Top 5 Mistakes of the Wealthy With Cole Pearson

May 14, 2024

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We tend to think that wealthy individuals always make the right financial decisions, but is that always the case?

The truth is that people with a high net worth can sometimes make financial mistakes just as easily as the rest of us and perhaps with even worse consequences. Cole Pearson shares five of them today.

Cole Pearson is the President of Investment Solutions at OneAscent, a family of companies seeking to help people align their investments with their Christian values. OneAscent is also an underwriter of Faith & Finance.

Five Mistakes That The Wealthy Make With Their Investments

Even wealthy or high-net-worth individuals can often make common mistakes that can undermine their financial success. For most people, wealthy or not, having a financial advisor can help you avoid these mistakes. Here are 5 mistakes that the wealthy make:

Not updating estate plans regularly. As people accumulate wealth, their estate planning needs change, and failing to update their plans can lead to unintended consequences. This could include probate, unforeseen taxes, and legal challenges for heirs, among other problems. The greater the estate, the greater the need to keep estate planning up to date.
Not creating a tax strategy. Everyone should be aware of the taxes they’ll have to pay and take advantage of tax-minimizing opportunities, but again, all the more so for wealthy individuals. They’re subject to various taxes, including income, estate, and gift taxes. Proper tax planning can help minimize their tax liabilities and maximize their after-tax income and opportunities to be generous during their lifetimes!
Not diversifying their income. Failing to diversify income streams can leave high-net-worth individuals vulnerable to market fluctuations and other economic risks. However, anyone could benefit from thinking about ways to diversify income. Proper income diversification can help most people weather economic storms and ensure financial stability.
Not guarding against lifestyle inflation. This refers to the tendency to increase spending as income increases. While the wealthy may have more disposable income, increasing spending at any income level can quickly erode wealth and jeopardize long-term financial goals.
Not passing our values to the next generation. Often people worry about planning to pass on their valuables but not their values to their children. As Christians we know that our financial decisions are stewardship decisions and that the resources God has entrusted to us can be used as a tool to make an eternal impact. One of the ways we can intentionally prepare to pass on values, not just valuables, is by incorporating them into our planning, investing, and making decisions—and teaching our children and grandchildren to do so early.

How Can People Learn More About OneAscent?

Explore a new way of investing that aligns with your values at OneAscent.com.
Click on 'Analyze My Investments' on the home page to tailor your portfolio to what truly matters to you.

On Today’s Program, Rob Answers Listener Questions:

Recently, my father-in-law passed away, and my wife and her brother are trying to get his house in their name, but there was no will. So I know it has to go to probate court. So we probably will have to get a lawyer from probate or just try to figure out the following steps, such as how likely it is to get his house in their name or how unlikely it is since there was no will.
I want to give a gift to my church for a building program. I've sold about 12,600 hours of stock to help with this. If I give all the money from the stock sale to our church, will I also owe any taxes?
I just received a new job. I'm 74, and I retired at 62. My husband and I are both debt-free. I have a part-time job as a greeter at the bank. I start at $11 an hour, 12 hours a week. But they offer a 401(k), so I wanted to ask if I’m too old to contribute to this or if I make enough money to justify putting money into it.

Resources Mentioned:

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