MONEY financial advisers

Get in Touch With Your Prejudices…About Money

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Steven Puetzer—Getty Images

Financial planners need to understand that their feelings about wealth are in fact their feelings — not necessarily their clients'.

It’s only human to hear and see a situation through the lens of our bias and experience. And that’s often where we tap into when we speak.

So, when years ago, a client of mine expressed how she and her boyfriend were “freaked out” by his sudden and very dramatic jump in income, I can forgive myself for bungling my reply. I don’t remember exactly what I blurted out, but it was probably something along the lines of “What do you mean freaked out? Most people would love to be in your situation.”

I saw their situation through my lens: If he were well paid for work that had been his life’s passion, that could only be a good thing. I just couldn’t relate to the stress they were feeling and the cascading dominoes of what that high income now meant for them.

The reality is that their stress was related to the change they were experiencing, the change that psychologist Jim Grubman, in his book Strangers in Paradise, likens to what immigrants experience upon arriving in a new land. With both my client and her boyfriend having earned modest incomes up until then, how would this high income change each of them? How would it impact their relationships now that they had arrived in the Land of Wealth? Could they adapt in a healthy way? What if they bungled it?

Because of my lens and the money scripts playing in my own head, my ears focused just on the part about their jump in income. It was only because I asked her to elaborate on her “freaking out” that I understood the stress they felt. It’s now easy to see that I should have known that wealth and stress often go hand in hand.

This experience reinforced how important it is to bring my own biases to the surface and identify the lens I wear. It also reiterated that while it’s essential to learn about tax strategies and portfolio design, it’s equally important to continually study the cultural and psychological aspects of money. These go hand in hand too.

It’s from this place of deeper self-awareness and deeper understanding of the psychological side of money that I can truly be present with my clients who experience a windfall, to anchor them as the tidal wave hits, and to move forward with them after the wave passes.

Here are some resources I’ve found helpful in understanding my own biases surrounding money and getting a better idea of what my clients are thinking:

  • The Soul of Money book and workshop with Lynne Twist (www.lynnetwist.com). This was very useful for me at the beginning of my financial planning career; it helped me let go of a lot of mental baggage related to money.
  • Money Psychology teleclasses with Olivia Mellan (www.moneyharmony.com). Taking her classes, along with being coached by her, increased my understanding of gender and money, and how couples communicate about money.
  • Facilitating Financial Health: Tools for Financial Planners, Coaches, and Therapists by Brad Klontz, Rick Kahler, and Ted Klontz. This important and accessible textbook for financial planners includes useful exercises to use with clients.
  • Strangers in Paradise by James Grubman (www.jamesgrubman.com). This book about generational wealth transfer among the superrich made me think more about what clients at all income levels go through when they become wealthier.
  • The Challenges of Wealth: Mastering the Personal and Financial Conflicts by Amy Domini, Dennis Pearne and Sharon Lee Rich. I read this when I had my first client who inherited wealth. It has exercises to help clients who feel knocked over by the experience.
  • Sudden Money: Managing a Financial Windfall by Susan Bradley and Mary Martin. Written for the general public, it has advice for dealing with specific types of windfalls, whether it results from the death of a parent or winning the lottery. One important lesson: In these situations, it’s as normal and helpful to have a therapist as it is to have a lawyer or accountant on the client’s financial team.

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Jennifer Lazarus is a certified financial planner and the founder of Lazarus Financial Planning, an independent, fee-only firm specializing in the financial planning needs of socially responsible investors in their 20s to 50s. She most enjoys helping people reach a place of empowerment and financial calm.

MONEY Financial Planning

What My 3-Hour Lunch Says About Good Financial Advice

Women at a lunch meeting
Colorblind—Getty Images

Financial planning isn't about investing for retirement or saving for college; it's about turning your vision into reality.

It was Suzanne’s birthday. I really wanted her to have the next best thing to a day off. So I, the adviser, and Suzanne, my client, scheduled our meeting at Guglhupf, a lovely local restaurant.

In 2005, when I formed my company, I was sitting at one of Guglhupf’s upstairs tables when I came up with the tagline of my firm: “Driven by a Vision.” Now, years later, spending a sunny afternoon on Guglhuph’s patio with Suzanne, I had a powerful moment of living that ideal.

