There is not a lack of (good) literature on investing and personal finance. The basics have been identified and repackaged several times over – live below your means, save, save, save, diversify your investments. So why is it that so many people still have financial challenges if the “keys to wealth” are so easy to come by? It’s because when it comes to finance, some people perish, but not for lack of knowledge.

The uncomfortable truth that many of us do not like to discuss is that one’s background matters. In a previous post in which I asked if financial literacy was overrated, I gave the scenario of a choice between expert level financial knowledge or $100,000 in cash. The obvious answer is the cash. But far from being an abstract thought experiment, many people find themselves disadvantaged because they were born into a situation in which they lacked the resources to even compete for a better financial outcome.

The greatest investor of all time, Warren Buffett, spoke about this exact case. Despite his absolutely phenomenal investing skill, he attributes a lot of his success to luck. Including the luck of being born a white man in the USA.

But this situation does not mean that people who are not as lucky cannot have financial success. It only means that expectations must be realistic. I have previously written about how we as financial advisers must be careful about the brand of financial success we sell to people. And now I think our advice would be more relevant if we take the various factors that people cannot control into account.