Money is messy
When people minimize the complexity of financial emotions, it makes Joy bristle. That’s because she knows money can be messy. In fact, the American Psychological Association runs a survey every year about the top stressors in people’s lives. Time and again, financial stress is at the top of the list.
She adds, “It doesn't matter how much money people have or who they are. Financial stress does not discriminate. It is a very powerful force in people's lives.”
In our profession, we’re trained to focus on the math problems around our clients’ financial concerns. But for us to become more effective in what is essentially a highly emotional pursuit, we need to make a shift.
By acknowledging the legitimate stress that impacts our clients’ decisions about money, we can start to find a way to understand their bigger picture and connect with them as people. That’s when our financial expertise will have the best chance to make an impact.
Enter a relationship with curiosity
So, how do you create an effective personal connection? The first step is to open your mind.
Just like when you are engaging in any kind of relationship, you need to approach with curiosity. That means co-creating the agenda with your client and working as a partnership not dictating it based on your assumptions about their demographic or what you think they want.
To get better at behavioral finance, you need to have deeper conversations. It takes time and finesse to draw out someone’s deeper goals, desires, dreams, and fears. Once you’ve brought those things to light, though, you’ll have a much clearer picture of what’s getting in the way of where they want to go.
Your ultimate goal, as Joy sees it, is to help your clients develop a sense of financial self-awareness.
“After a client leaves your office,” she says, “they are going to be more able to step back and notice some of their automatic, rote behaviors. That gives them a chance to say, ‘Okay, what is happening here? And is this actually what I want?’”
Work from a place of self-awareness
Another thing we aren’t always prepared for in our profession is to turn our attention inward. But Joy says it’s essential to be aware of our own biases (and even histories) so we don’t project it onto our clients.
She explains, “It can be much more comfortable to just focus on the person in front of you. But you can't expect to take someone farther than you've gone yourself.”
In our work, we routinely ask our clients to dig deep and look at existential questions around their life, their fears, and their relationships. These are all areas that are woven through with their finances. Joy reminds us not to underestimate the intimacy of those conversations. Would you be able to answer those questions yourself? As she puts it, “If you aren't examining that in your own self, I really think that is going to obstruct your ability to empathize and help your clients reach a new level in their life.”
When we aren’t thoughtful about our own experiences, it can make us feel disconnected from our clients. This makes it easy to slide into unhelpful thinking like, “They’re just irrational,” or to say, “You just need to try harder.” In contrast, being able to take their perspective can make it easier to find solutions. It all comes back to putting aside your assumptions and listening deeply.
Your “life well lived” is not necessarily theirs. And your fears about money aren't necessarily theirs. So you really need to be curious about what someone's experience is, what their vision is, and what their hopes are.
Maintain healthy boundaries
When she’s teaching advisors at Shaping Wealth, Joy loves to introduce the topic of boundaries with poignant questions: “Are you responsible for your clients financial wellbeing? Are you responsible for their happiness?”
We can get so wrapped up when our clients are suffering that it takes a toll on our health and balance. The solution is to separate what we owe them from what we don’t. Joy says, “It's about having boundaries. You need to have a sense of differentiation, reminding yourself, ‘My client’s life is their life, and my life is my life.’”
When you feel like you can’t ignore after-hours emails or you’re worrying about a client’s situation so much that it’s impacting your family life, it’s time to give yourself a limit. Deal with anything that is a true emergency, and otherwise remind yourself that you need to wait until office hours to address it.
“We can only take responsibility for what we have control over,” Joy says. “When your client walks out the door, you cannot control what they do. But you can control your relationship with them, what you’re sharing with them, and how you’re sharing it.”
Know when to refer a client for more support
Another critical piece of healthy boundaries is knowing your limits and having a plan in place to get more help when your clients need it. You will inevitably encounter emotional issues in advising, but you are not a trained therapist. So you need to be able to answer the question: “What's mine to address, and what is beyond my scope?”
“If you’re ever feeling out of your depth,” Joy says, “that’s a sign to step back and say, ‘I really need to consult with someone.’ I think it's very wise for advisors to have someone in their network trained in financial therapy, or an excellent clinical psychologist or a marriage and family therapist who's licensed and who you trust.”
She recommends referring clients for support when you see any of these signs:
- Financial infidelity or things about their partnership that are worrisome to you
- Experiences of early trauma or financial trauma that are having an impact on them
- Intense anxiety, panic, or obsessive-compulsive behaviors around money
- If you just feel in your gut that you’re concerned about their mood or safety
You’re not a therapist, which is why it’s helpful to have someone you can refer people to. And, in Joy’s final words, she wants to remind you that preparation is key.
“You are going to be working with people who are very distressed sometimes, and there's no way around that. So doing your own work and having adequate boundaries is incredibly important.”
What You’ll Learn:
- The first step to building an effective relationship for behavioral finance
- The step we all try to skip (but shouldn’t!)
- The necessity of healthy boundaries, including when to get outside help
In this episode of YAFPNW, Joy Lere, Psy.D., and Hannah Moore, CFP®, discuss:
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