Keith Akre’s almost 20 years in banking has helped him understand the truth and fiction of various wealth management practices which he shared this week with the Sycamore Rotary Club. Akre is currently the Director of Trust and Investment Services at Resource Bank. He began his banking career at Northern Trust in Chicago.
Myth 1: You have to be ultra-wealthy to get good financial advice.
Akre said the reality is there are tiered financial services to fit multiple investor needs. He said these range from on-line broker platforms, to investment advisors, to wealth management firms. According to Akre, the two main things to keep mind are that the person you are dealing with is competent and that “they care” about you. This myth is busted.
Myth 2: Great investment advisors will make you rich.
Warren Buffett of Berkshire-Hathaway had an average return on investments of 19.9% from 1965 to 2024 and investor George Soros had a 30% return on his Quantum Fund of 30% from 1970 to 2000. Average market returns are 10%. But Akre says the real key is investment consistency. For example, $50,000 invested for 25 years at 10% yields $336,000, but a regular contribution of $2,400 during that time will net $794,000. You might be lucky with a good advisor, however moderate but steady investing over time brings more consistent results.
Myth 3: Once you figure out a strategy, no further management is needed.
Akre noted that this ignores life changes such as birth of children, insurance costs, tax law changes, retirement needs, and wealth transfer planning. Akre said surveys show that the largest, unexpected expense faced by couples is support for their adult children (such as help with buying a house, a car, a celebratory vacation, etc.). This myth is busted.
Even though he is a professional money manager, Akre says he has picked both winners and losers when it comes to the stock market. He noted that while involved with an investment club in college he was an early buyer of Apple stock, but at the same time he also invested in New Century Financial which was having a huge runup in value just before it became the first casualty of the mortgage financial crisis. His conclusion is that making informed decisions through consistent investing is the best way to handle wealth management.