I recently came across this short three-minute clip from an interview with Shaquille O’Neal.
Within it he shares a couple valuable lessons. X user (@KRL_defi_) prepared an abbreviated transcript (below):
Shaquille O’Neal says he blew through his first $1 million endorsement check in a single day before learning a hard lesson about money.
Graham Bensinger : “Right before the draft, you got a $1 million endorsement deal and spent it all in one day?”
Shaq : “Pretty much. I thought I was getting a million dollars, but I forgot about taxes. After FICA and everything else, it was closer to $600,000.”
“I bought a $150,000 Mercedes with no negotiation. Then my dad asked where his was, so I bought him the same car.”
“My mom wanted one too, so I bought her a Mercedes as well. Just like that, about $500,000 was gone.”
“Then came suits, jewelry, sound systems, and everything else I thought I needed.”
“A few days later, the bank called and told me I was $80,000 overdrawn.”
You might be thinking, “Ken, yeah, obviously we get that lesson. Don’t spend everything you make…that’s basic. I thought you had something more interesting.”
But that’s not the lesson. Shaq continues…
“That was the moment I realized I needed a financial advisor.”
“I met a bunch of guys promising they could turn $40 million into $200 million overnight. I didn’t trust any of them.”
“Then I met a guy named Lester Ness. He talked about saving money, protecting assets, and building wealth the right way.”
“I said, ‘Shalom, I’m going with you.’”
Concentration is the key to becoming rich. Diversification is the key to staying rich.
Getting “rich” generally requires (1) living below your means and investing the difference over long periods of time, (2) taking a concentrated risk (e.g. owning a business), and/or (3) getting lucky / being born into a wealthy family.
A financial advisor’s job is NOT to make you rich off your investments in a short period of time. That’s just gambling. An advisor’s job is to help you manage the wealth you’re creating so that it can be used to enhance your life, your family’s life and provide you with financial freedom.
A good financial advisor…someone you trust with your life savings… is someone who deeply understands your financial resources, personal circumstances, tolerance for risk and your most important financial and life goals.
A good advisor then takes that information, builds a financial blueprint, and implements it then reviews that Financial Plan every year or as circumstances change.
A good advisor manages your finances with an objective / unemotional, deep commitment to the approach that maximizes your ability to achieve your financial goals no matter how many shiny distractions there are. And there are many over the course of a lifetime.
A good financial advisor doesn’t recommend specific investments or strategy or products (insurance, annuities, funds, etc…) until they thoroughly understand your resources, circumstances, and goals and have built your Financial Plan. How many times have you met someone in financial / insurance services who pitches investments or products without having even completed your Financial Plan? How could they possibly know what’s in your best interest? They don’t…they’re simply selling.
A good financial advisor is someone who understands how much stress your financial resources can tolerate before your financial goals are jeopardized and then builds an investment strategy around that.
You get rich by taking concentrated risks. You stay rich by diversifying and managing risk well.
And beyond all that, a good financial advisor also provides proactive tax planning to help you maximize the after-tax value of your resources.
Fortunately for Shaq, he got some good advice throughout his early life and had a great instinct on who to trust at a young age, which quite possibly made all the difference for him.
