Have you ever found yourself walking into your financial advisor's office and dreading the conversation? Feeling like they're going to talk in a bunch of different abbreviations and a vocabulary that might feel like a foreign language to you? Today, we're going to talk a little bit about what the difference is, in working with a financial advisor or financial planner that focuses on behavioral finance. What does that experience look like for you? Why should you consider a financial advisor that is focused on helping you through your behaviors, your money story, your philosophy with money, and creating a strong foundation to implement a financial strategy. So if you know somebody that is in the market for having a stronger relationship with a financial planner, or shopping for a financial planner, this is a great episode for you to tune into.
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Shannon Foreman 0:01
Welcome to the Thrive Forward podcast, my friends, have you ever found yourself walking into your financial advisors office and dreading the conversation or feeling like they're going to talk in a bunch of different abbreviations and words and vocabulary that might feel like a foreign language to you? Today, we're going to talk a little bit about what the difference is, in working with a financial advisor or financial planner that focuses on behavioral finance, what does that experience look like for you? And why should you maybe consider a financial advisor that is focused on helping you through your behaviors, Your Money Story, your philosophy with money, to be able to create a strong foundation and then implement strategy, there's nothing wrong with the way we do things in our industry, sometimes it's just that we put up these walls that make them completely inaccessible to the average individual, or our clients. So if you know somebody that is in the market for having a stronger relationship with our financial planner, or shopping for a financial planner, or whose financial planner just retired, this is a great episode for you to tune into. So let's press play.
Shannon Foreman 1:31
Alright, let's talk about what is behavioral financial advice? What does that even remotely mean? Well, behavioral financial advice gets to the core as to as to how we make financial decisions. The reality is there are so many different strategies out there, from how to save for retirement, how to invest, what types of investment vehicles you should use, when you should invest, when you should divest, when you should pay taxes, when you shouldn't pay taxes, we get thrown so much information at us. But the reality is, before you actually implement strategy into your financial plan, you should be thinking about specifically, what are my behaviors. And if I start the strategy, how committed Am I to see that strategy through if I don't deal with some of the behavioral stuff first. So when we start to think about our behaviors, we have to start with someone of our childhood and what that means. So we learned many different behaviors as a child, and that might play into how we raise our families, how we eat, how we exercise, how we view the world, our politics, or religion, all these different things, but money plays a part of that, as well. And some of the things that we saw, or didn't see or heard, or subconsciously heard that were, you know, unsaid things, but the language and environments that we were in, were absorbed by us to create our own money stories. And that transcends into fears and beliefs that we might have ourselves. When it comes to financial behaviors. There's quite literally now a designation called behavioral financial advisor. And it's something I will eventually be working towards, actually know the woman who wrote the curriculum and the team that wrote the curriculum and think to perform, they're an awesome organization, and truly thinking about how, as financial advisors, we can start helping our clients look at the intricate part of who they are pulling back those layers of onions. I think for me, the piece that I love the most about my job, is being able to sit down with individuals and ask the questions. But why? How? What? How does that make you feel? What if we did this? How would that make you feel? What are the impacts to your life? If we did something like this? How do you think that that would impact your partner? Playing off your partner? How did what that person just said, make you feel somewhat argue that behavioral financial advice is somewhat like therapy? Now, we aren't here to provide you therapy? And absolutely, if you need to seek some sort of mental health, by all means, we're here to encourage you to do that. But that's not what we're here to do. There are actual financial therapists as well. That being said, it can kind of feel like that as we self explore, what does it mean, when we start to think about our story, and starting with that, like I mentioned, there are different things that make up that story for us. Both indirectly and directly, what we heard socially, from society, both again heard and unhurt. So let me give you an example, as a female, right, we might be told, throughout our lives, depending on what generation we might be a part of. I know some people were told, Go find a rich man. That's how you make money. Or don't let your father see this, I don't want them to know that I spent this money. So there are a lot of different things, or, you know what, if you're a badass, go make all the money that you want to, and then you're like, but how? How all of these things, how all of these mixed messages. So
Shannon Foreman 5:44
from society, from our family, right? Like mentioning, you know, your father, I don't want him to know about this, what our culture, every culture has different expectations. There are some cultures that the expectation is that you send a percentage of your income home to your family, or you are responsible for paying for funerals or care or different elements of elders within your community. There's also the actual environment and environment is different than society. So think about this, the neighborhood that you grew up in, what was surrounding you? What stories of wealth and money were surrounding you. For instance, I grew up in South Minneapolis and a little bit of a rougher neighborhood. There weren't any signs for wealth management. Stead, there were signs for get your check cashed early. Credit cards, lines of credit, there was nothing there was a lot about borrowing money, but not enough about saving and investing money, where that might be different. I grew up off of Lake Street in Minneapolis, that might be a little bit different than Lake Street in Minnetonka. Why is that? Right? So there is if you're not from the Twin Cities area, Minnetonka and wise that is a little bit more of an affluent community, you drive down Lake Street in? Why is that? And you see, probably
