Building & Preserving Wealth

Understanding Our Relationship with Money

We can’t always know the right answers, but we should know the right questions

by Ken Cella

Mr. Cella is a principal leading the Client Strategies Group for Edward Jones. Visit

It’s probably safe to say that, for many people, creating and preserving wealth will be an enduring goal – but it’s also a highly challenging one. What do individual investors really need to know – and do – if they are going to build and maintain the wealth they require to meet their goals today and retire comfortably tomorrow?

Of course, that’s the key question those of us in the financial services industry face every day – in fact, it’s why we do what we do. And there are different roads investors can take to reach their destinations. In fact, our industry often creates new paths, many of which contain interesting insights and techniques.

Unfortunately, however, we can get caught up in technical issues – after all, we study hard to master the language and intricacies of the investment world. But do most of our clients really want to hear about beta, benchmarks and bond ladders? Or, more precisely, do they instantly recognize, on the most personal level, how these topics can affect them? I would say “no.” I suggest that we constantly, and unfailingly, put ourselves in the place of the people we wish to serve – by asking our clients the simple, timeless questions that help us better understand their relationship with money.

Question 1: What Do You Want From Life?

As human beings, we are all amazingly similar in what we want – family, friends, health, purpose, rewarding work and those things we consider to be most important. But as individual investors, our desires can and will diverge greatly, especially in regard to those wishes dependent on financial factors. One person may want to work until 75, then spend years doing some consulting; another individual is counting the days until complete retirement at 65. Others may have priorities that go beyond finance and retirement, such as ensuring a special-needs child will be provided for after her parents have passed. But it’s not just that we have different goals from each other – we also, consciously or subconsciously, rank the importance of our own goals; to achieve them, we must be willing to adjust our behaviors, and accept (or not accept) compromises accordingly.

Although we may have these ideas in our mind, we often need assistance in clarifying and expressing them. As financial advisors we can do a great service to our clients by helping them articulate and prioritize their goals. By understanding our clients and their relationship with money, we can discover the underlying values, motivations and the powerful “whys” that we can use to coach our clients throughout their lives to achieve their goals.

To understand their needs, we have a number of tools at our disposal but our biggest assets are IQ and EQ that can help us put ourselves in the shoes of our client or prospective client.

Here’s a good example of how the combination of knowledge and empathy can result in something special. Let’s say a new client meets with a financial advisor, and when the advisor asks her why she wants to retire, she mentions that she couldn’t visit one of her grandchildren on his birthday because of work commitments. She doesn’t want to miss another birthday, ever. The advisor responds by not only helping her identify the income she needs to retire, but builds in extra income during her grandchildren’s birthday months, so she can travel for each one of them. This is what can happen when we use both IQ and EQ to create meaningful plans for clients.

According to a recent Edward Jones “Relationship with Money” survey, 21 percent of Americans feel happy when thinking about money. Tied for second place was a mix of emotions, overwhelmed, anxious and confident – all at 16 percent each. Understanding these emotions can help clients make smart money choices in line with their underlying values and motivations and short- and long-term goals.

As an individual investor, you might want to express, for example, how deeply you feel about retiring at age 65 – for you, it’s non-negotiable. Consequently, you’d want your financial advisor to create an investment strategy that’s not reliant on a degree of risk that could jeopardize this goal. But you have other goals, too. Perhaps, when you do retire, you’d like to spend five months a year on a Caribbean island. But if you don’t end up with the resources, would you settle for something less, such as three months in a warm-weather U.S. state? And, if so, would you be willing to modify the risk/reward equation because you have the flexibility of accepting a different outcome?

We all have fears – but when they manifest themselves in our financial decisions, they can damage our ability to meet our goals; And our greatest fear may be the most obvious: running out of money...

There are also other considerations to keep in mind besides retirement. Ensuring you’re protected with adequate insurance, for example, and establishing reserves of emergency cash are both important. These three building blocks form the foundation of financial security and must be balanced appropriately.

This, in essence, is at the heart of understanding needs – a way to help clients express what they really want in life and to enable financial advisors to connect advice to those goals.

Question 2: What Are You Afraid Of?

We all have fears – but when they manifest themselves in our financial decisions, they can damage our ability to meet our goals, such as accumulating and preserving wealth.

