Helping clients actually enjoy their money

I have a friend — let’s call him Charlie — who’s been maxing out his RRSP since he got his first pay cheque, nearly 25 years ago. Charlie and his wife, whom I’ll call Alice, have done a bang-up job when it comes to saving and investing. They’re both professionals who collectively bring in well over $100,000 a year; he works full time and she works part-time. Their home is mortgage free, their cars (which they buy used) are paid for (in cash), they continue to contribute the maximum to their daughter’s RESP, and they have no debt. They live well but frugally.

What’s more, they’ve amassed approximately $600,000 in retirement savings, not including the value of their modest home.

In other words, Charlie and Alice are pretty much the embodiment of model Canadian financial planning. If we all conducted our economic lives the way they do, there would be no headlines bemoaning Canadians’ appalling debt levels or irresponsible levels of retirement savings. In their mid-40s, Charlie and Alice could, conceivably, stop putting any more money into their retirement funds and be just fine. They could easily cut back on work hours, travel a bit more, spend more freely.

And yet, they can’t. More accurately, they won’t. While Alice would like to begin to reap the fruits of their financial discipline, Charlie is convinced that they still don’t have “enough” to relax.

“The problem is that,” Alice told me one day over lunch (a lunch that her husband would likely see as an unnecessary extravagance), “in his mind, we’ll never have enough money to relax.”

Step #1 for advisors: Listen

A child of immigrants, Charlie witnessed his parents’ struggle to create a good life in Canada. He watched them pour everything into a family business that initially thrived and then saw its fortunes shift suddenly. For years, the family scraped by. The dream home they had begun to build stood unfinished and empty, a daily reminder — to Charlie, at least — of the precariousness of life and money. And now he’s spent pretty much his entire adult life compensating (some would say overcompensating) for his family’s financial misfortunes. He’s built a monetary fortress around his life but he still doesn’t feel safe.

Couples like Charlie and Alice are, generally, a financial planner’s dream. But couples like Charlie and Alice also present a specific challenge to planners. How do you convince a client that he does, in fact have “enough”? How do you help him see that financial dreams don’t have to be nightmares? How do you shift his style of thinking from one of scarcity to one of accomplishment and abundance?

The first step, says Betty-Anne Howard, a certified financial planner based in Kingston, Ont., is to listen. “Often, people hold onto a particular way of looking at the world because they don’t feel heard.” Financial planners, she notes, tend to have an agenda in conversations, but a client like Charlie may well need a lot of time to tell his story and to have his negative experiences with and fears around money acknowledged without criticism. Only when his fears have been articulated will he be able to reframe them. “Planners are too quick to pull out the numbers,” says Howard. “Until we understand the story behind the feelings, I don’t think the numbers mean much.”

Step #2: Build solutions to address fears

Then, says Howard, who also has a master’s degree in social work, an advisor can mine a client’s story for clues. Maybe, for example, Charlie is worried that he’ll have to bail out his parents. Because he’s self-employed, maybe he worries about what might happen to him if he falls ill, or frets because he won’t ever be able to rely on an employee pension. Again, once these fears are identified, many of them can be addressed — possibly by way of frank conversations with his parents, or via solutions like critical illness or disability insurance.

It’s also a good idea to make sure that Charlie and Alice’s good financial habits extend to all aspects of their financial and estate planning: Do they have up-to-date wills? Powers of attorney? Adequate insurance coverage? Do they have a clear plan for their daughter’s guardianship? Taking care of these arrangements may add to Charlie’s sense of security.

Step #3: Find the joy

But where does joy come in? “The core of our job is to crystallize the dream and help clients turn it into reality,” says Kevin Cork, CFP, president of The Absolute Group in Calgary. That crystallization process also requires deep listening, to get beyond the typical financial goals of paying down the mortgage and saving enough for retirement. With a client like Charlie, ask what he likes to do, on his own and with his family. How does he have fun? What brings him joy?

Those fun activities don’t necessarily have to cost money, says Howard. But if you hear a conflict between your client’s dreams and desires and her financial behaviours, explore that. You might say: “You say that you’d really like to go to Australia, but you feel as though you don’t have enough money to do that. Why is that? What fears or previous experiences are holding you back? Describe what that trip might look like. How might we create a financial map to get you there?”

As clients become more comfortable with the idea of using money for a better life in the here and now, you can also turn to the thought of a legacy: ask them to imagine how their financial diligence could have a significant, positive impact, on not only their family but the wider community. Shifting focus to the bigger picture can help over-savers feel more power and agency when it comes to personal finance. And then advisors can help realize those dreams through vehicles like charitable life insurance bequests, donations, or a family foundation.

Financial advisors can’t (and shouldn’t) take the place of counsellors. But they may well be in a position to help clients identify, and perhaps overcome, some mental roadblocks around money.