Shannon Foreman 7:07
I don't know, we'll call it 20 different types of wealth management companies. So there's a difference in the environments that we grew up in. Also, from an environment standpoint, what were What did you have accessible to you? Not just what financial pieces were there, but inherently, what did you find that was accessible? Did you have a nice park to play at when you were a kid? Did you feel safe going outside, there are different access points. And at some point, we might feel like we don't have now. Or we might feel like everything should be given to us. There are a lot of different ways that our environment, our family, our society that we're a part of, can indirectly and directly affect our money stories. And if we don't start to define that for ourselves, and working with a behavioral financial adviser, does some of that work? Are we truly going to commit to things? For instance, maybe you don't feel like you are worthy of wealth. But why is it something inherently in the background story that you were told, maybe you're not responsible enough? Maybe you're not deserving? Maybe you never had anything. So why should you be worthy of having it now. But other people around me don't have it, my family doesn't have it. Maybe your family did have it. And now you don't have the same income that your parents did. But you're still trying to live up to the same expectations of the lifestyle that you once lived, while you were living under their roof, or what they are experiencing? I find so often, especially with younger individuals that they want to start this life, right, they get married, they have a house, and they have 1.5 kids and a picket fence. And they want it to all be like what their parents had right away. The reality is what we remember our parents having right now took a lot of work and effort to get to that point. And so how do you stop comparing those aspects and really dig deep into what the stories and even some lies that you're telling yourself about not being able to be worthy enough to have what you should have. The second piece of working with a behavioral adviser is taking those stories and actually rewriting them, helping you to have an idea of what are the things that I can now tell myself that although this was true, is not true anymore, so that I can have affirmations to tell myself when I'm implementing some of these strategies that I am worthy of being able to do these things that these things are going to help me get ahead. Maybe I am not spending as much on subscriptions or late night Amazon At Bing, or social media ads that are advertised to me that I have to have this thing at 12am. You know, whatever those things might be, I'm not, you know, opening a store credit card to save 40%? because am I going to pay it off right away? Or am I going to be at a higher interest rate, then if I put it on a different credit card, do I really need that thing that I'm actually putting on a credit card, all of these things play into us establishing a better language for ourselves. So that's the second part. The third part is setting a vision of where you want to go. So we use a roadmap as behavioral financial advisors. It's kind of like directions, if you ever remember I know with my parents, my dad had this big map book that he would take out and find directions. And I had to laugh, we were just on spring break with my in laws, and they were driving back to Arizona and my father in law had a big MacBook. And he was planning his route, as my mother in law was putting it into her phone so that she could verify that they were going to get to the right place. But that is that memory of how are we going to get to that place, and if you don't know where you are, and don't rewrite that story, but also if you don't know where you want to go. So getting clear about the things that are important to you, not anybody else. I talked about this recently on another episode about being Sasha Fierce with your wealth. If you think that Beyonce, Oprah, any other insert an icon that you think of has been influenced by other individuals from a financial standpoint, by what they want to do their mission for envision for their business or their life. I know. Some people may have tried. But true, confident individuals, when it comes to their wealth, have a vision.
Shannon Foreman 11:51
And when you work with a really great behavioral financial advisor, they are going to bring you back to that vision. I was recently working with a client, and this client has a dream of passing on generational wealth. And we had that we had talked about that in our first session together, we then talked about it in in following sessions. And I have to remind her, Hey, has anything changed in your world? Or is this something that's still really important to you? Because maybe we need to make some adjustments in order for you to be able to do this. We also talk about what real generational wealth is another podcast, so you can listen to that that's a previous one from this month. So really getting clear about what it is that's your vision? Where do you want to be? Who do you want to experience it? Where when do you want to experience it? What are you willing to sacrifice to get to that place, these are all things that we need to consider when writing our vision. And then it's the implementation of practical steps to get to your goals, and reminders of why those things are important, right, that client that I talked about going back to the vision with them, when you do this with your accountability partner, or your financial planner, who really does care about your behaviors and your vision, what's important to you, not just the return of investments, which is also something that's very important, but at the end of the day, clients care, and you care whether or not you're able to do something, and you just want to be able to be told that you can do this thing, when you can do this thing, and if it is possible, right? So but we have to have a clear vision of what that is, and steps to get to that place, and reminders that we can get there. And then it's that consistent communication with a behavioral financial adviser, it's not something that's just set it and forget it, and, you know, call me when you need something and, and maybe we'll talk, you know, once a year, and we'll touch base on what's important. You know, from an investment standpoint, those are that's, that's purely in our industry, just suitability that's like the bare minimum of what we have to do. When you work with a behavioral financial advisor or planner. They're really looking for you and your best interest and getting down. If you want to talk about a big fancy word that our industry throws around is something that, you know, is out there, as you know, that person is working