Journal of Financial Planning: April 2011
Ross Levin, CFP®, is the founding principal of Accredited Investors Inc. in Edina, Minnesota. His book The Wealth Management Index, published by McGraw-Hill/Irwin, provides a framework for advisers to assess and manage their clients’ plans and goals. His e-mail is ross@accredited.com.
“I think in wealth management, part of our job is to help clients explore why they want what they think they want. ”
I have been reflecting quite a bit as we wait for our identical twin daughters’ college acceptance letters to arrive. These are two children raised by the same parents in the same home at the same time, yet initially they will be choosing different paths. While both are looking to go out of state, one wants a larger school far away and the other a smaller school close to home. These decisions that they make at age 18 could very well impact who they marry, where they live, and which careers they choose. And we may have some influence, but we certainly have no control.
The daughter who wants to be closer to home is in part choosing this because of her fear of flying. I can’t help but think about Jungian psychologist James Hollis’s quote in his book What Matters Most: Living a More Considered Life: “The meaning of our life will be found precisely in our capacity to achieve as much of it as is possible beyond those bounds fear would set for us.” While I have no doubt that our daughter will have a great experience at a good school in the Midwest, it could lead to a life very different from one whose boundaries were not established through fear.
Fear and Your Practice
I know that each of us is contained by certain things that affect what we do in our business and for our clients. While we may not identify these self-imposed limitations as caused by fear, I suspect that it certainly plays a part. At times, this may actually serve us. My fear of working with big clients when I started in the field may have prevented me from getting into situations in which I was ill prepared to perform well. My fear of public speaking helped me invest in training that has improved those skills.
At other times we may not be fearful enough. Our reliance on models may boost our confidence in rendering advice that is incomplete. We may try to hide our fear through brashness. I often see this as “the smartest guy in the room” syndrome—anyone who questions us may be getting too close to a fear that we are not quite who we show ourselves to be.
I tend not to think of myself as being fear-based, but I certainly see some areas in which those demons raise their ugly heads. As we work on transitioning our practice to others within the firm, I am somewhat fearful that my voice will be compromised and my significance diminished. This fear may present itself in worry that the generation behind us may not place the same value on all the things that have been the foundation for our firm.
There is a fine line between discovering fear and responding to it. The distinction can be subtle. We have some large clients with whom working is wonderful. We can do very complex planning in areas where we can create tremendous value. They became clients in spite of my attempts to sabotage the prospect interviews. This used to happen for me with million-dollar clients, then ten-million, and now twenty-million and up. My “I am not enough” message may be playing, yet our firm is set up to work with these types of clients, so I am unnecessarily creating a roadblock where none needs to exist.
On the other hand, my instincts serve me better when I am considering which types of clients are our best fits. This is about personalities rather than degrees of difficulty. Working with the wrong clients may also come from fear—the fear of not being liked. In these situations, I need to overcome my fear by not creating the relationship.
Fear and Money
I think our fears get us confused when we think about money. Hollis describes three “substantive projections onto money”:
- With money I am lifted out of the ordinary
- With money I can transform my life
- With money I can momentarily feel connected to something larger than me
I wonder whether these three traits—transcendence, transformation, and connection—are not enhanced but actually impeded by money.
We are not lifted out of the ordinary with money. We may be able to do extraordinary activities if we have money, but this does not make us extraordinary. The minutes of my days look different than they did before I had several people working for me, but I still have the same weaknesses on which I am working. In fact, money for a time made some of those weaknesses more pronounced. I remember buying a big BMW in my late thirties that was an outside statement to the world that I was successful. Within a year I was embarrassed by it. If I were a car guy, the purchase may have been natural; instead, although I may not have identified it at the time, it was a chance to be extraordinary.
Clients are often confused when they end up habituating to the things that they buy. Those things may actually keep them from being extraordinary. By this I mean that the act of becoming comfortable with the ordinary is extraordinary. The more we are buying, the less we are living with what we have and who we are. Money used for experiences may stretch us; money used for things often doesn’t.
I also don’t think that money transforms our lives. I really didn’t start off with much. I had to put myself through college, which looking back may have been one of the best experiences of my life. But me with money is no different than me without money. When Bridget and I met and married, neither of us had anything but some loans. Ironically, we didn’t really have money concerns in spite of being somewhat poor, and we really don’t have them now. We did not view our money as a way to describe us.
When Money Becomes a Trap
A couple of our clients are not transformed by their money, they are imprisoned by it. Their money is a reference point for who they are and their level of success. It has become their personal brand. If they give it away, they do so flamboyantly (and maybe even reluctantly). And they can get really scared if their portfolios fall and they don’t have the same amount as before, even though they have far more than they need.
In his book on gratitude, Thanks, Robert Emmons, Ph.D., writes:
Expressing gratitude for life’s blessings is likely to elevate happiness for a number of reasons. Grateful thinking fosters the savoring of positive life experiences and situations…. Counting one’s blessings may directly counteract the effects of hedonic adaptation, the process by which our happiness level returns to its set point…. If we constantly remind ourselves of our blessings, it should become harder to take them for granted and adapt to them.
Lastly, while money may serve to connect us to some people, it disconnects us from others. I operate in several different groups—from boards to religious institutions to business to volunteer organizations. At times, having money separates me from those who are not in the same situation as I am and therefore cannot do the same things. While it may also connect me with others in similar financial situations, money does not form the meaningful connection derived from being in a relationship. For this we have to go far deeper.
I think in wealth management, part of our job is to help clients explore why they want what they think they want. We may not be able to identify the root of their issues, but we certainly can try to help flush them out for them to look at and evaluate. Their fears may be driving them to believe that they have to have something to be something. We should go beyond showing them what they have to save in order to get something they may not eventually want.
The thing that has helped me most in dealing with these issues for clients is looking closely at myself. The first step for you may be to look at what has been holding you back. What is the story that you have created about yourself? Describe yourself as a person—compassionate, funny, smart—rather than as an object—successful, wealth manager. Ask yourself two questions: (1) If you were not afraid to fly, how far from home would you be able to go?, and (2) Where is it that you really want to go?