Originally posted at fa-mag.com by Mitch Anthony, June 1, 2023.
In my previous article in April, I introduced a number of questions that advisors could ask their clients to get a sense of their personal principles when it comes to investing. Among the questions I asked in Part 1 of this story were:
• If I suggested buying 100 shares of Company XYZ, what would be the first three questions you would ask?
• What are the guiding principles and philosophy that you follow with your money? Who are your main sources of information?
• Are there any investments you would avoid as a matter of principle?
As promised, Part 2 of this article will delve into two more questions you can ask to understand clients’ investing principles:
1. What does your money represent to you? What price or sacrifice was made to earn this money?
2. How would you define “true wealth”?
These questions go a layer deeper into the realm of your clients’ emotions, trying to get at what this money really represents to them—both in terms of the price they paid to obtain it and what they hope the money will do for them in their lives.
Question 1: What Does Money Represent To You?
The next time someone lays a piece of paper or a check on your desk, try saying, “You know, before I start making recommendations to you, I’d like to ask you a question: ‘What does this money represent to you?’” You might be fascinated with the responses you hear.
Years ago, my mother called to tell me that she had lost a sizable portion of the inheritance she got from her father, a farmer in North Dakota. She got tied up in an unadvisable investment recommended by a friend (an advisor, as it happens) and found herself involved in a couple of other naïve, self-directed investment moves.
After she described her missteps, I asked her, “All total, how much have you lost, Mom?”
Her answer sent a chill through me. Her voice breaking, she said, “I have lost five years’ of Daddy’s work.”
She had done the math and calculated the loss not in terms of money but rather in terms of life spent to create that wealth. Her answer was “light from heaven” in my soul, as it said something about the real nature of money in our lives and opened my eyes to the ways financial advisors can best judge their work. You will know you are a great advisor when you can measure your clients’ money in the same way they do.
This is why people who are “fanatically curious” stand a much greater chance of becoming great advisors.
I’ve known an advisor in Minnesota for 35 years. His name is Marlin. He started asking this question of every one of his prospects when he talked about managing their money: “What does this money represent to you?”
He told me that one day a man came to his office with a check for almost half a million dollars, and Marlin asked him the question. The man gave him a dead-serious look and muttered, “Four months in traction—and don’t you lose one single cent of it!” It turns out the man had been in a car accident and this was the money from his insurance. To him, the money represented the pain he went through, and he wanted to lose not a bit of it—which is why it went into bonds.
Marlin wiped his brow after telling me this story and said, “Phew, I’m so glad I asked!” That is the kind of information you might want to know before you suggest investment vehicles. This question is a good way of getting that critical piece of emotional context.
That’s because money represents different things to different people. I’ve always believed that it’s the world’s greatest metaphor—and that it’s up to advisors to figure out each client’s interpretation of the wealth they’ve gathered. This is something that hit home with me while I ran a suicide helpline during the farm crisis of the mid-1980s. At the time, I was speaking with farmers about wealth lost, not wealth gained. They would talk about the multiple generations of their families investing their lives into building the enterprise, only to see it go down on their watch. The money and the land were a metaphor for familial legacy—and the pain of losing it was unbearable to them.
For some, money is a metaphor for freedom. For others, it demonstrates the rewards for taking risks.
I once asked a very successful contractor what his money represented to him. He said it combined all the principles his father taught him: how to treat people fairly, how to fix the problem not the blame, and how it takes a lifetime to build a reputation, while it takes just one bad decision to destroy it. All those principles were rolled up in his idea of money.
People earn, save and invest with intentionality. When you’re an advisor, your first task in discovery is to find out what the clients’ intentions are. Usually, it boils down to people they love, places they love, and things they love to do.
Question 2: How Do You Define
Wealth defined is wealth refined. Years ago, I introduced a one-page discovery tool called the “True Wealth Questionnaire.” This simple exercise led me to some very profound dialogues with clients. Among the questions I asked were these:
• How do you define wealth with your family life?
• How do you define wealth with your career?
• How do you define wealth from a personal point of view?
• How do you define wealth financially?
We all intuitively understand that a person’s net worth cannot be defined by a number. We more accurately display our wealth through the contributions we make to our world than by the material rewards we collect. I think of this every Christmas season when watching the end of the Frank Capra film It’s A Wonderful Life. Clarence, the angel, hands George Bailey a copy of a book with the inscription, “Remember, no man is a failure who has friends.”
We speak of material gain as if it is the core of wealth, but we all know it represents only the material—and that true riches are much more satisfying. I’m reminded of the great words of the late philosopher Dallas Willard, who said, “Everything that is of value on this planet is a person.”
The conversations you choose to have with your clients are your investment in them as a person. It is in these conversations that the true riches begin to surface.