on the subject of money and wealth, and going through formal education to learn about financial planning and wealth management.
Ron wanted to discover why only a small number of people in the world held a huge proportion of the world’s wealth, yet the majority struggle. His advice now, for anyone looking to build wealth for their lives and retirement, is to learn and follow the time tested principles which have allowed many people to create long-lasting wealth. Ron advises to get clear on what your wealth goals are, know your reasons for why you want to create wealth and have a well-defined strategy that you can stick to.
Getting quality financial advice is a minefield for investors these days. The industry is littered with people masquerading as experts who have struggled to create wealth for themselves, yet freely dispense advice to others on how to build retirement and lifestyle savings. The industry has a major negative perception problem it needs to work on. For many would be investors, advisors are seen as commission based product pushers, more interested in their own financial outcomes than the clients they serve.
Malhotra agrees: “It’s the way the industry was set up towards a product bias and commissions rather than leading, guiding, educating and truly advising clients on how best to invest to suit their particular needs and circumstances. Thankfully that has changed but the perception still exists in many quarters.”
According to Malhotra, effective financial advice needs to be holistic, consultative and client centric. “It should be about developing a deep understanding of the client’s values; what’s important to them, as well as their financial and personal situation, their personality and their longer range goals. Only then should advisors develop specific strategies that will provide clients the best chance of achieving their goals and objectives. Financial products should be the last step, and possibly the least important step of financial advice. Advice is not about financial products it’s about providing clients with clarity, confidence and certainty and putting them in control.”
Ira Herman, national director of trust and estate practice at J.H. Cohn, N.J agrees: “holistic planning is an overall approach that combines both financial and social components to ensure client’s portfolios are well aligned with their values. It is a continuous, life-long process that requires active involvement and input from clients and advisors and helps achieve progress with life goals, manage risk, secure retirement, support charitable and social causes, transfer assets between generations, and achieve and maintain sustainable financial independence. Importantly, it helps ensure decisions made to create wealth will better reflect the individual’s values.”
Many people don’t seek financial advice due to a lack of awareness of the problems they could face later. They believe as long as their financial situation is not deteriorating, they will be ok in the future. Few understand the importance of time in the wealth creation equation and how little of it they have to really create the wealth they desire. Every year they delay joining the road to wealth, means needing to take higher risks to achieve the desired outcome in the reduced time.
Malhotra says: “The principles of wealth creation – investing early, investing often, diversifying your risk (but not over-diversifying), not over concentrating investments, buying quality assets under intrinsic value if possible and holding them over the long term are time tested and have proven to be successful. Ultimately history repeats itself and even though there may be a lot of economic and media noise along the journey, over the long term a good quality portfolio of assets should always create more wealth.”
“One thing is certain you cannot hit a target you cannot see” says Malhotra. Most people will benefit from the assistance of a suitably qualified independent professional who adheres to the time tested philosophy of wealth creation and who helps clients clarify and articulate meaningful objectives, helping them to stick with their strategy through the right disciplines and behaviours.
Risk can never be eliminated when it comes to financial decisions, however through prudent planning, management and education, risk can be minimised and this is where the real value of a financial advisor can be found.
To find out more about holistic wealth creation, visit: www.RonMalhotra.com