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Written by: Nigel Green | deVere Group
For decades, the adage “Cash is King” has reigned in the minds of many clients. It’s an expression that conjures images of security and power, a notion that having liquid assets on hand is the ultimate financial goal. But in today’s financial environment, clinging to this outdated belief could be one of the costliest mistakes your clients make—and as their adviser, it’s your job to set the record straight.
Let’s be clear: cash has its place. It’s the lifeboat that keeps clients afloat in emergencies and the fuel that powers short-term goals.
But treating cash as a crown jewel rather than a tool is dangerous in a world where inflation is eroding its value faster than most realize.
In 2024 alone, global inflation averaged around 6%, and even as it cools, its effects compound. A client who hoards cash might feel secure today but is unknowingly losing purchasing power every year.
This is where your expertise comes in. Your role isn’t just about helping clients grow their wealth—it’s about challenging the biases and fears that hold them back.
The Cash is King mentality often stems from a fear of risk, but in avoiding risk, clients embrace a different threat: stagnation. When cash earns negligible returns in low-interest accounts while inflation chips away, they’re effectively paying a penalty for their perceived safety.
The case against cash isn’t just theoretical—it’s practical and measurable. Consider a client with $100,000 in cash sitting in a checking account. Adjusted for inflation over five years, that money could lose $15,000 to $20,000 in real value.
Meanwhile, even a conservative investment portfolio might deliver steady growth that outpaces inflation, preserving and enhancing purchasing power. Advisers should hammer home this reality.
Now, let’s address the elephant in the room: many clients equate investing with gambling. They’ve heard the horror stories of market crashes and bear markets, and they’re quick to cite anecdotes of relatives who “lost everything” in stocks. This is where your sassy, no-nonsense approach is key.
Remind them that diversification and a sound strategy aren’t buzzwords; they’re the cornerstone of financial stability. And while markets fluctuate, history has proven their resilience.
The S&P 500, for instance, has delivered average annual returns of around 10% over nearly a century. Clients who fail to participate in this growth are effectively opting out of one of the most reliable wealth generators available.
Equally important is reframing the conversation around risk. Many clients perceive cash as risk-free, but that’s a fallacy. Inflation risk is real and pervasive.
At the same time, risk in investing isn’t inherently negative—it’s the price of opportunity. Helping clients see risk as a calculated move toward a brighter financial future, rather than a leap into the unknown, is critical. Thoe who can tell this story compellingly will win both trust and long-term results with clients.
Adviers should also address the psychological comfort of cash. Clients often feel empowered by seeing a big number in their bank account, but this is where you remind them of the bigger picture.
That safe pile of cash isn’t working for them. In fact, it’s holding them back. Shift the focus to building a portfolio that aligns with their goals, from generating passive income to funding retirement, education, or even that dream vacation.
The real challenge—and opportunity—for financial advisers is to help clients unlearn deeply ingrained myths and replace them with a data-driven, forward-looking mindset. This isn’t about dismissing the value of cash; it’s about putting it in its rightful place as part of a diversified financial strategy.
The king’s reign is over; the era of empowered, strategic investing is here.
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