The Eye-Opening Secrets I Learned Managing $500 Million Dollars


managing money high net worthDo you ever wonder what life is like for the rich and not-so famous?

Do you wonder how they invest their money?

Do you wonder about how they made their millions or what secrets they might have for you to benefit from?

Well today is your lucky day as I am going to share the insider details.

For a few years, I worked for a high net worth investment planning firm.

To be considered a client, you needed to have at least $2 million in investable assets. What does this mean?

It means you have to be able invest $2 million with us, in some combination of retirement and non-retirement accounts.

Don’t get this confused with net worth, as net worth has nothing to do with investable assets.

In total, we had over $500 million under management.

I mainly worked on building the plans, so I got to know the intimate details of our clients. I knew the things that most other people would never know about these people.

Like how much they really spend, earn and save.

So what did I learn from dealing with the rich?

I list the most interesting insights below.

Some things may seem obvious to you while others will surprise you. Hopefully, you will learn from these wealthy people and be able to apply these tips to your financial life.

Priceless Lessons Learned While Working With The Rich

Financial Lessons Learned

habits of wealthy people

#1. Starting A Business Leads To Wealth

Most of our clients were self-made millionaires. Very few inherited their money.

They either started their own business or bought a franchise.

While starting and running a business or franchise is not a walk in the park, it does offer you many benefits that being an employee of a company does not.

For starters, you determine your salary, not someone else. Of course, it helps to have profit so you can pay yourself a salary.

But the benefits don’t end there.

You can take advantage of many tax breaks.

In fact, if you set up the legal structure of your business the right way, your salary will be paid to you in the form of dividends, which are taxed at a much lower rate than ordinary income.

Additionally, you get to save a lot more for retirement.

If you are covered by a 401k plan at work, think about how your company might match your contributions up to 5%.

As the owner of a small business, you can make both employee and employer contributions to your retirement account and the maximum you can save is a lot more than what you can save as an employee.

In other words, a lot more money in your retirement account.

The bottom line is if you want wealth, you need to seriously consider starting your own business.

While ownership isn’t cut out for everyone, if you are willing to put in the work, it will pay off.

For example, we had a client who started off with 1 McDonald’s franchise. Now he owns 7.

If you get into a franchise early enough and it sees success, this could be you too.

#2. Wealth From Being An Employee

Don’t let that first section get you down, especially if you have zero interest in starting your own business.

There is a path the multi-millions being an employee as well.

The only catch is you have to move up the corporate ladder and be smart about money.

We had a handful of clients who were executives in various sized companies. They worked hard to move up the corporate ladder over the years.

With the promotions came a higher salary.

But these people weren’t your typical person.

They were smart about their money.

They made it a point to save their raises and bonuses. They contributed the max to their 401k plans every year.

And if they had the option to buy company stock, they did so.

All of this led them to great wealth.

At the end of the day, regardless of your income, you have to be smart about spending money.

You can’t be foolish with it and buy anything and everything.

You need to save as much as you can so your money can work for you.

The more you put your money to work, the sooner you can stop needing to work in the first place.

#3. Wealth In The Medical Field

While I could lump doctors into the group with business owners, I wanted to break them out because they have some special circumstances.

Most people make the mistake and think all doctors are wealthy.

This is far from the truth.

The reality is most doctors are dirt poor early in their careers.

This is because they have six figure student loan debt and are not partners in a medical practice.

As a result, most of their income goes towards saving for retirement, paying off their student loans and paying their mortgage.

We have doctors just starting out and those closing in on retirement.

Those just starting out had nothing saved in taxable investment accounts as all of their savings was going into their retirement plan to lower their taxable income.

But you could see where the scales tipped the other way when you looked at the older doctors.

These clients had large retirement accounts as well as large taxable accounts.

So while it is a lot of education and debt to become a doctor, the career does pay off nicely over the long run.

#4. Be Cautious When Inheriting Money

You might think inheriting a windfall is a dream come true.

And it is for most people over the short term.

But over the long term, it is a nightmare.

Here is what I am talking about.

Many of our clients that inherited money were quickly going broke.

The reason is simple.

They never learned how to properly manage their money.

Before they inherited their fortune, they were scrapping by.

Then one day, they hit the jackpot and were millionaires.

While they did invest the money, they never took control of their spending.

So every few months, they were taking money out of their account.

This went on for years, until the accounts were virtually zero.

We had one client who blew through $5 million in less than 10 years!

Had they just dialed it back at some point, they could have retired and lived a life of ease.

