Financial Planning
May 30, 2024

Wealth Management Strategies That Do Not Work

Stewart Willis

Managing your wealth is no walk in the park. One misstep and you could find yourself in a financial mess that’s hard to untangle. It's easy to get lured by flashy investment schemes or trendy money-making tactics, but they're often just smoke and mirrors.  

The harsh truth is that securing your financial future requires a level head and a willingness to steer clear of strategies that seem too good to be true.  

This blog will uncover some wealth management strategies that don't work and explain why it's important to steer clear of them. You'll be better prepared for strategic wealth management by understanding these pitfalls.

1. Spreading Your Investments Too Thin

Yes, diversification is one of the most important strategies for wealth management, but overdiversification can be harmful.  

Diversification is a key wealth management concept, often described as "don't put all your eggs in one basket." It involves spreading investments across different asset types, such as stocks, bonds, and real estate, to reduce risk. Diversifying can offset losses in one area with gains in another, helping to protect your portfolio from extreme fluctuations.

Holding too many investments can offset gains from your high-performing assets. The result is average or below-average returns. Your top-performing investments' impact diminishes when they make up a small portion of the portfolio. 

Sometimes, with overdiversification, you have too many similar investments. This creates a redundancy in your portfolio and doesn’t add value. The complexity of your portfolio can also be costly with this wealth strategy as management fees add up. 

2. Concentrating on Short-term Gains

We all want results from our wealth planning strategies, but investing doesn’t give you instant results that last. Chasing the dream of getting rich instantly isn’t a solid wealth strategy. However, the reality is that investing does not provide instant and lasting returns. The dream of getting rich quickly is often an unreliable and unsustainable wealth strategy.

Focusing on promises of high returns in a short period can lead to investing in risky ventures because they seem trendy. This approach is flawed and often leads to disappointment and financial setbacks. 

Even if short-term gains are successful, you need a wealth management tax strategy to avoid a heavy tax burden. A sudden bump in your income could raise your tax bracket and diminish returns. Sustainable wealth comes from holistic, long-term strategies that prioritize risk management and consistent growth over time, not chasing instant riches.

3. Sticking to Old Strategies for Wealth Management

It’s not uncommon for people to stick to what they know because it’s the “tried and true” way of doing things. However, if you have a wealth management strategy but aren’t seeing the returns you used to, you have a problem.  

Wealth management strategies aren’t one-and-done solutions to your financial woes. They require some fine-tuning and updating as time goes on. Life brings changes like children, marriage, inflation, divorce, job promotions, buying a house, or even emergency expenses. 

You need to ensure that your wealth management strategy adjusts to accommodate these life changes. Sticking to what worked for you in the past might not apply to you now. You need regular reviews with your wealth manager to ensure that your wealth strategy aligns with your goals. 

Let’s take inflation, for example. When you don't consider inflation, you assume the money you accumulate today will have the same value in the future. However, because of inflation, the same amount of money will buy fewer goods and services in the future.  

Inflation poses a severe threat to retirement savings, eroding their value. Ignoring inflation's impact will undoubtedly diminish your purchasing power, rendering your hard-earned money insufficient. 

4. Concentrating on Intangible Assets Only

When most people hear investments, they mostly think about stocks and bonds. However, a wide range of tangible assets can give you great returns. You have to be smart about how you invest in them when you develop your strategic wealth management plan. 

Investing in tangible assets, like real estate, precious metals, or collectibles, offers several benefits over intangible assets. Tangible assets like real estate or gold have a solid advantage. They exist and have inherent value beyond just market speculation.  

Even when markets go haywire, these assets have practical uses that give them a baseline worth. Physical assets are powerful hedges against inflation's erosion of currency value. Tangible assets, such as real estate, jewelry, or valuable collectibles, can often be more readily passed down as inheritances than intangible assets. This provides future generations with a concrete, physical asset that has the potential to maintain or even appreciate in value over time.   

In contrast, intangible assets like stocks and bonds may be more susceptible to market fluctuations or accessibility issues. This makes them less reliable as generational wealth transfers. 

Frustrated man looking at chart on laptop

What Are the Disadvantages of Wealth Management?

Wealth management, though offering expertise and tailored advice, has downsides. It can be costly with management fees and commissions. However, the main disadvantage is that some advisors may have conflicts of interest when promoting financial products that earn them higher commissions. They don’t offer objective advice because they are not fiduciaries.

What Is the Biggest Challenge Facing the Wealth Management Industry Today?

One of the key challenges in wealth management today is the rise of robo-advisors. While they do make wealth planning more accessible, they lack the personal touch and comprehensive approach of a human wealth manager. These low-cost solutions may not fully consider your unique objectives, tax plans, and needs, potentially leaving gaps in your wealth management strategy. 

When Should I Dump My Financial Advisor?

Knowing when to leave a financial advisor requires recognizing warning signs. Red flags include poor communication, unclear or excessive fees, conflicts of interest, and consistent portfolio underperformance despite aligning with your goals. If your advisor fails to update you or address your concerns, has hidden fees, prioritizes their earnings, or delivers poor results, it may be time to seek a new advisor.

Take Control of Your Wealth

Don’t get left behind with wealth management strategies that don’t work. Let our team help devise a plan that works for you.  

Talk to a trusted financial planner today!

Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to and search by our firm name or by our CRD # 175083.

Alternative/Private investments are often complex,  speculative and illiquid investment vehicles that are not suitable for all investors and are typically only available to accredited investors who meet certain minimum financial requirements.  Alternative Investments often engage in leverage and other investment practices that are extremely speculative and involve a high degree of risk. Such practices may increase the volatility of performance and the risk of investment loss, including the loss of the entire amount that is invested.  They are, therefore, intended for experienced and sophisticated long-term investors  who also have the financial wherewithal to accept such risks.

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