3 Client Beliefs That Can Trip Up Advisors

What You Need to Know

Attitudes about money are imprinted on us in childhood and can lead to unconscious financial behavior as adults.
Financial advisors need to fully understand how these beliefs may be driving their clients to make certain decisions.
They must then ask questions and challenge assumptions that may not be in the client’s best interest.

My parents were married for more than 50 years before my father found out that my mother still owned an apartment in Queens, New York, that she had bought decades earlier with her sister. It wasn’t something she was hiding from my father, just something she considered her own business. And that was how they had always approached their finances.

My mother’s views on financial privacy are a byproduct of the culture in which she was raised. She grew up in Colombia, where a lack of confidence in financial institutions is widespread and where, at one time, the government held 50% of the banking system’s assets.

The country also endured decades of political violence, starting with a ten-year civil war that began in 1948, the repercussions of which rippled throughout Colombian society for decades, engendering an atmosphere of political uncertainty and unpredictability in the financial market. People found security not in banks but rather in cash loans between family members and by owning real estate.

The story about my mother illustrates how one’s nationality or culture can play a significant role in their view of financial matters. Sometimes a parent’s or grandparent’s upbringing combined with nationality or cultural background can shape the generational views about money within a family.

Indeed, attitudes about money are imprinted on us in childhood and can lead to unconscious financial behavior as adults.

For example, people who grew up in the Great Depression or World War II, or who are the children of survivors of that era, may have a scarcity mindset and believe in saving every penny and never spending on “little luxuries.” This way of living might strike today’s younger generation as hoarding and eccentric, but it stems from attitudes imprinted in childhood.

I once heard a story of a wealthy woman who, when she was young, would find clean but used clothing in her closet on visits home from college. It turned out her mother, a member of the “Greatest Generation,” was in the habit of picking usable items out of other people’s trash — not because she couldn’t afford new clothes, but because they were still “good” and wearable.

Many times, people’s behavior as adults derives from what they experienced as children. I’ve seen this come into play often in my work with clients as well as in my own family. In my own case, because I grew up seeing how my parents had addressed finances when I first got married, I was not ready to share everything with my own husband.

It took me some time to adjust and to get to the point where we file our taxes jointly, know how much is in our retirement accounts and make major financial decisions together. One of the hardest things for me was to let go of my individual accounts, which were labeled “payable on death” to my mother.

My personal background and culture have shown me how important it is for financial advisors and trust and estate planning professionals to fully understand the imprinted beliefs that may be driving their clients to make certain decisions. Being able to do so will not only create a better understanding of the client’s needs, but also create a more thoughtful estate plan.

Here are three common cultural stumbling blocks that wealth and financial advisors should be aware of:

1. Money is not to be discussed.

This is a common belief in many cultures. Money and financial situations are private so as to not appear boastful or a target for borrowers. For example, I have a relative who resides abroad, yet her mail is sent to me because she doesn’t want anyone to know her business.

Money is something that might not even be discussed between spouses, as in the case of my own parents. In my time as an estate planner, I have had several situations where one spouse didn’t want the other to know that she had her own bank account.