But now they are working 40 plus hours a week with no chance of retiring since they still can’t control their spending.

#5. Insurance Is Critical

Most people focusing on their finances focus on the obvious things.

They are concerned with how much money they make and make an attempt to control their spending.

But virtually everyone overlooks protecting their money as their wealth grows.

And this held true for our wealthy clients too.

Most were woefully unprotected when it came to insurance coverage.

One small accident and they could be disabled for the rest of their life with little in the form of income.

Or one bad break and they pass away leaving their loved ones to pick up the pieces and the bills on one salary.

The point is, don’t overlook insurance coverage.

It is critical you take the time to protect your wealth.

This doesn’t mean you get the maximum insurance coverage for everything in life.

If you have assets worth $50,000 you don’t need a $5 million life insurance policy. But you should have something if others rely on your income.

Make sure you have adequate home and auto insurance.

Make sure you have life insurance if you have someone depending on your income.

And be certain to have disability insurance.

The stats show you are much more likely to get disabled and not be able to work versus dying prematurely.

#6. Don’t Try To Time The Stock Market

I talk about how no one can predict what the stock market is going to do next in many of my investing posts.

Yet for some reason, people still think they are smarter than the market.

And the majority of time, it turns out bad.

At our firm, we followed a long term approach to investing.

We invested our clients in low cost, index based mutual funds and ETFs. This strategy worked well for everyone.

But there was one client who insisted he knew better.

One day, he called in after receiving his quarterly statement.

He wanted to know why his wife’s account earned 7% the previous year and his account lost 3%.

We explained to him that it was because she followed our long term approach, while he was constantly making trades on his account.

Surprisingly, he didn’t accept this. His ego was too big.

So we compromised with him. We took 75% of the money in his account and invested it in an account based on our philosophy.

The other 25% was his to trade as frequently as he wanted in a separate account.

Fast forward to the following year and the writing was on the wall.

The account we managed earned 5%. The account he traded in lost 2%.

He agreed to let us manage 90% of his money our way and he took the other 10% to play with by trying to time the market.

#7. Long Term Investing Is The Smart Approach

Just to dig further into the idea of long term, low cost investing, I wanted to explain the situation we were in.

Most of our clients lost a good bit of their savings during the Great Recession. There was a lot of hand holding and talking them through things to stay invested for the long term.

We were fortunate that most of our clients listened to us and stuck it out.

And this paid off nicely for them.

By the end of 2011, just a few short years after the collapse of the market, they were back to where they were before and some even had more money now.

As they stayed invested for the years since they have doubled and tripled their amount of their investments.

All of this was because they stuck it out and looked at the long term.

Yes it was a scary time and it was not easy. But the market came back like it always does.

I can’t say when the next recession will hit. I can’t say it will be as bad or worse than the last one.

But it will happen.

And if you can stick it out and stay invested, you will benefit in the long run.

And if you have the courage to keep investing more money during this time, you will come out ahead much sooner than the rest.

#8. When You Are Mega Wealthy, You Can Spend As You Please

While it is critical to watch your spending to build wealth, there does come a point when you can let off the brakes and spend as you please.

We had a client who was spending $40,000 a month. When I first built her plan, my jaw hit the floor.

I couldn’t imagine spending that much money every single month. Sure I could do that once or twice, but eventually I think I would get tired of buying things.

In any case, I was sure the projections were going to leave her penniless.

But to my surprise, she could spend more than this every single month for the next 40 years and still be a multi-millionaire.

How much money did she have?

Over $30 million.

So her spending $480,000 a year was much less than the rate her account was growing at.

Therefore, if you want to ignore a budget and spend like there is no tomorrow for the rest of your life, then get to the point of having $15 million or more.

Non-Financial Lessons Learned


While the above lessons were mainly financial, I did learn a lot of non-financial things too.

These lessons are seldom talked about but they are the foundation to success and wealth.

As a result, it is important you understand and follow them.

#1. The Importance Of Failing

I learned the importance of failing not only from our clients, but also the owner of the company.

From our clients, I heard many stories of failing and picking yourself back up and trying again.

It never was easy, but each one made a point to mention that the failure they experienced held a key role in their eventual success.

For example, one small business owner was doing great. So great that she decided to expand.

The only problem was that she was still learning how to run a business. When she opened a new location and hired staff, she could barely keep up.

Eventually she lost everything.

With her new business, she is now taking things slow and making smart decisions that are well thought out instead of just jumping in.

The owner of the company also was big on failing. So big that he encouraged us to fail.

Not in the sense that he was OK if we made major mistakes, but he viewed failure as growth.

