I receive a monthly newsletter from a company named Regenexx that is pioneering a new technology. This is where they take a person’s platelets or stem cells, process them, and then inject them back into a suffering joint with the hope the injected material will help the joint to repair itself. If you do some research on this procedure, you will quickly find that it’s controversial, without much clinical research as yet that supports the company’s claims. For that reason, I have adopted a “wait and see” position about having the procedure done on my overused baby boomer knees.What grabbed my attention in a recent newsletter was a story by one of the doctors describing his experience of being a patient at the clinic where he works. His associates treated him with the same procedure he does on patients. Regardless of whether the procedure is eventually proven effective or not, I find myself respecting a doctor who uses for himself what he promotes for others.I don’t watch much TV, but when I do it’s invariably a cooking show. From these shows I’ve learned that a cardinal sin for any chef is not tasting the food before they send it to the guest. In competitive shows, contestants who are not continuously tasting their cooking will eventually be packing their knives and leaving the kitchen.Financial advising is no different. Suppose you discovered that your financial planner sold you active mutual funds with expense ratios of up to 1.5%, but invested their own money into passively managed, low-cost mutual funds with expense ratios as low as 0.09%. Would you become suspicious that the advisor may have a double standard? Or wonder why what is good for you isn’t good for the advisor?Related: Tax Avoidance and Tax Evasion Not the Same Or suppose you are an overspender who seeks out an advisor to help you work through the technical and emotional issues of creating a spending plan to gain mastery over you money. What thoughts and feelings would you have if you discovered your advisor was also an active overspender and on the verge of bankruptcy?If advisors don’t own any of the product they are selling you or follow the advice they are giving you, very few will volunteer this information. It therefore becomes your responsibility to ask advisors whether they follow their own advice. This is a legitimate and important question. It’s perfectly appropriate for prospective clients to find out whether financial advisors manage and invest their own money in the same ways they recommend to clients.Yet prospective clients rarely ask advisors to disclose what they personally invest in. It’s a hard thing to do. This may be in part because many of us have a money script that it isn’t polite to ask people personal questions about their finances .I would suggest that politeness is not the issue. You have a duty to yourself to be sure the advice you are getting is coming from someone who has successfully accomplished what they are coaching you to do.To make asking these questions easier, you might compare financial advising to other forms of coaching. Would you take golf lessons from someone who doesn’t golf? Or singing lessons from someone who can’t carry a tune? Of course not.It’s just as ridiculous to take financial advice from someone who says, “Do as I say, not as I do.” Don’t be satisfied with an advisor who “talks the talk.” Make sure they also “walk the walk” that they recommend to you. It can help you be sure their advice will guide you in the right direction.
