Discussing personal finances is challenging for many people, especially women. Like it or not, women are still judged more harshly than men for being profit-motivated, negotiating salaries, and asking questions of their financial services professionals. These societal biases can make it harder for women to communicate effectively with their advisors, and for their advisors to understand their banking needs.
It is important to be proactive to minimize the impact of these gender money myths on your financial health. Actions to take include finding an advisor who is a good fit for you and your family, examining your “money-talk” mindset, and learning the skills for engaging in a difficult money conversation. Let’s look at each of these areas individually.
Finding Your Advisor Match
Finding an advisor you trust is important to your long-term health. A good advisor works with you to identify your goals based on your values and dreams, and then designs a financial plan to help you achieve your wishes. For example, if you want to grow your small business into a million-dollar corporation, an advisor can educate you about the various types of business funding available, show you how to prepare and analyze financial statements, and refer you to attorneys, human resource consultants, and executive coaches when needed.
Like any relationship, finding an advisor who is a good fit takes time and energy. Determine what you are looking for in an advisor, than interview at least three professionals. Referrals are helpful, but remember, a good match for a friend, may not be a good fit for you. Here are a few questions to consider when starting your search.
- What are the top three reasons I want to hire an advisor?
- What traits does this advisor have to display for me to trust this person?
- What credentials or training do I want my advisor to have and why?
Once you have determined your ideal advisor profile, network to find a few advisors to interview. Here are some questions to pose during your first meeting.
- What credentials do you have, and how will this training benefit me?
- Who is your ideal client, and why do you enjoy advising this type of client?
- What percentage of your clients are women?
- How do you adjust your advising style to meet their needs?
- Do you work as a member of a team and if so, who are the other team members and what type of access will I have to their services?
- How are you compensated? Do you receive commissions on the products, a percentage of assets under management, or a flat fee? Will these fees be transparent to me?
In addition to these questions, add a few of your own based on your specific life circumstances and financial needs. Credible advisors will patiently answer your questions and not pressure you to make a decision during the first meeting. Use your intuition, and if something doesn’t feel right about the meeting or the dynamic between you and a potential advisor, check that person off your list. There are many talented and caring advisors so you don’t need to settle for a professional you are not comfortable with.
Once you make a hiring decision, it will take a while to develop a good working relationship with your advisor. But you have set yourself up for success by investing time and energy in the selection process.
Identifying Your Money Talk Mindset
Working with an advisor requires that you share personal financial data, and your money-talk mindset determines your comfort level in doing so. A money-talk mindset is defined as a collection of your thoughts, feelings, and beliefs about discussing personal finances with your family, friends, and colleagues. This mindset is partially based on the messages you received from your family about financial conversations growing up. There is no right or wrong mindset, just the one that is unique to you.
For example, if you were raised to believe that disclosing your net worth is rude, then it may be intimidating to provide this data in advisory meetings. However, if you were encouraged as a child to ask your parents financial questions, then most likely this part of the advisor-client relationship will be comfortable.
Identifying your money talk mindset is a great way to determine what areas of finance are likely to be easy to discuss and what areas are likely to be more difficult. This insight should be shared with your advisor, as it will help this person understand you and how to approach different aspects of financial planning.
If you are not confident talking about money, working with an advisor can be beneficial. You can practice your financial communication skills and build this muscle up over time. In addition to doing this for yourself, you can set a good example for the women around you – your daughters, mothers, sisters, co-workers, and employees.
Engaging in Difficult Money Conversations
The advantage of having a trusted advisor is that you can address areas of your financial life that may be more challenging to discuss. Topics that tend to bring up difficult feelings include aging and healthcare, death and dying, and money conflicts. Of course, your unique money talk mindset may be different and, therefore, the topics you find challenging may vary.
Fear is often the feeling that prevents people from engaging in these sensitive conversations. This is often true when addressing financial conflicts – whether in a romantic relationship, a business situation, or with your advisor. The fear is that you will be judged or rejected for voicing your concerns. However, if you remain silent you will not have a chance to be understood and the conflict resolved.
Here are a few tips to consider when faced with a difficult money conversation.
If your emotions are running high, take time to breathe and calm down. This will help you approach the other person more rationally and also increase your ability to listen.
The goal of any productive money conversation is mutual understanding. Be curious about the other person’s perspective. Focus less on proving yourself right and more on empathetically listening to your conversational partner.
Agree to disagree
Conflicts take time to resolve, and some never do get resolved. At the start of any money talk agree to disagree when necessary. When you take the pressure off yourself to find a quick solution, a better, longer-term one just may come along.
Investing in your financial health takes time and energy, and a competent and caring advisor certainly makes the journey less labour intensive. Give yourself the gift of finding the right advisor and learning how to engage in effective money conversations. Both are key ingredients to living a long and secure financial future.
By Kathleen Burns Kingsbury
Kathleen Burns Kingsbury is a wealth psychology expert, founder of KBK Wealth Connection, host of the Breaking Money Silence® podcast, and the author of several books including How to Give Financial Advice to Women, How to Give Financial Advice to Couples, and Breaking Money Silence®. For more information, www.breakingmoneysilence.com.