High-net-worth clients are often extravagant spenders living well beyond their means. By contrast, “millionaires next door” are wealthy but typically frugal.
But as Dustin Gale, senior wealth advisor at Kayne Anderson Rudnick, tells ThinkAdvisor in an interview, “I remind them that they can’t take it with them. They’re often living too conservatively and too far below their means … not enjoying things that they’ve worked for as much as they could.”
Gale, a certified financial planner previously with Bank of America and Wells Fargo, emphasizes helping clients look at both sides of their balance sheet. That way, he stays alert for credit opportunities, including margin loans.
Gale, who has developed a niche of high-net-worth clients going through major life transitions, uses alternative investments to reduce volatility or to generate more consistent income.
A finalist in ThinkAdvisor’s 2023 LUMINARIES awards in the category of Community Impact, Gale, 39, has been a volunteer for more than a decade at Project ECHO, where teens learn – through financial education, mentoring and business plan competitions – how to become entrepreneurs.
In the interview from suburban Los Angeles, where he is based, Gale discusses his wide-ranging work with the non-profit and how ECHO “focuse[s] on something positive [for youths] to give back to the communities over the long run.”
Here are highlights of the interview:
THINKADVISOR: What’s a motto you use that rings a bell with clients?
DUSTIN GALE: I have some clients that make a lot of money and are living above their means. I have clients that don’t make a ton of money — “millionaires next door” — but have been able to accumulate a lot of wealth because they’re careful and mindful about expenses.
But they’re often living too conservatively and too far below their means and maybe not enjoying things that they’ve worked for as much as they could.
I remind them that they can’t take it with them.
What’s the biggest challenge facing financial advisors today?
One of my biggest challenges is that information moves so quickly with social media and the news outlets — there’s a computer with news alerts in everyone’s pocket — and all that can really make clients feel uneasy and create anxiety.
How do you, as an advisor, handle it?
To help bring clients peace of mind, I say, “Here’s what this truly means” and give them some historical perspective. The educational process does help.
And we look at their customized financial plan and remind them that some of what they’re hearing is just noise.
Any other major challenges for advisors?
Tax codes are constantly changing. So you need to do some long-term planning for clients that are looking at different types of irrevocable trusts and provide guidance on unknown variables for the future.
What do clients need most from advisors, given the current market and economic conditions?
Communication that’s tailored to their specific objectives, goals, needs and circumstances.
An advisor who has a low client-to-advisor ratio can spend a lot of time with clients and understand what their concerns are to create a more customized plan.
Clients need a good grasp of what’s going on financially [in general], so that when they see volatility spiking or a lot of big [negative] headlines, they know not to panic too much.
My clients don’t. They know that that news isn’t for their personal [situation]; it’s just broad information and doesn’t have too much to do with their specific plan.
You’re the immediate past chair of the board of directors of Project ECHO, a non-profit that teaches teenagers about entrepreneurship and holds business plan competitions in Los Angeles. Tell me more about your role in the program.
Youths create their business ideation and business plan, work on their pitch and present to a roomful of entrepreneurs and [other] professionals.
We have a mix of at-risk youths and other students who have had more advantages and opportunities.
It’s another [way] to get kids off the street and focus on something positive to give back to their communities over the long run.
Do LA schools offer ECHO?
We link up with schools. Sometimes the program is embedded into the actual school program.
What’s your role as a volunteer?
I’ve worn a bunch of different hats over the last decade.
My mission is to reach as many youths as possible. That’s partly how we grew from 100 students to a couple of thousand.
[Some of my participation] was teaching [the students] the financial part of business on campus at UCLA for a couple of years.
I stepped back recently but remain involved as part of the advisory board.
Has this volunteering helped your business?
It’s a form of networking with all the professionals and entrepreneurs that are mentors working with the students and that are judges for the program’s competitions.
I think it probably helped my business a little bit just by expanding my network, and eventually referrals start[ed] to trickle in.
Your firm uses alternative investments. Do you ever recommend them to your clients?
Yes, either as a customized approach to reduce volatility or provide more consistent income as a diversifier away from traditional fixed income. It depends on the scenario.
We have a robust alternative investment platform to provide accessibility to clients, depending on their goals, objectives and time horizons.
What else differentiates your practice?
I’ve had quite a strong background in credit on the bank side. I have the ability to look at both sides of the balance sheet and talk about credit opportunities with clients.
I’ve helped them with different types of secured lines of credit or even margin loans.
Maybe they’re purchasing a new house and haven’t sold their existing home yet. I’m not a bank, but I can point clients in the right direction [to] the network of partners I have.
You were previously with two wirehouses – Wells Fargo and Bank of America. Do you prefer being independent?
Oh, yes. It was definitely coming into the light! Working at those big institutions, there was a lot of red tape and politics that you have to spend too much time on.
I prefer to devote my time to my clients.