High-net-worth clients are often extravagant spenders living well beyond their means. By contrast, "millionaires next door" are wealthy but typically frugal.
But as Dustin Gale, senior wealth advisor at Kayne Anderson Rudnick, tells ThinkAdvisor in an interview, "I remind them that they can't take it with them. They're often living too conservatively and too far below their means … not enjoying things that they've worked for as much as they could."
Gale, a certified financial planner previously with Bank of America and Wells Fargo, emphasizes helping clients look at both sides of their balance sheet. That way, he stays alert for credit opportunities, including margin loans.
Gale, who has developed a niche of high-net-worth clients going through major life transitions, uses alternative investments to reduce volatility or to generate more consistent income.
A finalist in ThinkAdvisor's 2023 LUMINARIES awards in the category of Community Impact, Gale, 39, has been a volunteer for more than a decade at Project ECHO, where teens learn – through financial education, mentoring and business plan competitions – how to become entrepreneurs.
In the interview from suburban Los Angeles, where he is based, Gale discusses his wide-ranging work with the non-profit and how ECHO "focuse[s] on something positive [for youths] to give back to the communities over the long run."
Here are highlights of the interview:
THINKADVISOR: What's a motto you use that rings a bell with clients?
DUSTIN GALE: I have some clients that make a lot of money and are living above their means. I have clients that don't make a ton of money — "millionaires next door" — but have been able to accumulate a lot of wealth because they're careful and mindful about expenses.
But they're often living too conservatively and too far below their means and maybe not enjoying things that they've worked for as much as they could.
I remind them that they can't take it with them.
What's the biggest challenge facing financial advisors today?
One of my biggest challenges is that information moves so quickly with social media and the news outlets — there's a computer with news alerts in everyone's pocket — and all that can really make clients feel uneasy and create anxiety.
How do you, as an advisor, handle it?
To help bring clients peace of mind, I say, "Here's what this truly means" and give them some historical perspective. The educational process does help.
And we look at their customized financial plan and remind them that some of what they're hearing is just noise.
Any other major challenges for advisors?
Tax codes are constantly changing. So you need to do some long-term planning for clients that are looking at different types of irrevocable trusts and provide guidance on unknown variables for the future.
What do clients need most from advisors, given the current market and economic conditions?
Communication that's tailored to their specific objectives, goals, needs and circumstances.
An advisor who has a low client-to-advisor ratio can spend a lot of time with clients and understand what their concerns are to create a more customized plan.
Clients need a good grasp of what's going on financially [in general], so that when they see volatility spiking or a lot of big [negative] headlines, they know not to panic too much.
My clients don't. They know that that news isn't for their personal [situation]; it's just broad information and doesn't have too much to do with their specific plan.
You're the immediate past chair of the board of directors of Project ECHO, a non-profit that teaches teenagers about entrepreneurship and holds business plan competitions in Los Angeles. Tell me more about your role in the program.
