Column: Mindset is crucial when planning

Posted 3/14/23

Investors have been on the stock market and interest rate roller coaster so long they may feel as though they have gone mad. Planning around continued volatility is a challenge unless you are …

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Column: Mindset is crucial when planning


Investors have been on the stock market and interest rate roller coaster so long they may feel as though they have gone mad. Planning around continued volatility is a challenge unless you are committed to updating goals at least annually. People who stick their heads in the sand and avoid planning “until the market settles down” are missing opportunities and are likely to go off track. This could take years or never rectify once you lose focus.

This is one of the many reasons why the Board of Certified Financial Planners has added psychology as an important component of financial planning. Until the advisor and client can discuss fears, conflicts, money beliefs and biases openly, it will be difficult to stay on track or even build the right kind of plan.

It is not easy to discuss these things, such as:

— Your first recollection of money

— Your money story, beliefs, conflicts, biases

— Influences on your financial behavior

However having these conversations helps boost emotional intelligence. This includes self-awareness of mental triggers, taking responsibility for a situation and helping to facilitate positive change.

Many people become frustrated when they cannot make progress toward their financial goals or may not even know how to set realistic goals. It is crucial to have the right mindset before you begin your financial improvement journey. Speak to your advisor about the psychology exercise to help you progress, especially if any of these sound familiar:

• Squandering financial windfalls

• In denial about spending, lack of saving or investment knowledge

• Enabling others or controlling others with money

• Over or underspending

• Extreme anxiety around financial matters

• Unrealistic expectations

• Feeling guilty for having or receiving wealth

• Fear of losing money or making the wrong decision

Normalizing irrational behavior helps decrease anxiety and shame. We are not often taught how to handle financial affairs so when pressed to do so, we lack the confidence and knowledge to make good decisions.

We often quote George Kinder, CFP,* a pioneer in the early 1980s in financial planning, by asking three main questions:

1. Imagine you are financially secure, and you do not need to worry about money. How would you live your life?

2. Imagine your doctor tells you that you only have five more years to live, but you will not feel ill or be in pain. What will you do with your remaining time?

3. You only have one day left to live. Ask yourself, “What did I miss?” “Who did I not get to be?” “What did I not get to do?”

The idea of these questions is to help prioritize what is most important so you have no regrets, don’t waste any more time getting started, and are able to enjoy your passions.

Kinder states that these answers don’t reveal the desire to make more money, work harder or receive a promotion. They typically relate to one of these five categories:

1. Family or relationships

2. Authenticity or spirituality

3. Fulfilling creative goals

4. Giving back and leaving a positive legacy

5. A sense of place such as travel to special places or living in a certain environment.

All of these exercises are designed to help you create a more meaningful thought process around your financial goals and challenges. While it may be uncomfortable, few things in life bring immediate gain without a little pain. You can think about these questions before your next planning meeting and even discuss them with your family to gain perspective. Then let your wealth advisor help you discover what is important and how to create a plan that is effective for you. You will be less worried about things out of your control, such as the stock market or interest rates, and more concerned about your financial impact on your family and other passions you have.

* George Kinder, CFP, The Kinder Institute of Life Planning.

Patricia Kummer has been a Certified Financial Planner professional and a fiduciary for over 35 years and is managing director for Mariner Wealth Advisors.

board of certified financial planners, investment advice in denver, patricia kummer, mariner wealth advisors


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