Talking about money can quickly get personal.
Elijah Kovar, co-founder of Great Waters Financial, was having so many deep, personal conversations with his clients that he realized he needed more training — this time as a life coach.
He went through a year-long training program to gain education as a life coach and get the tools needed to help clients through complicated family financial situations such as divorce, death, estate planning and caring for aging parents, as well as questions about how and when to retire.
“Anything really meaningful is real and has feelings to it, if we’re honest about it,” Kovar said. “There’s a lot of meaning tied up in these money conversations. And just having a financial plan doesn’t answer these concerns.”
While not every meeting touches on personal baggage, most clients at some point in the professional relationship reflect on personal topics like helping parents age in place, assisting an adult child who has not yet left home or worrying about which family members should or shouldn’t be trusted to get an inheritance, Kovar said.
Kovar’s extra training as a life coach has been well-received by clients who appreciate his sensitivity in handling complicated topics, he added.
“I’ve gotten an overwhelmingly positive response from clients. For the ones who are able to have the emotional capacity to convey it, they’ll often say, ‘My life is different now because of this conversation’ or ‘You’ve changed my life.’ And that’s really cool,” Kovar said. “Who would have thought that financial advising would be the platform for these conversations?”
Financial professionals who are certified financial planners are trained and tested on the psychology of financial planning, according to John Loper, the managing director of professional practice at the CFP Board.
In 2021, the CFP Board updated the topics that CFP-certification applicants are tested on to include a “psychology of financial planning” domain. The CFP Board also publishes a book called “The Psychology of Financial Planning,” as well as an accompanying resource guide to help financial planners at all stages of their careers gain a better understanding of people’s financial decision-making and to strengthen their client relationships.
“By adding the psychology of financial planning into the CFP curriculum, [the] CFP Board elevated this topic to an essential component of the financial-planning process; one that impacts decision-making, the client-planner relationship and the client’s financial well-being,” Loper said. “You’re dealing with people, not widgets.”
Still, advisers said the best training is on-the-job experience with real people and real-life situations.
“You just have to be ready for it at a moment’s notice,” said Brian McGraw, a senior wealth adviser with Hightower Wealth Advisors. “Sometimes they just want you to listen — to just be empathetic.”
“I just try to go with my gut. I try to put myself in their shoes. If I can, I add a personal anecdote that lets them know I can relate,” McGraw added. “People are being vulnerable with you by sharing intimate details of their financial lives and personal scenarios. By being a little vulnerable back, it adds an additional layer of comfort and builds trust.”
To McGraw, “being able to connect with someone personally is the best part of the job,” he said.
From the archives (September 2019): Why the best person to give you money advice may NOT be an accountant or financial adviser
Some financial identities — such as being a saver or a spender — are so ingrained in people that they churn up baggage from their childhood and can trace back to how they were raised.
“Money can be a sensitive topic with people,” McGraw said. “There’s so many behavioral aspects in finance. They have to have a level of trust to even come in in the first place. The quicker you find a connection point, the quicker you can build on that foundation.”
When Dan Casey, founder of Bridgeriver Advisors, became a financial adviser more than 20 years ago, he expected all of the touchy conversations to be strictly about money. But personal stories are so enmeshed with finances, he said.
“The fact that I’d be having these conversations never occurred to me when I was first starting out,” Casey said. “There’s tons of skills I’ve picked up over the years.”
Casey said he relies on his own intuition and ability to tune into people’s emotions, body language and cues to gauge tension or stress in conversations. Only once did he have to ask a couple to leave his office because their emotions ran so high that they were shouting at each other.
“Family is complicated,” Casey said. “You throw money into it, and it further complicates it.”