Have you ever wondered how your personal memories of money and life experiences shape your decisions and money perceptions? Join me as I share a few of my own memories as well as why I always ask clients about their first memory of money.
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JOSH KLOOZ, CFP®, MBA
1780 Hughes Landing | Suite 570
The Woodlands, TX 77380
Music by bensound.com
Hello and welcome in again to another episode of Wisdom and Wealth. Today I want to continue to expand on our discovery focus that we've had in the past few weeks. But discovery if you're just joining us, I mean the process of getting to know each other as a prospect and a client and a wealth manager. I find that often, sometimes the industry can force people to fill out questionnaires or checklists and then assign them into one or two, maybe three portfolios and there's a lot of short shrift that goes to the personalization that makes you you and that helps individuals make decisions. There is a whole thought process and rationale and a lived history that goes into that and one of the questions that I find that is incredibly helpful in understanding the basis of where someone is coming from is just simply asking where they grew up and getting a sense of what the culture was like around their growing up years. It may seem like a small thing, but it's really not. When I think of myself personally, I'm very proud of the fact that I grew up in a rural farming and ranching community in Nebraska. To this day still look back incredibly gratefully for that experience and what it taught me and how I still live out those values and those principles to this day. Another thought that comes to me occasionally is when I ask clients what their first memory of money is. It's fascinating. Everybody has one, even clients or prospects. People that come in might say I don't have one, and then they think about the question just a little bit further, just a little bit longer. Everybody has a story, and who knows whether it's the first time they ever encountered money or not, it's the first time that it lodged in their memory. I use myself personally. It's tied around work. I worked for a gentleman within our church and pulled Danny Lanz out of his yard. Looking back on it, I hope I didn't put too many divots in his yard because I was probably six or seven, as his memory serves me today. I hope I did a good job. I remember feeling so grateful and so proud of myself at the end of the day. Another one that sticks out in my memory is I got paid to do some work. The gentleman that had hired me paid me with a $100 bill and then he proceeded to look at the $100 bill and say that's one of the better looking men I've ever seen in my life, don't you think? It's always stuck with me. The reason I ask this question is that I find that sometimes our memories of money can be positive, but often, beneath the surface, there are negative memories of money. Sometimes the first time that we ever become conscious of money is when we don't have enough. There is some type of an economic downturn, or maybe one of your parents lost their job or their business was struggling. That's the first time that you remember becoming aware of money. That memory lingers in the back of our heads longer than we would like to admit. In our darkest moments or our most stressful moments, it comes back and it comes back to us and the pain, whether it be minimal or very in-depth, is there. If you don't believe me, ask someone about their experiences growing up in the 1930s, if you ever had the chance. It lives on in their memory over and over again. I know with even my grandmother, whether it was bread bags that she would say or different things that she would do just from a sheer thrift and preparation perspective. It all went back to memories of her childhood and trying to make things last as long as they possibly could. So why is this important? I think it's important for whoever you partner with from a financial planning and wealth management perspective, to understand the lived history that you have and the experiences that you have, so they can better understand how to communicate with you and how to guide you through the process of owning the different instruments in your portfolio, whether they be stocks, bonds, cash, alternative investments, so on and so forth. But they need to understand the psyche with which you are approaching your income and your asset ownership. They also need to understand that you're human and understand the stories that make up, and the experiences that make up, the narrative that comes to play when stressful moments arise. I can't imagine partnering with someone who simply takes a look at your assets and then puts you in a portfolio based off of your time horizon risk, rather than understanding the psychological intangibles that go along with those decisions. It's a recipe for disaster at some point, and so I find that if you can go ahead and understand how to communicate with each other from the outset, there's so much more value to be derived in that type of a relationship. I think all of us genuinely want to be coached. We don't want to be too uncomfortable, but we do want someone that's going to hold us accountable and that will harken back to the things that we say, that we want to believe, and also hold us accountable when we're treading off into experiences that literally have no bearing over our current situation. Whether it's your first memory of money or whether it's a bad experience that you had in the past, I don't think that it's helpful to have monocosal explanations about that event and how that event has bearing on your future. The thing that you can hold to are the principles that you hold today, that you hold yourself accountable to, and also the decisions that you have made today and the planning that you are making today. That sets your life apart going forward. So, at the end of the day, I find that if you miss these critical steps of understanding each other and whether it's well-intentioned or whether it's out of you know just a quickness or a scalability question of whoever you're partnering with, you're running a risk if you don't fully understand who each other are. And the other piece that I will add to this while I'm talking about it is this goes if you were talking with someone and your spouse is not there, it's just as important that all parties are involved when you're investing resources. This is why, even if you look a step further and you talk about serving multiple generations. It's important to understand the first generation and the second generation of the relationship that you're entering into so that you understand the perspectives of everyone at the table and that you can advocate for an outcome that serves everyone well. If you don't even understand the perspectives before investing the money, how could you possibly understand what's going to serve those clients well in the long term? So, again, I would invite you to ponder back. Remember what is your first general, what is your first memory of money? What are the experiences around money and earning money or investing money that might inform your knee-jerk reactions in this day? And ask yourself are there other explanations other than the ones that you've assigned to those events that might be closer to reality, rather than just a simple, singular explanation for those events? I find that often all we hear about are the negative outcomes of people's investment decisions, and often it's second hand and even third hand information that we get, and so we're not able to critically evaluate why a certain outcome happened. And so we should take all of those different experiences with just a little bit of grain and salt, unless we are completely, intimately involved in the details and understand all the second and third order of facts and decisions that went on in that specific situation. So hopefully this gives you some food for thought in your current situation and, as always, if you have any questions, please reach out. If you have a first memory of money that you're willing to share, I'd love to hear it, and also if you have any further questions or suggestions and thoughts, I'm an open door as well. Thank you again for your time. Please like and rate the podcast, as always, as this helps us reach and serve additional listeners, and know that I'm wishing you and your family continued truth, beauty and goodness in the road ahead. Have a great day.