(Extracted from The Financial Turing Test by Nick Maggiulli)
It is probably better to listen to a self-made rich person than a self-made poor person when it comes to financial matters. However, this doesn’t imply that the rich person understands how they got rich.
So net worth might matter, but it also might not. It’s like the logic that to be a good brain surgeon you had to have had brain cancer before. One doesn’t imply the other. Lots of rich people would give terrible financial advice (and vice versa).
… How do you get rich without getting lucky?
Why do I think this is one of the best questions you could ask a supposed “financial expert”? Because it forces them to address many topics at once. They have to discuss their philosophy on spending, income, investing, and much more. They can’t just provide a soundbite. In a sense, this question is cheating because it will provide more than one way to judge an individual’s expertise.
… People don’t want to hear about how to get rich from someone who had rich parents, took lots of risk, or got lucky in some other way. They want to know how they can do it regardless of their background. Of course, a financial planner should take into account someone’s background when helping them plan their financial life. However, the ability to identify the common actions that lead to financial success across all people is what matters. That’s how you pass the Financial Turing Test.