When you only do the things you are comfortable with, you never grow as a person.

When you step outside your comfort zone, you are bound to make mistakes. But this is good because you are learning new things and becoming a better person.

One day, a client wanted a detailed spreadsheet created on his various annuity options. I never built a spreadsheet like this before, but because of the owners belief in personal growth I gave it a shot.

And I failed big time.

Well, not that big.

I did create the spreadsheet, but many of the formulas were wrong. When my boss reviewed it, he pointed out the mistakes and we worked through them.

He also made it a point to show me the things I got right when trying to create this for the first time.

#2. Experience Trumps Things

This lesson is arguably as important if not more important than being OK with failing.

So many of our clients were all about experiences and not things.

They would talk at great lengths about family trips and vacations they would take with their kids and grandkids every year and showing us pictures.

Very rarely, if at all, did they talk about their new 80 inch flat screen TV or the luxury SUV they bought.

Life was about how experiences make you happiest, regardless of the amount of money you have.

In fact, one time an older client of ours left his eyeglasses in our conference room. Since he lived close by, I offered to drop them off when I went out to lunch.

I was shocked when I walked into his house. He lived like I did when I was in college.

His house wasn’t huge and it didn’t have every fancy gadget or contraption that most people have.

He lived a simple life and was full of joy and happiness all the time.

I guess when you don’t spend money on things to appear to have wealth it is easy to amass a $20 million dollar fortune!

And just to be clear, you could take away all that money and he would still be over the top happy as long as he has his grandkids.

#3. Keep Learning

The final lesson I learned was to always keep learning.

This includes reading books for education and entertainment and even finding a mentor to learn from.

The more you can continually learn in life, the better decisions you will make.

And this holds true regardless if the decision is money related or not.

We had one client who would teach part time at the community college.

While you could argue he was teaching the students, he was learning just as much, if not more from them.

They kept him in the loop with regards to technology, among other things.

Lessons Learned From The Rich Recap

Overall, there were a lot of lessons I learned from the wealthy.

Here is a quick breakdown of them if you are short on time, or just want the highlights of each.

  • To amass a lot of wealth, start your own business. With all of the financial benefits surrounding business ownership, you can quickly become wealthy going this route.
  • Be smart about spending. If owning a business is not in the cards for you, you can still become wealthy. You just need to be smart about your spending and save as much money as possible.
  • Everyone’s financial situation is unique. While it is human nature to compare yourself with others, no two financial lives are the same. Focus on your finances and your goals.
  • Inheriting money is not always great. Many people go broke after a windfall simply because they don’t know how to manage money in the first place.
  • Protect yourself. Do not overlook the importance of insurance coverage. You worked hard to build your finances, take out adequate insurance to protect it.
  • Invest for the long term. If you want to build wealth through investing, you need to take a long term approach and stay invested for years, even when the market drops.
  • Accept failure. When you fail you are growing as a person. Learn from your mistakes and keep trying new things.
  • Experiences are priceless, things are pricey. Many rich people will tell you they value experiences over things. Take the time to understand what you value and stop needlessly spending on things.
  • Always keep learning. Never stop learning. The more you learn, the better person you become and the smarter decisions you make.

Final Thoughts

Overall, I loved the job. All of our clients were down to earth and great to spend time with.

I learned a lot just by being around them and learning about who they were and how they got to where they are now.

The biggest lesson though was that being wealthy wasn’t all about the huge houses and fancy cars, etc.

It was about retiring by the time you are 50 and traveling, spending time with your children and grandchildren and enjoying life.

That is what most of the small business owners did.

But with that said, I would be lying if I didn’t drool and get a little (OK a lot) excited when one of the doctors would pull up in his brand new Porsche 911.

After all, everyone deserves one toy, right?

31 thoughts on “The Eye-Opening Secrets I Learned Managing $500 Million Dollars”

  1. [on sudden money] “… if you have crappy money habits, you will be right back in the same financial spot as before..” Couldn’t agree more with this Jon. Money really helps expose the values we hold dear.

    1. That and if you never address the real issues, you will never get to the real cause. This means you will just end up in the same cycle forever.

  2. Good advice all around. I can’t wait to be one of those guys in the line-up that you’d never guess was a millionaire.

    1. Being a hard worker and making sure you ask for a raise. Too many people think the company will just take care of them when nowadays that is becoming more and more rare.

  3. Thanks for sharing. Those stories are just what I expected. The really rich people should live large and help prop up the economy a bit. Spending $40k per month is living well below her means for that example.

