Do Clients Need to Know Your Net Worth?

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Encouraging a 20-something friend at my gym to attend a workshop I was giving on investing and financial planning, I quipped, “I’ll teach you how to be a millionaire.”

“Really?” she responded.

I quickly explained that, if someone her age invested $6,000 a year in stocks for the next seven years and then stopped, there would be a reasonable historical probability she would have $1 million at age 65. (This assumes a historical return of 8% on stocks, which may not happen in the future).

I didn’t anticipate her next question, “Are you a millionaire?”

Financial professionals like me think nothing of asking clients about their earnings and net worth. Occasionally the question of disclosing our own net worth comes up in conversations among my peers. Many advisors think their net worth is none of their clients’ business. Others think it’s a fair question. However, they express concern that a single number like net worth only presents a glimpse of a larger picture, and by itself is incomplete information and can even be misleading.