Understanding your client’s relationship with money

As a tax and accounting professional, you’re used to dealing with clients when they’re highly anxious, emotional, and vulnerable, but their anxiety could stem from something bigger than a big tax bill or potential audit. Money itself—whether they have lots of it or much less than they used to—is quite often the root cause of their anxiety. More importantly, no two clients, including spouses, have the same relationship with money.

 According to the American Psychological Association, money has consistently topped Americans’ list of stressors:

• 72% of adults report feeling stressed about money at least some of the time. 
• 22% of adults felt extreme stress about money at some point during the past month.  
• 26% of adults report feeling stressed about money most, or all, of the time. 

It shouldn’t be this way, and this is where enlightened accountants and other financial advisors can be a huge help. Since money is a taboo topic for many people, they need a place where they can feel safe talking about it openly and honestly. That’s where you come in.

Since money is a taboo topic for many people, they need a place where they can feel safe talking about it openly and honestly. That’s where you come in.

Once you’ve developed an initial rapport with your clients, you can start by asking them about their relationship with money. Chances are they haven’t thought about their personal money story before, but by doing so, you can start to uncover underlying causes of how they deal with money—and potentially struggle with it. Start with fundamental questions like these:

• What is their money story? 
• What type of Money Scripts are they using? (see more below)
• How did that Money Scripts cause them to make certain decisions in their finances and life?
• How can they go about rewriting their personal money story? 

This line of questioning can be very useful for helping clients understand how they view their finances and how they make important life decisions about money. It’s all part of taking a “human-first approach” to your client relationships. As I say in my new book, “The Holistic Guide to Wealth Management for Accounting Professionals,” taking a human-first approach is more valuable to most clients than your technical expertise or any products or solutions you recommend to them.

So, you might be asking, what is a money story and, what are Money Scripts?

Money Scripts

Financial psychologist Dr. Brad Klontz, Psy.D., CFP®, coined the term Money Scripts in 2011 to refer to general beliefs that people have about money. He found those beliefs are often formed during childhood or early adolescence, and tend to be passed down through generations. As a result, Klontz believes people tend to follow one of four Money Scripts throughout their lives:

1. Money avoidance. Here, people believe money is evil. They believe having too much money is terrible, and that the accumulation or desire for wealth is negative. Money avoidance can lead to self-destructive financial behaviors and needs to be addressed early in a client relationship. 
2. Money worship/money focus. People who adhere to the money worship script put money on a pedestal. They believe money and the things it can buy will solve all of their problems. They are people who believe the ultra-wealthy and people who follow the money-worship script go out of their way to show their peers that they have money, too, whether they really do. Money worship is a slippery slope, often leading to overspending and poor wealth management.
3. Money status. People who succumb to the money-status script believe their entire self-worth is tied to their net worth. Even if they don’t necessarily have money, they want to flaunt their wealth to make themselves seem more important. Money status is related to “keeping up with the Joneses,” and can lead to higher credit card debt and overspending.
4. Money vigilance. People experiencing the money vigilance script tend to be very anxious about spending money, even when they have plenty of it. They’re generally future-oriented, and have a strong desire to maintain a financial safety net for emergencies. Money vigilance tends to be a positive Money Scripts, since it leads to healthy saving and budgeting behaviors, but can also prevent people from enjoying life and missing out on great investing opportunities, as well as amazing life experiences and travel opportunities.

Questions from clients

Dr. Kristy Archuleta, professor of Financial Planning at the University of Georgia, a licensed marriage and family therapist, a Certified Financial Therapist-I™ and author of “Financial Therapy Literacy and Practice,” told me on my podcast that our job as advisors—or de facto financial therapists— is to motivate clients and build their confidence so we can help them, “commit to sticking with a plan so they can make small [incremental] steps that lead to big changes.”

To that end, she employs a technique called the “Best Hopes” question you can start using in your practice as well. Quite simply, ask your client: “What are your best hopes for your future? Quite often said Archuleta, they’ll reply: “I don’t know. I’ve never really thought about that.”

It seems like such a simple question, but since many people have not been trained to think in such aspirational terms, they need help from someone they can trust to imagine what their ideal future looks like. Archuleta said we must then ask clients follow-up questions such as:

• “So how are you going to know when those hopes are realized?” 
• “What are you going to be doing differently?”
• “What is going to be going on around you?”

“You might have clients come in and say: “’Would I really want to feel free and be able to do what I want to do in retirement?’ That’s a pretty common response,” said Archuleta.“You’re helping them visualize something that they really want life to look like, and then you’re helping them imagine that ideal future and build a clearer picture of it.”

Archuleta continued: “Are they going to do things any differently and how will they know these changes have taken place or these best hopes have occurred? Then they can say: ‘Well, I’ll be smiling,’ I’ll be traveling,’ I’ll be living closer to my children,’ or ‘I’ll sell this big house and move to something smaller and more manageable.’”

Dr. Joy Lere, a clinical psychologist and co-founder of Shaping Wealth, told me on my podcast that most advisors are overtrained on the left-brain economic side of things—the numbers—but undertrained on the right brain emotional side. The left-brain side is, “Where they feel most comfortable, confident and competent,” said Lere. “But when you stay entirely in the ‘numbers’ lane, you’re helping clients avoid the murky underbelly of the psychology of money. What’s going on in their heads can be scarier to explore than numbers on a financial statement. As a holistic advisor, you need to get the right side of the brain involved, too.

Practice makes perfect

As many of the expert contributors in my book discussed, self-awareness is a key component of emotional intelligence, but it takes practice to achieve. Most people need outside help and coaching to improve their self-awareness because we have so many blind spots. 

That’s where you come in, the tax advisor who can guide your clients to financial success.

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