Over the past few years working with people and their money, I've discovered that most people who worry about money do so simply because they don't understand how money works. They're missing a piece of the puzzle and haven't asked the right questions because they were probably like me and were raised to NEVER ask people about their money.
Since most of my clients are moms, think of a mom you know (maybe it's you!) who doesn't know if she is saving enough for her future and her children's future. She doesn't know how to protect her #1 asset - her income - in case she becomes unable to work for an extended period of time. She doesn't know how to become financially flexible in case she want to change careers. She doesn't know that she CAN and SHOULD create new income streams. She's tried talking to people at her bank about investments but doesn't feel like she's getting the whole story (and wonders if it's because she's not "rich"). So she worries. And worries. And worries.
The number one reason people worry about money is they don't understand it.
The top 2 reasons why people don't understand money are:
1. People are busy earning an income and spending time with their families. People love to do what they know and what comes naturally to them. Career life and family life are in their comfort zone. Learning about money is not.
2. People don't know where to look for helpful, easy to understand information about money. They start to think it would be a good idea to get help with their money, but questions like, "Which friend should I ask to refer me to their financial advisor? What does a financial advisor actually do? What if it's expensive? Should I just buy a book about it?" cause them to freeze. Most people go back to doing what they do best: career, family and worrying about money.
After wondering about how money works throughout my teens and twenties, I was given an opportunity to learn about money and share my knowledge with others. Becoming a "financial advisor" involved leaving my comfort zone, investing hundreds of hours in absorbing course material and passing challenging exams. The financial knowledge I've gained up until today and will continue to gain each and every day of my life has one purpose: to help others.
What I find truly interesting is most of the people I've worked with didn't have much on their "Money To Dos" list. 80% of their money worries were caused by lack of knowledge. Once they read through their Money Success Plan and understood where they were at and how to get where they want to be, they were like, "Whew." Relief.
The financial services industry has done a poor job of actually serving people. CBC (Canadian Broadcasting Corporation) recently shared what those of us who have had to sign non-disclosures regarding our compensation have known for years: the financial services industry not about serving people. It's about profit - not profit for you, or me, but for THEM: the banks and financial institutions which employ "financial advisors".
I'm not saying financial advisors are bad people who don't have their customers' best interests at heart. All I'm saying is that it's difficult for a financial product salesperson to think about anyone other than their family when that's what's on the line: their family's needs.
"I would say 90 per cent of my day is trying to hit targets," said a financial services representative at TD Bank. "I have to go [meet with] my manager daily and go through each customer that's scheduled for me and see how many 'units' I can get from that customer." She says if a client has money in a savings account, she's encouraged to get them to buy TD mutual funds instead of giving financial advice she thinks would be better, such as paying down a credit card or high-interest loan. "It's completely about selling," she said.
That's from a recently published CBC News story.
No wonder people feel overwhelmed and give up on finding quality financial advice.
As someone who spent the first few years of my career with a company like the one described above, I will tell you the big banks are a great place to start a career in finance, but not a great place to stay if your number one goal in learning about money is to HELP OTHERS.
What I've learned in my 35 years of life is that in order to help others, we must care deeply about them. We must have their needs at the top of our priority list, no matter what industry we work in.
If you are one of the 121,000 people registered as financial professionals in Canada, then you are probably one of the vast majority whom, like myself, are registered as dealing representatives; salespersons licensed to sell financial investments.
What I would like to see is for that 121,000 to be made up of 100% financial professionals who are compensated for building Money Success Plans for the people they serve, with or without selling financial products.
You guessed it - that's my role.
Whether you're a financial advisor or a person who has attempted working with a financial advisor, do you agree the problem is not the heart or lack thereof in the financial advisor, but the problem is compensation?
I'm sharing these quotes from a recent CBC News story on the topic of financial professionals' compensation because it's my job to help you achieve money success. You deserve to know what you're up against and why you've struggled to find honest, helpful financial advice.
...if a client has money in a savings account, she's encouraged to get them to buy TD mutual funds instead of giving financial advice she thinks would be better, such as paying down a credit card or high-interest loan. "It's completely about selling," she said.
Financial advisors want to help their clients, but like you and me, they need to provide for their families too.
Lucky for me, my path led me away from commission targets only a few years into my career. I was able to design my own compensation model, which is simple: I get paid to have meaningful conversations with my clients about their money, help them crunch numbers, and turn all of this into a Money Success Plan. My clients pay me to get the ball rolling, then 2-3 weeks later, they decide how I'm compensated going forward. If they like me, trust me, believe I have their best interests at heart and see a need to have me on their team for a couple years, (and if I like working with them), they have the opportunity to sign a two year working agreement. The two year working agreement includes an action plan including investments and/or income protection ideas. Occasionally, the working agreement ends once I've presented the Money Success Plan. This happens when the client wants to execute my ideas on their own or with the help of another financial professional, or when their financial picture looks solid to me, thus no need to continue working together.
In an ideal world, and I hear people in other parts of the world are actually doing this, financial professionals never work for free in hopes of a financial product sale. People never wonder what their financial professionals are being compensated.
In an ideal world, companies hire financial professionals to teach their employees workshops about saving, investing and protecting income. Money Success School during work hours. Less worry = more productivity, right?
In an ideal world, people would have meaningful conversations about money with their friends, parents and children rather than looking for a financial guru with all the answers. People would talk freely about money struggles and successes rather than keeping them hush-hush.
Here are the top 10 questions I ask a new client in order to help them build their Money Success Plan:
1. What's the earliest money lesson you can remember?
2. What's the #1 goal you want to achieve in the next two years?
3. How will your life be different once you've achieved that goal?
4. Does your spouse/child know this is your #1 goal?
5. How did you accumulate the wealth you have?
6. Do you and your spouse ever argue about money?
7. Do you speak openly about money with your children present?
8. What was your biggest financial win?
9. How do you make investment decisions?
10. What is your time worth on a per-hour basis?
When was the last time you had a meaningful conversation about your money?
Are you interested in...
-one on one financial coaching?
-Attending a live workshop?
-hosting a live workshop for your employees?
Thanks for reading, sharing and being my inspiration!