Our greatest fear may be the most obvious: running out of money. More Americans said they were scared of outliving their assets than they were of dying, according to a well-publicized study of a few years ago.1 Furthermore, individuals today must rely on themselves to achieve financial security to a degree far greater than previous generations. Just a few decades ago, the traditional defined-benefit pension was the most prevalent retirement plan offered by employers, but today, only about 17 percent of workers have access to pensions, according to the Bureau of Labor Statistics.2

And these pensions aren’t coming back: Consider this: About two-thirds of pension funds are at least considering eliminating guaranteed benefits to new workers within the next five years, according to a recent survey by Mercer, a global human resources consulting firm.3

So, given this information, we might assume that most individuals should be motivated to build their financial resources and be open to ideas of how to do so.

Yet, the evidence suggests otherwise. Nearly half of U.S. families have no retirement savings, according to research from the Economic Policy Institute.4 What’s behind the disconnect between the fear of outliving assets and the apparent lack of action needed to address this concern? As financial advisors, we know the most common reasons:

Procrastination – Even young people know they should probably be saving and investing for the future, but they often put it off until they feel more financially stable. Unfortunately, the longer that people wait before beginning to invest, the more they’ll have to put in each year to make up ground and attain the resources they’ll need for retirement.

Lack of knowledge about investing – Despite the availability of financial professionals and information about financial topics online many people are simply deterred from investing because they find it a mystery, with questions like: Why are there so many different mutual funds and investment choices? Can I have a 401(k) and an IRA? How do I invest in things that support my personal values? What’s the smallest amount I can invest? When will I have to pay taxes on what my investments earn? A bright spot for the future is that a growing number of states are now requiring high school students to learn about personal finance and economics, according to the Council for Economic Education, reflecting that “people are responsible for their own financial future,” the head of the group said.5 That said, advisors have a role to play here as well. Finance is complex, and clients are looking for advisors to help simplify things for them. The more people understand about their finances, the more confidence they’ll feel, and the better prepared they’ll be.

Fear of losing money – Nobody likes to see drops in their investment statements. But too often, the response is exactly the wrong one. During the Great Recession from late 2007 through early 2009, investors began selling off their stocks and stock-based mutual funds and fled for “safer” investments, such as Treasury bills and certificates of deposit. But other investors stayed the course – and they were rewarded for their patience, long-term perspective and refusal to let fear dictate their decisions, because 10 years after the market bottomed out in March 2009 (as measured by the Dow Jones Industrial Average), it had risen about 300 percent.6 And it’s gone up even further since then.

Clearly, these fears can hold people back from accumulating the resources they need to reach their objectives. But throughout history, the cure for fear has been education – and so, it’s up to those of us in the financial services industry to educate our audience about the realities behind the fears. If we can do that – through facts, logic and history – we can liberate clients and prospective clients to invest successfully.

Question 3: Where Are You In Your Journey And Why Have You Come To Me?

In our work, people come to us for all sorts of reasons, some of them quite specific. Perhaps they just want advice on opening an IRA, or maybe they’ve inherited some stocks that they aren’t sure they should keep. Maybe they’re having trouble saving enough in their emergency cash funds, or are confused about insurance needs. We are capable of answering these questions, but shouldn’t we look behind them to see what may truly be the concerns of the questioners?

It’s almost certainly not just the transaction they’re after, but rather the feeling that they are informed, understood, secure and in control. Do they want to open the IRA because they’re worried they’ve fallen behind in their accumulation? Do they think that by selling the stocks, they can use the money to speed up the growth of their portfolio? Why do they think they need this type of acceleration?

Every request you receive and every question you’re asked may well be the entry to a doorway that can take you to where you should be – helping your clients feel confident their current financial situation is on track to meet their goals.

As we work toward helping clients understand and identify what they need in order to meet all of their goals, we need to design a client experience that will get them there. We, as professionals, need to co-create that experience and focus it entirely on our clients. Instead of assuming we have all the answers, we will focus on asking the right questions. That’s how we’ll make a difference in our clients’ lives.




1 Allianz Life Insurance Company white paper: “Reclaiming the Future”
2 Investopedia: The Demise of the Defined-Benefit Plan
3 USA TODAY: “It’s Really Over: Corporate Pensions Head for Extinction as Nature of Retirement Plans Changes”
4 Economic Policy Institute: “Nearly Half of U.S. Families Have No Retirement Savings”
5 Council for Economic Education: Survey of the States
6 CNBC: “The Market’s Gain in the Last 10 Years is One of its Best Runs Since the 1800s”