in your best interest, aka fiduciary, big fancy word. That meaning of being a fiduciary, if we don't understand your behaviors, what's important to your vision and the steps to get there, we're not actually acting in your best interest. Because if we don't understand your why we can help you get to the place that you want to we can't make investment recommendations that match those things, or insurance recommendations that match those things or cash flow or tax or estate planning all of the things that we talk about. We have to truly understand what's important to you. What is your story, what are your experiences? How do you want to overcome those to be able to have a healthy relationship and move forward? So consistency is something that's important. I call it On my consistency touchpoints sessions, I don't believe anybody wants to attend a meeting anyway, I don't believe in reviews because we can't always look backwards, we want to look forward. So we want to understand, Okay, what did happen, but we're not going to spend as much time on that. But how do we move forward? And how do we shift forward? All right, let's take a pause, as we're talking about behaviors and financial advisors and the things and you're thinking to yourself, wow, I've just really never thought of this concept before. My financial advisor doesn't think like this mean, any person I've ever talked to about money has never talked to me about how my story plays a part in what it is that I think about and the strategies are my commitment levels. Man, maybe I need to really reevaluate that, well, we're here to support you in that process. And we love the opportunity to sit down with you, you can schedule your wealth assessment with us today, simply go to forethought. planning.com, backslash wealth assessment. And that's where you schedule your 30 Minute complimentary session with us. It's where we sit down and truly find out whether we're going to be a good fit together, whether or not you feel like you're ready to make the commitment to truly rewriting your financial story, your wealth, vision, creating that and moving forward and having a partner to walk alongside that with you. So don't wait any longer schedule your wealth assessment today. All right, now back into more behaviors.
Shannon Foreman 16:30
So let's talk about three things that you can do to understand whether or not this is something that you want. Whether that might be just from this conversation or like, this sounds awesome. I didn't even know this was something that was available. Well, you need to evaluate first, if this is something that you're seeking to use a financial professional for? And do you want to understand this more? What resources are available to you, you can Google behavioral financial advisor, you can understand what that means a little bit more than what I've talked about today. But really, we've talked about the bulk of the meat of it. So first, you need to evaluate is this something that I want to do? And do I want somebody that's going to hold me accountable? Do I want to really create a solid foundation and stop using band aids of strategies that I never really commit to doing? The second piece is asking the questions about these two, these financial professionals, right. So these financial advisors and planners, what are the languages that they use? Do they feel approachable? Do they incorporate behaviors into their practices? And how do they do that? Behavioral financial advising isn't just something that is a is a, you know, fancy word that's being used, or a hashtag that's popular right now, it is really something that is changing in our industry. And the direction is changing the last of product sales, less of recommendations and more about solutions, and really getting down to the solutions to the problems within ourselves and how we can rewrite our stories for ourselves. So think about the language, like I mentioned, I use sessions instead of meetings. I try to make sure that I'm listening to my clients, and what's important to them first, is this person, at first trying to get you to do something right away or trying to buy a product, or are they more interested in the financial planning process? That's something to consider, as a behavioral financial advisor asked for references. I'll be very blunt with you, it's really hard to be able to give you a client recommendation. That's not something that's allowed in our industry. But you can ask for references from someone, you can also ask for referrals from friends and family or other professionals that you trust. Lastly, if you are like Shannon, you know what, I don't know if I need anybody to do this for me right now. But I think I'm okay doing it by myself. Episode 77 of the Thrive Forward podcast breaks down what it takes to be your own financial advisor. And so think about that episode before you digest it. But going through this process and listening to this episode today, if you thought to yourself, you know what? I guess I've never really thought about how the environment society, my family and culture really affected my relationship with money. Well, then it's time for you to really get in touch with your financial story. How is it helping? How is it hindering doesn't mean everything is bad. There are some things that are going fantabulous for you. So let's focus on those. But are there also things that maybe we could work on and rewrite for you so that they're more productive? Are there strategies that you're falling from, that you're not actually implementing? Maybe there's a behavior behind that. That doesn't work for you. We have an episode previously. on the podcast, I believe it's August 2021. Yes, August 2021, where we break down several different types of financial behaviors. Feel free to go listen to that as you work through this. But think about even just breaking your piece of paper into four quadrants, thinking about what you learned from society, what you learned from the environment or the community that you grew up in. From your culture and your family. What in each one of those brackets is serving you and not serving you. And how can you rewrite that in something that is more positive and more affirmation or for you to drive towards the fact that you are worthy of wealth. The views expressed here are those of the participants and not those of forethought planning, advisors, pride or LPL. Financial all investing involves risk including loss of principle, no strategy assures success or protects against loss securities are offered through LPL Financial and member of FINRA and SIPC advisory services offered through advisors pride and SEC registered investment advisor LPL Financial Advisors pride forethought planning and the guests of the Thrive Forward podcast are separate and unaffiliated parties
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