Connecting Clients to their Money

Journal of Financial Planning: June 2015


Ross Levin, CFP®, is the founding principal of Accredited Investors Inc. in Edina, Minnesota and author of Implementing the Wealth Management Index.

This is my first world issue, but I think it may be useful: I have two cars. The car that gets me through Minnesota winters has 135,000 miles on it. My second car is a zippy convertible that I store all winter, pull out as soon as possible in the spring, and drive as long as possible before I tuck it in for the fall. 

Now I am not really a car guy. In fact, I bought a really nice car when I turned 40 (I’m now 55) and found myself embarrassed to be driving it to most places I went. Even though I’m not a car guy, I love Teslas. For me, buying a Tesla needs to be broken down into two components—personal and positional.

Personal and Positional

Personally, several of my clients have Teslas and I love going places with them. The cars ride great, have a lot of driver-indulgent features, and they fit nicely with my views around sustainability. But if I bought a Tesla, I think I would probably want to drive it year-round, thereby changing my relationship with the summer car that I love. I could get rid of the convertible, but the bigger question is why would I introduce a change that would alter my satisfaction with what I have? At some point, my winter car will no longer be economical and my choice will be between buying a car that works fine for my two-car option, or buying the Tesla and losing my top-down summer rides.

Positionally, I am uncomfortable buying something that costs a lot and makes me feel showy. I did this when I was 40 and struggled with those feelings for seven years—until my “rules” allowed me to buy a different car. Yet, I would also like to drive up to my outside board meetings in something that indicates my success. This is no small positional conundrum. Most of the time I am comfortable with myself, but some of the time I still feel like I need to prove something.

This kind of questioning helps me better understand why I am about to do something.

Connect Actions with Values

A coworker asked me, “When is it okay to enjoy your money?” When I was 40, I don’t think I bought that luxury car for me, but rather as a way to show others a version of me I felt I needed to represent. I was not enjoying my money, I was enjoying money status. In many ways, I bought the vehicle from weakness and fragility. If I was a car guy who really valued the driving experience, I may have had a different reaction to that car purchase and would not have been as self-critical.

So I think it is okay to enjoy your money when you are connected to it. Different people will enjoy their money in a variety of ways. Some people love trips, some invest in their home, some love giving money away. The issue is to understand spending motives and then connect actions with core values. Ultimately, this is why clients hire us.

Most of us have these kinds of discussions with our clients daily. And they really matter. At times, we need to encourage certain clients to take action. Other times, we need to ask them to explore why they are making choices that seem personally incongruent.

Help Clients Uncover their Purpose

A client was feeling trapped at his job in a toxic environment because he was being paid well. He came in talking about how many more years he could work there until he’d be able to escape and do something that he likes more. He was a prisoner to a lifestyle that caused him to be misaligned. 

We carefully went through his cash flow and created a variety of scenarios that would give him the freedom to walk away on his terms. We reached an agreement on things that were easy to cut and worked out a plan regarding other areas that would take more time to change. We explored options and ranked them according to the client’s preferences. We rank ordered selling his cabin versus having his significant other go back to work. Although the client still is employed by the company, he feels a sense of relief and the permission to do something different.

I was in a client meeting with a long-term client who for literally two hours was working on me about our fees (we show lifetime fees paid when we report historic after-fee returns). As the meeting was nearing its end, the client asked me if I liked my work. I told him, “Not today.” We laughed and then he asked how much longer I would do this. I told him that I would like to be out from owning my stock by age 65, but continue to work with clients into my 70s. In spite of the railing I got regarding fees, he was concerned that I may be at the end of the line. My clients know that I understand them, care about them, and will do right by them. Ultimately, that is what our clients are paying us for.

Certain advisers will compete with us on price. But perhaps their target client—the price-sensitive client—may not be a good fit for us. But if we can connect clients to their money, they will fully appreciate our value. Our value and our shared values are conjoined.

This takes time and conversation. It isn’t scalable. Commodity businesses are scalable. If I just want to buy a car, I can go online to find the best price. If I want to understand the “why” behind the car purchase, then I need deep conversation.

Conversation is its own reward. To build a practice on the conversations that will help clients uncover their purpose and to help them be seen for who they really are makes this an incredibly rewarding profession.

General Financial Planning Principles