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Wealth & Well-Being

What You Learn About Yourself Working with a Financial Advisor

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Most people know that when they start working with a financial advisor, they will learn a great deal about the financial strategies they’ll use to build wealth, save on taxes, leave a legacy for their heirs, and more. But what they often do not realize is how much they will learn about themselves in the process.

You see, advisors use their knowledge and expertise to construct personal financial plans that aim to achieve their clients’ goals. These plans include not only investments, but also savings, tax strategies, and insurance. But financial goals look different for everyone. Not just because we all come to the table with different resources, but because we have different desires in how we want to use those resources.

Where You Are Going Begins with What’s Inside

As a team of advisors, we can’t really help you get where you want to be if we don’t understand where that is in the first place. This is why the process of working with an advisor should always begin with a deep dive into the priorities, values, goals, and mission of the client(s).

Of course, this process is designed for us as the advisor to get to know the client on a deeper level so we can build a financial plan that works best for them; but we have found, the process can be quite enlightening for the client, as well.

After all, the process asks you to get to the heart of what makes you tick. What sets your soul on fire? What people, causes, or events are you happy contributing to? Because we have found that our clients are most fulfilled when they use their resources in support of that which is most important to them. Our work together makes sure those values and priorities are clear so they may be aligned with their financial resources.

Prioritizing Goals Reveals What is Most Important

Naturally, you will have more than one financial priority which can include any number of goals. And putting them in order of importance may be trickier than you think. But, what happens when we work with clients to prioritize these goals is pretty revealing.

When we ask a client to prioritize their financial goals, what we are really asking is what is most important to them. We all have limited resources and often must have frank conversations about financial tradeoffs. For example, is it more important to you to have a fully funded 529 for all your kids and perhaps retire a little later than expected? Or would you be willing to have a less full 529 and retire as early as possible?

The questions that come into play throughout this process can sometimes be tough to answer, but they can often help clarify your core values and ensure you have confidence in your plan.

Your Money Scripts & How They Affect Your Financial Habits

Another key element that advisors need to understand when they begin working with a client is how that client feels about money. Does it make them feel anxious or safe? Happy or overwhelmed? Much of these feelings comes from our own personal histories with money. They come from what our parents taught us, the financial predicaments of our childhood, our personal experiences with money, our lifestyles, and sometimes the influence of our spouse’s experiences, as well.

These experiences shape what financial thought leader Brad Klontz coined as Money Scripts—or our unconscious beliefs about money, often rooted in childhood, that affect our adult behaviors and perspectives. For example, individuals who grew up in the Great Depression have typically remained very cost-conscious adults (disparate of income level) because of the scarcity they experienced in their youth.

Money Scripts reveal themselves to us as advisors during the client onboarding process, and sometimes even as early as the initial Discovery Call. But, they are not always easy for the clients to see themselves. Our job here is to help clients understand the narratives shaping their financial behaviors in order to rewrite the ones that may be stalling their progress. If a client believes they will always be bad with money, they put up their own roadblock to success. We help clients flip the script and become the type of people that stick with their financial plan and make financial decisions that will help them reach their goals.

Are You a Risk Taker?

Another major factor we need to understand as financial advisors is how much risk each of our clients can handle. This will help inform investment decisions, tax strategies, and even projected timelines toward each financial goal.

The reality is that some clients identify themselves as risk-takers but find when the market dips that they are more risk averse than they originally believed. It is easy to feel more comfortable taking risks when the market is riding high. It is less easy to do so when things turn south.

The fact of the matter is that some clients are comfortable with more volatility and do not bat an eye when intra-year declines occur in the market; but the same market movement will cause another client to lose a week’s worth of sleep. Understanding how each individual or couple feels about risk is an ongoing process that we monitor as our relationship evolves. We never want a client to experience undue stress or anxiety about their financial plan, so we adjust risk levels as we go along.

What Does Your Financial Plan Say About You?

There is a funny little saying in the financial world that goes something like “Show me where you spend your money and I’ll show you what your priorities are.” This is because it is our natural inclination to allocate our resources toward the things that make us most happy and fulfilled.

For example, a friend of mine recently downsized her house to free up time and funds that would allow her, her husband, and children to do more traveling. As a family they identified their top values and decided that they would rather see the world and create memories than to have a larger, more comfortable home.

Of course, this is just an example of a decision that may have been made differently by someone else, but the idea is the same for people of all ages and financial means. We tend to allocate our money to that which is most important to us.

Take Your Life Off Autopilot

One of the biggest problems that we see clients face is when their spending gets subconsciously put on autopilot. They get used to paying for the same expenses and same experiences that they always have because they are used to it. Life moves hurriedly along, and they do not stop to question how their money is being spent.

But over time, as their lives and priorities change, they often forget to revisit to check and see if their spending is in line with their values. This is not only why advisors need to have a robust onboarding process to get to know new clients before designing their financial plan, but also why revisiting the plan at least once a year is imperative.

Permission to Dream Big

To be honest, going through this process with a new client, or revisiting it with a long-term client is so much fun. It is amazing to see them light up as they learn more about themselves, and to hear them discuss the potential opportunities they can create with their resources.

It is as if the planning process gives them permission to dream again. To think big. To question their limiting beliefs and open themselves up to new and exciting possibilities. And if there were no other rewards reaped from this profession, this one would be enough.

Here at Northstar, we think it’s critical to make a habit of stepping back from our day-to-day and ask yourself, “What is important to me here and now?” and “Am I aligning my resources in a way that supports these values?”

Because when these two line up, incredible things can happen.

Written by Rachel DeCarolis in collaboration with Lexicon Content Development

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