Why Successful Entrepreneurs Aren't Always Successful Money ManagersSubmitted by Castlebar Asset Management on September 5th, 2017
Have you heard of Superhero Syndrome?
It’s a phrase online entrepreneur and outsource expert Chris Ducker uses to describe what most business owners suffer from: the idea that we can do it all, all the time, and it’s up to us to save the world with our business!
To create, launch, and run your own business takes a lot of skill and talent. There’s no doubt that successful entrepreneurs are intelligent, resourceful, innovative -- and above all, capable of managing quite a lot.
But that doesn’t mean you should always try and do every important task in your business or personal life on your own. This is especially true when it comes to managing your money.
The Importance of Building a Team of Objective Third-Party Professionals
Here’s what smart business owners know about building a team around them -- and why they choose to hire other experts to handle tasks and important work:
- Someone who specializes in a certain activity or task can likely get it done better and faster than you can.
- An expert can catch mistakes you might miss, or spot opportunities that you didn’t realize were there.
- Entrepreneurs are insanely busy people, and can greatly benefit from the value of having someone to hold them accountable to actions they need to take outside their business to reach success in other areas of life.
- An objective third party working with your best interests in mind can help make rational decisions about the best choices for you (instead of letting their own emotions or attachment to the situation cloud their judgment, as you would be prone to doing because you’re so close to it. It’s your money, after all, and it’s hard to remain 100% objective).
That last bit is crucial when it comes to making financial decisions and dealing with all the little choices you need to make day in and day out with your money in your business and in your personal life. And all of those decisions come with a cost.
We can suffer from something called decision fatigue. This happens when we max out our capability to make reasonable, sound decisions -- and once we reach that point, all the decisions we make after tend to be more emotional and less rational.
Emotional, irrational decisions are not the kind you want to make when it comes to your money.
Entrepreneurs Can Wear Many Hats, But That Doesn’t Mean They Should
You likely know your own industry inside and out. No one is questioning whether you could go out and learn what it takes to be your own investment manager and develop a financial plan that works.
But that doesn’t mean it makes sense to try and be the CEO of all aspects of your life.
As Chris Ducker points out, the best and most successful entrepreneurs knows exactly when someone else can do a task better than they can -- and they hire that person to complete the job.
Not only does this free up your own time and energy, but it also puts the required task in the hands of someone who might be better equipped than you are to deal with it.
This isn’t that radical of an idea. Think about it: you don’t perform your own medical procedures, do you? Of course not.
You may do your own research and learn a lot about an illness or a condition that affects you or your family. But you still reach out to a healthcare provider to receive treatment. In fact, you probably put your intelligence and resourcefulness to work to find the best healthcare provider available to you.
This becomes even more important when we’re talking money management.
Successfully creating comprehensive financial plans, investment strategies, and managing all the moving parts as your life and business change year to year is a huge task that requires a lot of knowledge, experience, and most importantly, objectivity.
Successful Entrepreneurs Know the Value in Professional, Outsourced Money Management
Again, no one doubts your ability to go out and teach yourself what you need to know. If you wanted to manage your own money, you could likely do it and the outcome would probably be acceptable.
You’d probably do just fine. You might meet the goals you set and feel good about your money.
But there’s still a problem with this.
As an entrepreneur, you’re well aware of what you know. You probably even know what you don’t know, which is why you hire great employees and others to help you when you need it.
But human beings tend to be really bad at recognizing when they don’t know they don’t know something.
If you know you lack some critical piece of knowledge, you can always go out and learn. We’ve established that as a business owner, you’re smart, capable, and hard-working. But none of these qualities will help you find knowledge that you don’t even know you should be looking for.
In addition to the fact an objective financial advisor working as your fiduciary can help manage emotions and support you in making rational decisions with your money, your own wealth manager can help you overcome your blind spots to maximize all the strategies for wealth building available to you.
There’s a reason average investors fail to outperform basic market indices. And it has nothing to do with how much you know (or think you know).
Investors -- even smart, experienced, knowledgeable investors -- fail when they’re on their own because they act irrationally. They fall victim to cognitive biases, behavioral slip-ups, and emotional decision-making that causes them to deviate from a long-term, sound strategy for building real wealth.
When you have a financial advisor on your side, they can stand between you and those vulnerabilities to ensure you stay on track -- and they can also free up your time and energy to put your focus where you can earn the greatest return: your business.
Andrew Comstock, CFA
Please contact me at 913-660-0708 or by email to discuss your financial planning and investment management needs. You can sign up for our monthly newsletter here. Follow me on Twitter @CastlebarAM.
Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.