Personal Money Talk - Spooky, or Kooky?

The days are getting shorter, the air a bit more “crisp”, and we’re quickly approaching the scariest times of the year…

Nope, not Halloween, I’m talking about end of the year finances. (And 2024 budget prep)

Talking about money can be really scary - and Americans HATE TO TALK ABOUT THEIR FINANCES.

In fact, an article from Reuters noted that in a Wells Fargo study, 44 percent of Americans point to personal finances as the most challenging conversation anyone can possibly have.

Even discussions around death come in behind conversations about personal finances, at 38 percent.

WAIT - PEOPLE WOULD RATHER TALK ABOUT DYING THAN THEIR PERSONAL FINANCIAL SITUATION?!?

Yes.

Avoiding talking about your finances can be severe - with negative consequences to your health, wealth and happiness. But that doesn’t make it enough to shine a spotlight on our struggles with talking about it.

So, WHY DOES talking about finances make us uneasy?

According to behavioral finance expert and head of IncBlot Organizational Psychology in Huntsville, Alabama: 

“It is such a loaded conversation, and there is so much subtext and hidden meaning wrapped up in money. Money is shorthand for happiness, power, and personal efficacy, so it can be very scary.” 

“When money is short, it can be seen as a deficiency on the part of the breadwinner, and when there is lots of money, there can be fears that greed takes the place of genuine love.”

This can lead to two major factors as to why you might hesitate reaching out to a professional to discuss your retirement situation.

One is called disclosure anxiety — feelings of discomfort at the idea of sharing personal information with a professional advisor.

Kind of like a Schrödinger's cat, by not talking to a financial advisor, you can feel as if you ARE on track with your retirement planning situation, solely because nobody has told you that you AREN’T on track.

As long as you don’t lift the proverbial cover to confirm one way or the other, you get to live in that paradox. (There’s a longer article I wrote about that on our blog, discussing “The Ostrich Effect” that might of interest to you)

While you might not be sure if you can retire with the lifestyle you want, you also can’t confirm that you CAN’T live that desired lifestyle, and that’s enough to get you through another day of uncertainty.

The other is evaluation anxiety — expectations of being negatively judged by the financial professional.

Whether it be for past financial mistakes, investment decisions you didn’t know you got wrong, or simply not thinking you have enough money, you might be too scared to talk to an advisor out of the fear of being judged. 

There’s also the plethora of questions that need to be addressed, but are tough to answer without knowing more intimate details about your lifestyle:

“When should I take social security?”

“Can I lower my tax bracket in retirement?”

“How long will my retirement accounts last if I withdraw ::insert amount:: per year?”

“Which types of accounts should I withdraw from, and at what rate?”

All of these require knowing more information about you before a fiduciary can give you a proper response, and sharing personal information with someone you haven’t developed a relationship with can be challenging.

So, how do you overcome these anxieties?

Here are three key principles to keep in mind to help you talk openly about your finances:

1 - You’re Not Alone

Like we noted before, 44% of Amercians are uncomfortable talking about their finances. Hopefully that provides a bit of relief to know that you aren’t the only one hesitant to discuss their situation.

Scientific American notes that while many people intuitively understand that open conversations with friends, family, spouses and employers about finances are beneficial, taking that initiative is difficult. 

But, the simple act of simply scheduling a specific time for a conversation can be a good first step. Once you have a time on the calendar, having some questions prepared ahead of time can be useful. Having a few questions ready removes some of the anxiety and can help keep the conversation on track. Here are a few to help you get started:

• When your parents brought up money, what were they talking about? How did these conversations inform your views on money?
• What does financial independence mean to you?
• What are some things that make you feel GOOD to spend money on?

2 - Fiduciaries Are Not Here To Judge

Talking to a qualified financial advisor about your retirement situation is sort of like talking to your doctor about your health and any issues you may currently have questions about.

A financial advisor is there to examine your assets and liabilities, and work with you on a plan that you can — literally — live with, and help you sleep better at night. 

There is no need to feel ashamed, because as bad as you THINK your financial situation might be, a financial planner has seen it all, and better to have your situation diagnosed now, than to ignore it and allow it to possibly get worse through avoidance.

Michael Kitces, director of research at Pinnacle Advisory Group in Columbia notes, “No one is perfect, people do make mistakes, your planner is not there to judge you but to help you, and that — as with your doctor — it's important to face and move past your self-consciousness about this, or you risk giving your planner incomplete information that makes it impossible to provide a proper recommendation”

3 - You Steer The Relationship

When you know it's time to speak with a professional, you want to be able to work with one that makes you feel comfortable. 

Take advantage of free, no-obligation, get-acquainted appointments that many places offer (like us! ;) ).

Prepare yourself with some questions that will not only help you evaluate the advisor’s technical competence, but their interpersonal skills as well. 

Given the chance, why would you want to work with someone you didn’t like on a personal level? Now is one of the few times in life where you get to make that decision.

Pick someone who interacts with you in a genuine manner, and is interested in helping you to become better equipped to make good financial decisions.

If you start to feel anxious about taking the next step with a financial professional, you should consider reading about this study published in the Journal of Financial Planning. 

David M. Blanchett - Ph.D., CFA, CFP® - discovered that “Households working with a financial planner were found to be making the best overall financial decisions, followed by those using the internet, while those working with a transactional advisor {banker/broker} were making the worst financial decisions.”

Whether you’re asking questions about when you can retire, how to manage your investments, or if you have enough to leave the impact you want for your family and community, we’re here to help.

Our 365 Retirement Plan Process is designed to create a personal relationship with our clients, taking the time to truly understand their unique personal and financial situation. Just as no two people are alike, we believe no two retirement plans should be, either. We take the time to create customized strategies to help our clients pursue their retirement goals.