Karen Lee
Karen Lee
Money Baggage — Yours, Mine and Ours

If you want to be successful in helping clients create and stick to financial plans, be prepared to go beyond the numbers.

September 17, 2009
by Karen Lee, CFP/ChFC

My objective in becoming a financial advisor was to help people become financially independent. That's still what I love to do, but I've become increasingly aware of the self-sabotaging behavior exhibited by many of my clients. As their advisor, I feel I have an obligation to help them recognize this behavior, as well as help them overcome it.

Even the most carefully constructed financial plan will fail if the client's relationship to money — and resulting behavior — isn't factored into it. People's beliefs, upbringing and feelings about the purpose of money have a tremendous influence on how they spend, save and invest. With couples, the money behavior issues can be even more complex as the money personalities of the two people may be quite different. When I work with clients — individuals or couples — I always include a careful look at their "money baggage," that is, their beliefs and values about money.

Conducting Client Meetings

Our first meeting is basically an hour-long meet-and-greet, an opportunity to familiarize clients with the financial planning process and discuss fees. The second meeting — the Fact Finder — is when I uncover their money issues, because this information will enable me to help them successfully implement the financial plan. Although I do gather all the necessary financial information at this two-hour meeting, I am far less concerned with the numbers than with the details of their goals and money behaviors.

Here are the types of questions I ask:

  • When you were growing up, how was money handled in your family?
  • Was there enough, a lot or too little?
  • Did your parents talk openly about money? Did they fight about it?

Clients are usually at ease if you share something about your own experience. My parents had a scarcity mentality about money. I often tell clients the story of a trip to the grocery store with my mother and two siblings when I was seven-years-old. Chickens were on sale for a dollar each, but each customer was limited to two. My mother gave each of us two dollars and we all stood in the checkout line with our two chickens and two dollar bills in our hands. I was embarrassed by that and similar experiences and vowed that I would always have enough. That commitment has been a driving force in my adult life, at times making me a compulsive saver. My own personal challenge has been to loosen up a little, learning to spend comfortably without either hoarding or splurging.

Fact-Finding Mission

Once I've broken the ice, clients are usually eager to reveal some of their own experiences. If they share just a kernel, e.g., "Yeah, I remember that my mom would sometimes ask me not to tell my dad that she'd gone clothes shopping, because it often made him angry to learn she'd been spending money." I probe for more and ask, "How were money decisions generally made? Who kept the purse strings? Was it common for your dad to disagree with your mom about spending?"

Then I'll shift the focus to the spouse — "So what was it like in your home? Was your experience similar?" This is powerful, especially if we learn that dad controlled the money in one household and mom controlled it in the other. This kind of situation sometimes results in discord and dysfunction.

Turning to their current nuclear family, I'll ask questions like:

  • Do you both work? Who pays the bills?
  • How are financial decisions made?
  • Is one person a spender? If so, what does he or she buy?

If they appear to have similar struggles as their parents did regarding who manages the money and makes financial decisions, we'll brainstorm what they can do to ensure that they both feel like they're sharing in the responsibility. If one is a spender and the other a saver, I recommend that they create a strategy in which expenditures over a pre-agreed amount must be discussed, before either one makes a purchase.

Another important part of my fact-finding mission is to learn about their kids, grandkids and extended family. Even without being prompted, a couple will immediately share if they have a child with special needs, but few will readily offer that their 30-something son has a history of substance abuse and may need expensive rehab care. So I ask them to tell me about their family, about their parents' financial situations (if they know) and about their siblings. This kind of conversation not only provides information about financial demands, but it gives me additional insight into how they communicate with each other and whether they are on the same page.

I generally ask what financial independence means to them. For some it means continuing to work for as long as they can, but taking a couple of nice vacations every year. For others, it may mean retiring at 55, buying a lovely retirement home, traveling extensively and hosting their children and grandchildren for an annual cruise.

Most advisors at one time or another have worked with a couple who tells you they want to send both kids to the college of their choice and retire at 55, but continue to upgrade their house and car and never really get ahead. This type of client can be frustrating, but asking the probing questions up front and establishing a personal relationship based on candor and trust can help the advisor manage and redirect the couple or at least open the door to honest conversation.


When talking with clients about their finances, it can quickly get personal. It's important to be clear with your clients that you are not a trained counselor — and if serious issues exist, be prepared to gently suggest counseling with a licensed therapist.

To really serve our clients, we have to be willing to go beyond the facts and numbers. Learning about the client's behavior around money is critical to giving them the financial services they need and deserve, especially in these very difficult times. If you want to differentiate yourself among the large field of financial advisors, this approach may be invaluable, not only in attracting new clients but also in ensuring that you retain the ones you already have.

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Karen J. Lee, CFP, ChFC, MSFS, AEP, Registered Representative. Advisory Services offered through Securities America Advisors, Inc. Lee is a financial planner in Atlanta and author of the forthcoming book, It's Just Money — So Why Does It Cause So Many Problems. Reach Lee through her Web site. Karen Lee & Associates, LLC, Integrated Financial Group, Inc., and the Securities America companies are unaffiliated. Karen Lee & Associates, LLC is a member firm of Integrated Financial Group, Inc, a consortium of independent financial consultants.