The Cobbler’s Children Paradox Affects Financial Professionals Too

October 29, 2019

The cobbler’s children have no shoes and financial professionals (private equity professionals, investment bankers, asset managers) have no financial plan. This paradox seems to consistently plague the individuals I meet who work in the finance industry. One would think that those in the industry are buttoned up in terms of their own financial needs; however, due to the lack of time, return, and expertise, individualized planning is pushed to the back burner.

It often comes as a surprise to many that we work with families who are financial professionals, but as you will see below there are many reasons that we consistently see this cobbler’s children paradox take place with financial professionals.

Lack of Time – The financial industry is known to be demanding in terms of time, effort, and focus. That demanding culture makes it common to find yourself on an airplane, in a different city multiple times a week, or working both early mornings and late nights. Caring for your career, but also a family takes much of your time. It is easy to focus all your efforts on current clients, an upcoming deal, or a child’s birthday. Like most career-oriented and driven professionals, putting yourself last on the list is common. This lack of time and dedication makes it very difficult to be thoughtful about creating the right plan and investing the time to implement effectively.

Lack of Return – Financial professionals will create the max amount of wealth by focusing on their careers and pouring themselves into their work. Finding the next deal or client leverages the time and expertise of the professional to grow their wealth quickly. By focusing on this ‘alpha’ generation in your career, the planning work often gets relegated. However, setting up a plan and executing can create return, save taxes, and allow your career work to compound and grow for your future.

Lack of Expertise – You didn’t get into private equity, investment banking, or asset management to become a wealth manager.  You chose that career and industry because you loved working on deals, optimizing capital structures, and diving deep into specific investments. What you do daily differs from the world of wealth management and having a team in place to focus solely on bringing the best and brightest ideas allows you to continue to focus on what you love doing and exercising your own expertise.

Finding time to put yourself first is not always the easiest task for busy, dedicated individuals. Focusing on career and family is enough to keep you occupied. However, setting and building a plan can be vital to compounding your wealth, saving taxes, and setting yourself up for long-term success. It is important to overcome the lack of time, return and expertise to ensure that your children have shoes and you create a successful financial plan.

Matt Kocanda, is a Wealth Manager at BDF and a member of the Investment Committee. The investment committee develops BDF’s overall investment strategy. Matt focuses on advising Financial Service Professionals through their complex needs – including cash flow, tax, or estate planning. Matt received an undergraduate degree in Finance from Indiana University.