Financial Advice From a Money Management Pioneer

For Ethel Davis, financial advising is part business and part heart. Here's how she answered some of our everyday financial questions. 

Ethel Davis, owner of VZD Capital Management, has a morning ritual. The first thing she does before beginning work is turn on the digital photo frame perched on her office desk. Each photo is of a client.

"I ask them to send me a picture doing something they love to do," Davis explains. "After 30 years of being in the financial arena, I have been around so many financial advisors who just took other people's money. I said I was not going to do that, and I took bruises for it. And still I rise. Maybe I haven't made as much money as others, but as I look at those pictures of my clients each morning, I know I have purpose."

Davis seems refreshingly unaware of her status in the world of money management. The recipient of a Five Star Wealth Manager award has also been named to the prestigious roster of "Women Who Mean Business" by the Kansas City Business Journal. In addition, Davis is the first African-American female to own 100% of a registered investment advisory firm in the Midwest, and one of the few to do so within the U.S.

Davis, who is firmly ensconced in the top 2% of money managers in the greater Kansas City area, is a bit of a hometown hero for me. She did not disappoint when I met her in person. She laughs easily, listens carefully, and is genuinely inspired by the faces that flash by on her digital photo frame. According to Davis, remembering who she works for is what fuels her.

What struck me most was her combination of financial savvy and heart, which you can see for yourself in her answers to these questions about everyday financial issues.

The Ascent: How would you advise someone who is discouraged because they've made financial mistakes?

Davis: Remember how, when we were kids, our teachers would circle the things we got wrong in red? We started to feel like we were less because there were things circled in red. For a long time, I didn't like the color red and I didn't even know why. Here's the thing: Something that's been circled in red is not a mistake, but a lesson. It's just a lesson. Get over it and move on.

TA: A lot of people are worried about not having the ability to pay for their children to go to college. What would you say to them?

ED: I can tell you what my parents did. My dad had his GED and my mom had an eighth-grade education. They sat us down and said, "You are going to go to college because we want you to have opportunities we never had. We're not in a position to pay for it, but we believe in you. We know you can make the kind of grades that get you scholarships. We know you can work with your school counselor to find ways to pay for college."

You should never sacrifice your finances or retirement to pay for your kids to go to college. Support them. Show them you believe they can do it.

TA: What would you tell someone who says they earn too little money to get ahead?

ED: I would ask them about their job and how they like it, and then I would say, "If I hear you correctly, you get up every day and go to work. Then, you pay everyone else but yourself. I don't care if you earn $40 a week. Put $1 aside and you still have $39 to pay everyone else. You are paying yourself to get up and go to that job."

You have to say to yourself, I'm going to do something different. I'm going to break this cycle of poverty, even if it takes one penny at a time. Remember, wealth does not have a specific number. It's a mindset. You have to change your mind to believe you can invest. 

TA: What about people who don't invest because the cost of living is too high? 

ED: I would like to know why. If they're living someplace like California and there's a huge gap between their income and cost of living, that's one thing. If their cost of living is too high because they have a huge home, two Teslas, and kids in private school, money is not the problem. It's a self-esteem issue. I would ask them, "Who hurt you? Who told you that you are less than [them]?"

TA: Do you find that people simply get discouraged by life?

ED: Absolutely. One of my mentors is Lamonte Winston, a man who has coached in the NFL. I was upset once because I lost a job, and he said, "NFL football coaches are fired publicly every day. It might not feel like the best thing that could happen to you, but it may be liberating. You're now a free agent. Get on with your life."

TA: Is there a basic financial lesson everyone can benefit from? 

ED: Before you do anything else, make sure you have six months' worth of savings, and be on a budget at all times. This is important. 

TA: Ultimately, how do you see your role as a financial advisor?

ED: I am a financial advisor, but I'm also a consultant and a financial physician. You come to me with a symptom and I've got to find out where the problem is. I'm also an accountability partner. When you make mistakes I'm going to give you exercises to learn to forgive yourself. A good financial advisor is not simply selling you annuities or insurance. They're helping you change the way you think.

A legacy of financial wisdom

The V and Z of VZD Capital Management are in honor of Davis' parents. Although they're gone now, she thinks of them every day and knows they would be proud that their girl took their lessons to heart. 

This Q&A has been edited for length and clarity.