Why The Wolf of Wall Street is the Perfect Guide to What NOT To Do in Financial Management!
By Aditi Bhat
If there is one place on earth where information travels faster than light, it has to be the New York Stock Exchange. Colloquially known as the Wall Street, it was originally built to thwart away corruption and crime, so that money can be made the right way.
Today it hosts the dreams of over a billion investors who want to make it big and reach the top like Jordan Belfort and Stratton Oakmont from “The Wolf of Wall Street”.
Source - agentsandseers
The movie, which is based on the real-life accounts of Jordan Belfort and his short-lived success at Wall Street, is not just entertaining but also teaches a lot about financial management and leadership. It is a classic case study for students learning financial professional courses, as it teaches what NOT to do in financial management.
Four financial management mistakes to avoid
Rule#1 | Don’t treat your clients like innocent lambs
The greatest lesson for financial advisors is to focus on the client’s success, as it directly equates to their success. Having a short-sighted vision to make quick gains from your clients by disregarding their expectations will eventually lead to losing the client. Remember, your client is your greatest asset.
Jordan Belfort could not hold on to his clients as his motive was to ‘wolf on their money’. He did not invest in growing a long-lasting client relationship and turning them into assets.
Rule#2 | What looks good may not always play well
A scientific study says that it takes people just seven seconds to judge others on their appearance. A well-dressed and fluent financial advisor may be more skilled at selling financial products than managing them.
As narrated in the book, Stratton believed that by training uneducated people to sound like professional brokers, he could convert leads into clients. He even hired a tailor to make custom suits for his employees. Every management guru terms this as a recipe for failure.
The key point here: Nothing can replace the value of real knowledge and skills. Do not try to cover up your shortcomings, but instead upskill through various online courses.
Rule#3 | Check. Cross check. Repeat.
The nature of financial management is driven by expert estimations, but they are still guesses, nevertheless. The financial wisdom is seldom cross-checked and is largely peer-influenced. What is right for one may not be right for another. Today, big data analytics training has helped many financial firms turn financial data into knowledge to make accurate financial decisions.
Jordan Belfort remarked, “Who doesn’t study the mistakes of the past is doomed to repeat them.” Unfortunately, he couldn’t follow it to avert his own downfall.
Rule#4 | Choose reputation over a too-good-to-believe-offer
Stockbroking essentially is playing with other people’s money. It is one of the main reasons why traders are ready to take higher risks as it’s not their money that is at stake. It’s a ‘heads I win and tails you lose’ deal every time. So it is a good practice to choose well established and reputed financial firms to grow with.
Stratton came into the business with no previous expertise or history. The people who chose to trust him with their money and time eventually lost it as the company simply called itself bankrupt and closed down.
To conclude, financial management could be a tricky business, but there are many professional courses aimed at providing financial literacy to investors so they can better manage their financial goals and needs.