    1. I remember looking over her statements and was blown away at her monthly spending. But when I completed the analysis, it showed she would be fine spending this amount all of the time.

  4. All good lessons, but the one I think many people forget about is insurance coverage. Just like budgets and goals and asset allocations, insurance must be updated as things change over time. Great post!

    1. I think everyone overlooks insurance. Maybe because it is boring? Or maybe most just don’t think bad things will happen to them. I’d love to understand why it is so often overlooked.

  5. How To Save Money

    Good read! I always love some stories about the rich. Keeps me inspired about my goals!

    1. Working with them definitely inspired me. I would see the size of their balances and work work hard so that one day I could have that balance in my account!

  6. Having read the millionaire next door and millionaire mind, it was nice to see you reaffirm what was mentioned in the book. Most millionaire’s I know are very generous people that anyone would love to have a cup of coffee or a beer with. Few flaunt their wealth and those that do give society a bad impression of wealth.


    1. Jason, everything I saw from our clients basically reinforced The Millionaire Next Door/Millionaire Mind. It was refreshing to see them as good people and not greedy slimeballs.

  7. Wish I could say that I’ve gained such meaningful lessons from the job I slave away at. The good thing is that I have started learn these lessons, especially from fellow PF bloggers, so that I can leave that job and truly start living!

    1. There are always lessons, you just have to look around a bit sometimes to find them. Glad to hear though that in the meantime you’ve learned from other bloggers!

  8. I agree that if you are horrible with money, you will eventually go broke. It took me a long time to see that happiness with money comes from experiences and the freedom to do what you want, not the newest gadget, car, etc… Fortunately, my wife is great with money and has helped me see how to properly handle finances. 🙂

    1. I learned that too early on in life. I’m glad I did because it has allowed me to live life and not let money control me.

  9. Thanks for sharing. I wasn’t surprised to hear that you can tell the appearance of some high net worth individuals. These individuals achieve high net worth by being frugal. Those who have fancy cars and houses probably don’t have as high net worth.

    1. Many of the people we “think” are rich really aren’t. We just see the super rich on TV and think that is how everyone with money lives, but it isn’t.

  10. Adam @

    Most people that are truly rich, don’t need to show it off. It’s the 30k millionaires that flash. Experience definitely trumps stuff (except maybe my flatscreen…)

    1. I agree Adam. The ones you see flaunting it are usually the ones that have more than they know what to do with, so they go buy toys. The rest of the rich live a modest life and enjoy their wealth more privately.

  11. Great post and some good lessons. I try to live within my means by saving 20% of our net income. I figure we can do this for the next 10-15 years we’ll be in good shape for early retirement.

  12. It’s great when you have a job where you can learn valuable money lessons through your clients. This post is right on point!

  13. Wow, I would love that kind of a job. I think you would get to meet a lot of really interesting people. Just like that guy you mentioned who walked around in a Hawaiian shirt and shorts all year, I certainly wouldn’t have guessed he was worth 10 million. And I think it’s amazing to see how people like doctors who make a ton of money can also be really financially irresponsible.

  14. Thanks for your insightful article about what can help individuals make steps towards being financially successful. You make a great point about how many individuals that do well financially often own or start their business. My dad started his how civil engineering firm while I was growing up. We saw some very lean years while it was getting off the ground. However, once he was more successful, he started to put his money to work for him by investing and other asset management opportunities. Knowing the difference between and asset and a liability can help you use your hard earned money more effectively.

  15. Great article, I loved reading it. I’m on my way to amassing a small fortune from my business based on trading (talk about hunches at all) and I enjoyed reading your assessment of all the people who came your way.

    Experiences is what I hope to be super rich in.

  16. This is some great insight into the spending habits of the wealthy – sometimes we expect the rich to be a monolith, spending the same amount on the same items, but that couldn’t be farther than the truth. Thanks for sharing the lessons you picked up!

  17. This is a fascinating article – I love how you’ve differentiated between different core factors, such as self made and inherited. I definitely think that people who grew up without the safety net of millions are more likely to be responsible with their money, but this also depends on how they earn it. By working hard and investing, you’re more likely to be financially aware than others who struck gold in the lottery, or equivalents.

    I’m also very glad to see that you’ve pointed out that we can learn more than just how to approach finance. Many of these people come for advice as they know that they cannot nail the market – and know when to ask for help. What lots of self made millionaires do know, however, is more applicable to the average person. Perseverance, dedication and learning to listen to those who are well informed.

    While it is very unglamarous to say that you get rich by listening, working hard and being humble, it is definitely true!

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