Suzanne is a visionary, an entrepreneur. She first came to me as a client because she wanted to be sure that the various ventures she had underway didn’t encumber too much of her wealth — that her assets wouldn’t all be at risk and that she would have enough set aside for her family’s future needs and her own retirement.

At its core, financial planning is helping people realize their vision. And for my entrepreneurial clients, I’m helping them navigate some very complicated waters at a time that’s emotionally charged due to hope, desire, exhaustion, and frankly, being stretched too thin.

These conversations can’t happen inside financial planning software, and they don’t happen on the pages of a financial plan. They aren’t about “Do I have enough money to fund my financial goals?” These conversations are about figuring out how to make those goals come to life.

And this is without my being a business consultant. I don’t know the trades of the businesses my clients start. What I do know is that there are risks associated with what they’re doing, and that likely their venture’s cash flow isn’t going to be as healthy as the projections project. I expect that there’ll be a need for another capital infusion. All of these things are going to impact their other financial planning goals: paying for their child’s education, for example, and being financially independent one day. They know all this too.

However, I believe that when a person has a strong vision for a world they want to impact — their community, their life’s energy making that impact — that inner urge trumps saving for retirement. It doesn’t trump it to the point of being reckless and blinded by today’s enthusiasm, but we recognize that they’re standing at the center point of the see saw, one foot on either arm, finding that balance between today and the long-term tomorrow.

I’ve never snuffed out their flame by saying, “You can’t do that.” I think that’s because I know what it’s like to be driven by a vision. It is my role to identify the risks I see, offer suggestions of how to look at it from another angle, ask them to name a Plan B, and beat the drum of the importance of managing cash flow. Then, I support them in their new venture, in whatever way reasonable.

At this meeting with Suzanne, there was an extra-special payoff. While I do try to stay out of the specifics of my clients’ businesses, over the course of our three-hour lunch we brainstormed about how she might finance one of her new ventures. I realized I knew some people who might be interested in funding it, and I promised to put Suzanne in contact with them. I later did, and they ended up providing money to Suzanne for this project.

So this meeting epitomized my work: My clients are driven by a vision, and I am driven to help them achieve that vision. And if we can enjoy a decadent dessert together, that’s even better.

MONEY financial advisers

Why I Talk Philanthropy with Clients

A financial adviser who once kept mum about her philanthropic investments explains why she isn't shy about them now.

I never used to bring up with clients the subject of philanthropy.

Since 2005, my husband and I had been personally investing in “high social-impact investments,” but I hadn’t been talking about them with the people who came to me for my financial planning services.

Philanthropy was too personal of a topic. Whether clients donated money or not was their private matter.

And, as a financial adviser, I certainly wasn’t going to recommend any investments that earned such negligible returns–say, only 0.5% annually–no matter how much good these investments did in the world.

Then, in 2009, someone hired me to help her outline a thoughtful approach to philanthropy. That invitation tipped off a series of conversations about what she wanted. We went far beyond talking about identifying charities, how much to give, and the pros and cons of establishing a donor advised fund.

These discussions made me realize that I had been holding out on my clients. I saw that I had been making a decision for them about whether or not they wanted to invest in something with low returns but a high social impact. In doing so, I was denying them the deeply meaningful connection that I personally experienced.

I learned then, all over again and in a new light, what I already knew to be true: My obligation as an adviser is to hear what my clients want, to explore their options with them, and to help them implement the decisions they deem best. Sometimes that decision is to allocate a defined portion of an investment portfolio to high-impact investments.

A few years and many conversations later, I’ve learned to let go of the label “philanthropy.” Fundamentally, the conversation is about what people want to do with their money, and sometimes that means investing a clearly defined portion of the portfolio purely for social impact.

That may mean making a peer-to-peer loan, investing via a grassroots organization that supports local farmers, or being a seed investor in a local start-up. It might be an intentional decision to re-route a portion of the dollars clients had been donating to charities and instead choosing investments which lend those dollars to people who need access to capital.

Interesting in talking about this type of philanthropy with your clients? Here are two useful resources for finding high social-impact investments:

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Jennifer Lazarus is a certified financial planner and the founder of Lazarus Financial Planning, an independent, fee-only firm specializing in the financial planning needs of socially responsible investors in their 20s to 50s. She most enjoys helping people reach a place of empowerment and financial calm.

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