Overheard in a café: “If You’re Married… You’ll Never Be a Rich Man…”
Three men were seated in downtown Annapolis at City Dock Coffee one morning. Two of the men were more advanced in their careers and trying hard to impress their value to a younger man working for the Governor. After significant posturing, bragging and chest beating, the two men finally wrapped up. But, before they left this young man’s company, one of the two men offered him the business card of his own financial planner. He followed by saying to the younger man, “the first question he’ll ask is whether you’re married. The second question is whether you have kids. If you answer yes to either, he’ll tell you that you’ll never be a rich man.”Really?
Besides being a misogynist remark devaluing the relationships of a wife and children, the financial planner must be a shallow individual, devoid of relationships with other humans. Perhaps his relationship with money is his only passion. But, why build wealth if you are going hoard your riches and live a socially impoverished life?
Apparently, the wealthiest Americans alive today do not share the opinion of that financial planner. In fact, the top 5 self-made richest Americans are:
1. Bill Gates, Microsoft, married with 3 children
2. Warren Buffett, Berkshire-Hathaway, widowed & remarried, 3 children
3. Larry Ellison, Oracle, divorced, 2 children
4. Michael Bloomberg, Bloomberg, divorced, 2 children
5. Larry Page, Google, married, 1 child
All of these individuals have the same thing in common: marriage and children. That didn’t seem to stop them from amassing fortunes.
Most financial advisors continue to ignore the value, financial power and influence of women. But as more women complete higher levels of education, they are obtaining more highly paid jobs that impact the family wealth status. Women controlled an estimated 27%, about $20 trillion, of the world's wealth in 2009. In North America, women control a third of the wealth, and it is projected that will grow at an average annual rate of 8% through 2014.
However, the financial planning industry under serves this group of wealth holders. According to research conducted by the Boston Consulting Group, women with $1 million to $5 million of managed assets were dissatisfied with how their investments were handled. A common complaint was that advisors don't take females seriously and come across as “patronizing and contrived.”
Historically, there have been two reliable ways to become rich in America: own your business and own real estate. America was built upon those premises. The original founding fathers wrote the laws to favor landowners and business owners. Of course, they were the landowners and business owners so it made sense that they would construct laws for their benefit. Today, our tax code encourages opportunities for Americans to advance their financial status through business and real estate tax advantages.
The financial planning industry downplays the advantages to holding real estate. While many financial planners today continue to push investment products as a means to wealth, stocks and bonds have been under performing for many investors. Yet the financial advisor or planner makes money regardless of the performance provided.
Over the past 18 months, many savvy investors have found it far too risky to put their money in intangible commodities and volatile markets and are opting for dirt—real estate. According Real Capital Analytics, the uber riche are heavily investing in real estate. And the TIGER 21 survey shows that the ultra rich have transferred at least a third of their wealth into real estate from other holdings.
Real estate has been a strong wealth-builder for the majority of Americans and made many ordinary citizens, millionaires. According to The Millionaire Next Door: The Surprising Secrets of America's Wealthy by Thomas J. Stanley, PhD and William D. Danko, PhD, 97% of millionaires are homeowners. Interesting to note, these married millionaires claim their wives contribute to their wealth by being excellent planners and meticulous budgeters. And in many cases, the wife was the initiator to the couple’s first home purchase.
So, being married doesn’t hurt your wealth-building success. In fact, a study done by the National Marriage Project at Rutgers University revealed it actually strengthens it finding that individuals become more economically productive after they marry and save more money. They earn more, save more, make better financial decisions than their single counterparts. An Ohio State University research study found that married couples accumulate nearly twice as much personal wealth as a person who is single or divorced. Married couples accumulated 93% more wealth than single or divorced people over the life of the study. Common sense dictates that one household is easier to maintain than two; and two incomes compound wealth faster than one.
David Bach, author of The Automatic Millionaire Homeowner, reaffirms those findings. The millionaires he interviews attribute owning their home to building wealth. And the majority of these were married couples that planned and managed their wealth cooperatively.
So, what about that “financial planner” that can’t help you become a rich man if you are married or have children? He’s definitely out of touch. I hope that young man tossed the guy's business card in the trash bin on his way home to his wife.