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Most conversations that financial advisors have with clients are focused on the financial strategies that bridge the gap between the present and the future.
In other words, let’s figure out where you want to go, what you want to achieve, what your goals are and then develop a plan (based on where you are now) to get you there.
Underlying those conversations is the assumption that if you can simply show someone the steps they need to take to reach their desired future state, then of course they’ll do those things.
But, then comes the gap between knowing and doing. Between knowing what you’re supposed to do and actually doing it.
The client says their top priority is fully funding their daughter’s private school education. You take into account what they have saved currently, the cost of the school, the years left until she’s 18, and then show them exactly how to make it happen.
You sit down with them six months later to assess their progress, and they haven’t made any changes to accomplish what they told you was their TOP priority.
This gap between knowing and doing is forged by the client’s mindset and motivation around money. How they think, feel, and behave.
The key to achieving financial success and accomplishing your goals requires more than knowledge of money. It requires knowledge of yourself.
And these mindsets and motivations driving client decisions derive from their past. The one piece of the timeline we often overlook with clients as we focus on the present and the future.
Thus, the key to improving financial decisions, and ultimately reaching financial success, lies in our ability to help clients explore their past and gain an understanding of how they think, feel, and behave with money.
Once we understand these mindsets and motivations, we can start bridging the gap between knowing and doing.
Like when you learn that the client who hasn’t started saving any money for college grew up in a divorced family where her dad showered her with lavish gifts to earn her love and unknowingly created a money belief that “I need nice things to validate my self-worth.”
And, so her desire for acceptance meant buying nice things. And buying nice things stripped away all available money that could be directed to college savings.
A belief formed in the past influenced her decision-making in the present that jeopardized her goals for the future.
The same goes for everybody. It’s our experiences from the past that influence our present and impact our future.
Experiences when you’re seven dictate outcomes when your’re 70. It’s crazy but true.
The most influential factor on the road to financial success isn’t income, assets, or net worth. It’s not a dollar sign or an equation.
It’s how clients they think, feel, and behave with money. It’s the mindsets and motivations that drive their financial decisions.
And it’s only once you understand yourself – how you think, feel, and behave with money – that you can start changing your mindset and behaviors for the better.
Rachel Cruze has been teaching people the financial strategies and what to do with their money for the majority of her career. But, then she realized that before she could help people know what to do with their money, she first needed to help them know themselves.
And, in her book Know Yourself, Know Your Money: Discover Why You Handle Money The Way You Do and What To Do About It, she breaks down the mindsets and motivations we need to know to help clients make better financial decisions.
Things You’ll Learn
- What percentage of personal finance is behavioral and what percentage is actual tactics and strategies
- The Four Money Classrooms that help us understand the way money was communicated in our family
- How the money classroom you grew up in impacts your current money decisions
- How dreaming improves saving
- A process for prioritizing goals with a focus on motivation and changing behavior
- Three key insights to create lasting change in clients
- How starting every money conversation with a “Why Statement” improves communication and behavior
- How to instill belief and hope in clients that they can accomplish their goals
About Rachel Cruze
Rachel is a two-time #1 national best-selling author, financial expert and host of The Rachel Cruze Show. Since 2010, Rachel has served at Ramsey Solutions, where she teaches people to avoid debt, save money, budget and how to win with money at any stage in life.
She’s authored three best-selling books, including her latest, Know Yourself, Know Your Money: Discover WHY You Handle Money the Way You Do and WHAT to Do About It. Follow Rachel on Twitter, Instagram, Facebook and YouTube or online at rachelcruze.com.
Other Episodes You’ll Like on the Effects of Money Memories
- Episode 7: Exploring Client’s Emotions, Beliefs and Behaviors with Catherine Morgan
- Episode 18: Understanding A Client’s Money Mindset In Order to Maximize Their Well-Being with Sarah Newcomb
- Episode 26: Financial Therapy Skills 101 for Financial Advisors with Nathan Astle
- Rachel Cruze
- Know Yourself, Know Your Money: Discover Why You Handle Money The Way You Do And What To Do About It by Rachel Cruze
- How to Write a Personal Mission Statement
- Dr. Henry Cloud
- Simon Sinek
- Seth Godin
- The Voice Of The Heart by Chip Dodd
- Dr. Caroline Leaf
Whenever you’re ready, there are 3 ways I can help you master the human side of advice:
- HSOA Masterclass: An 8-week group program where you and a small group of advisors will walk away with the skills and resources to master the human side of advice, enhance client outcomes, and forever change the trajectory of your business.
- HSOA Sessions: 2-hour coaching blocks where we work 1:1 to design the ultimate discovery process that creates clients who pay more, refer more, and follow-through on your advice.
- HSOA Community (COMING SOON!): A place to meet, collaborate, discuss, brainstorm, learn and grow with other advisors passionate about the human side of advice.
If you’re interested, let me know here.