• Matt Morizio

Behind the scenes of financial advising: what I learned in 2018, part 1


Athletes and entrepreneurs think A LOT alike

In my first year as a financial advisor, around 75% of all the clients that chose to work with me were either D1 or professional athletes and/or entrepreneurs/intrapreneurs.

And I admit, that was completely by accident. I was meeting anyone and everyone I could.

Given that I used to play minor league baseball and have since built a couple successful practices from scratch in a couple different industries, it makes sense that these are the types of people I continue to work best with.

And their mindsets are incredibly similar.

I’m reminded of a famous Bruce Lee quote that says something like, “Fear not the man who practices 10,000 kicks once but the man that practices one kick 10,000 times.”

Both athletes and entrepreneurs are those people who practice one kick 10,000 times. And both, I’ve learned, have very little clue what to do with their pot of gold if they ever reach the end of their rainbow.

Both are so hyper focused on their singular mission that they don’t allow any distraction to get in their way, even if that distraction is personal finances.

And in both the professional sports and entrepreneurial journeys, the earnings along the way are so minimal that investing is irrelevant until the switch flips and you either make it to “the show” or you exit your company.

So I consider it a privilege whenever I’m presented with opportunities to educate those people along their journeys about how my world works, and more importantly, what questions to ask to make educated decisions with their money when the time comes.

Owning 15-25 individual stocks doesn’t expose you to any more risk than owning a bunch of mutual and index funds.

Diversification is key to successful investing, I agree. But I’ve learned that concentrated investing and proper diversification are two sides of the same coin.

When you know what you are doing, a concentrated portfolio does not put you in a riskier position than owning a bunch of mutual or index funds.

I wrote about the research behind the optimal number of holdings here, but I also experienced it first hand in Q4 of 2018. Our clients were not any more exposed holding 25 companies than those invested in 500+.

It taught me a lot about true diversification versus what the industry considers “proper diversification.”

The short answer, more isn’t more.

You can’t budget your way to becoming a millionaire.

This was a huge mindset shift for me in 2018, and I credit Grant Cardone’s 10X Business Bootcamp for a lot of it.

At Beck Bode we have a number of CFP’s (Certified Financial Planners) on staff, and it’s our job to completely understand a client’s financial life to make appropriate investment recommendations. In the process of learning about our clients’ finances, budgeting and spending always come up.

Before this mindset shift, I only coached people to cut back on excessive spending and to live well within their means.

But what I realized is most client problems go away if we add a 0 to the end of their annual income or net worth.

Sure, that isn’t easily accomplished, but it’s worth paying attention to.

I still encourage people to live within their means, but now I put a heavy emphasis on figuring ways to earn more money.

You can’t make enough lattes at home to live the life most desire to live.

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Investment advice offered through Beck Bode, LLC, a fee-only Registered Investment Advisor in the Greater Boston area.