WHAT DOES YOUR ADVISOR DRIVE?

Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway. — Warren Buffett

The investment advisor wore sunglasses and drove a BMW M6 convertible with the top down. The insurance advisor had a big black Mercedes. The client had pricey cars too and a gated house that reminded me of a prison. I felt out of place.

In his Financial Post column, fee-only financial planner Jason Heath (LinkedIn) advises us to think again before buying a luxury car. We may be further ahead saving for retirement. Boring but practical.

Advisors tend to have nice cars because that looks like a sign of success. Don’t you want to hire a winner?

Example

When we bought our current house in the 1990s, we considered two real estate agents. One had a Lincoln Town Car. He looked successful but maybe he had a side job as a limo driver. The other one had a Dodge Intrepid with broken air conditioning. He joked that someday he'd have a car that worked. He looked like a loser but maybe he was a better negotiator.

We picked Mr. Lincoln. 

WANNABE

I've seen advisors who put their keys (and smartphone) on the table during meetings. Look at me! Look at me! They had pockets, purses or bags but were showing off.

The car keys were often for a BMW 3-series or Mercedes C-class. Entry level, but they felt special and thought clients would be impressed.

Established

Successful advisors might care less about what they drive. Maybe they had their dream cars and got comfortable enough to take them for granted. One advisor switched from a BMW 7-series to a Hyundai Genesis, which he claimed was better. Maybe this ad swayed him? Maybe he could no longer afford more.

Warren Buffett drives a Cadillac DTS. No chauffeur-driven Rolls for him. He doesn’t get his advice from Wall Street or Bay Street either. An advisor driving an M6 might not impress him.

Remember

We can (and do) judge a book by the cover. The risk is low. We can (and do) judge advisors by their cars and other props like clothing. That’s riskier.

Successful advisors have the ability to sell. That doesn't mean they have skill or interest in doing the actual work. What drives them matters more than what they drive. That we can’t easily see.

Links

• Think twice before buying that luxury car (Jason Heath, Financial Post, Oct 6, 2012)
• How to save on your next Audi, BMW or Mercedes
• The best buying experience: Audi vs BMW vs Mercedes
• The BMW Innovation Drive and the new 5-series
• BMW gives reasons to be cynical
• Hyundai vs BMW: The rationale for irrational behaviour
• Is your car built to last?
• What to do when your car lease ends
• What kind of car should your financial advisor drive? (Quora)

Podcast 190

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PS If your advisor takes the bus, get off at the next stop.