We have been asked this question many times. It’s a question that requires deep thinking to understand what you’re really asking.
Am I okay… with my family? With my health? With my career? When we are asked this question, they mean “Are we ok financially?” For years, our industry answered this question with dollars and percentages. “You made this amount of money last year,” or “The percent return outperformed the benchmark.”
But, does that answer the question? I remember many years ago I presented a year-end report to a young widow who had a 23% return on her account. She asked, “is that good?” I missed her question completely – she was really asking “Am I going to be ok? Am I going to be ok financially, raising these young children alone?”
I think even our clients expect us to talk in dollars and percentages. But now we understand that clients are really asking if they can do the things they want, and feel confident with their choices. “What does my spouse want to do? Have we ever talked about this?”
Unfortunately, I think many people are so frightened they’ll run out of money that they walk away from many of their dreams and die on a mattress full of money.
I was at a restaurant with a friend, at the end of the meal he pulled out a coupon for a free dessert. The waiter said “I’m sorry, that expired yesterday.” While I was upset with the waiter (come on, a $2 dessert?!), I was even more concerned with my friend as he said, “No, thanks.” This person had enough money to buy the restaurant three times over – with money left over.
Meyer Wealth Advisors wants to answer the real questions. For many years we have provided outstanding Investment Management. We will now parallel that with Guidance Management. This quarter we will address the three stages of Guidance Management.
How do you feel and think about money? At the heart it, what drives your financial choices?
You’ve decided you want your money to work for you – so what do you want it to do? What matters to you?
Am I on course? Does my Guidance Management parallel my Investment Management? Do I have a relationship with my advisor that allows me to check-in when life changes?
Let’s begin by exploring the first stage of Guidance Management.
How do I feel about money? How do I think about money? What are the biases I bring to my thinking process concerning money, and how have these biases driven my past money decisions?
We look at three basic thinking processes when discussing how we think about money:
A Protection MoneyMind® is motivated by fear, and values security. The Protector feels they never have enough money in their safety net. They are careful and meticulous.
A Commitment MoneyMind® derives joy from giving and supporting others, and is fearful of letting others down. They cut down their own needs, and sometimes give more than they can afford in order to help their loved ones.
A Happiness MoneyMind® prioritizes enjoyment, and lives in fear of missing out. They live life to the fullest, thinking of cost last.
Nobody is one single MoneyMind®, we’re all some sort of combination of each MoneyMind®. But most people have a predominate MoneyMind® that dictates most of their financial behavior.
Many couples don’t share the same predominate MoneyMind® traits. There is usually a “CFO Spouse, ” who manages the financial decisions. And the “non-CFO Spouse” is happy to let them.
Investment management meetings usual revolve around the Advisor focusing on the CFO Spouse, and discussing exciting topics such as standard deviation, beta, and asset allocation. Meanwhile, the non-CFO Spouse checks out.
This is not the non-CFO Spouse’s fault, as they would like to have a say in the financial planning process. This disconnect is the Advisor’s fault.
The Advisor needs to start talking about needs and wants, and exploring the ways to put this money to work for real-life goals.
Before we can do that, we have to get on the same page of understanding each other’s biases, so we can collaboratively make decisions. This doesn’t mean changing each other, it means understanding each other. How do you do that? Take the MoneyMind® exercise here.
Next month – What do you want your money to do for you?