Written by: Taylor Kovar, CFP | Kovar Wealth Management
Trust between financial advisors and their clients is essential. When dealing with something as important as another person’s future—not to mention their current livelihood—success is impossible without a trusting relationship.
But how does that trust get built? It can’t be bought or demanded, and it doesn’t appear overnight. In those first few meetings, there’s only one tool that can quickly and dependably build a connection between advisors and the people they hope to help: communication.
The novice advisor hears this and thinks, “Great, I love talking!” Those with a little more experience know that skillful, effective communication goes far beyond how you express yourself. To make a point and make it clearly, you need to know not just what you’re trying to say, but who you’re saying those words to.
At the end of the day, you need to understand how your client thinks about money so you can discuss the topic on their terms.
The 5 Money Personalities
Everyone has some combination of five different Money Personalities that fundamentally influence how they feel about money. These characteristics are the product of how a person was raised and their personal DNA. You can’t teach or talk someone out of this personality; you have to recognize these traits and know what makes that kind of person’s financial brain tick.
For advisors who work with married couples, you see the effect of Money Personalities in the very first meeting. Money influences practically every decision we make, so it’s no wonder our feelings about finance profoundly impact our relationships. Wealth managers aren’t immune to these personality traits, either; when a client has opposite instincts from your own, awareness of your Money Personalities will help you bridge that gap a lot more quickly than just trying to coerce them into seeing it your way.
Communication. Unless you understand who you’re communicating with, it’s just a lot of talk. If you want to build strong trust and connections, you need to know these 5 Money Personalities.
This personality is pretty easy to spot. The Spender’s face will light up when they walk into your office, ready for you to tell them about an investment property or a startup in search of financiers. It won’t matter how much cash they have on hand, they’ll still want to buy whatever they think you’re selling.
A lot of advisors have Spender as their primary or secondary personality. You know in your bones that you have to spend money to make money, and you’ve fortunately got the experience to spend relatively wisely.
When you work with less judicious Spenders, you have to talk them down in the early going. Retirement funding first, beach house later. Set aside money for your kids’ education before you take them sailing around the world. The Spender lives in the moment; keep guiding their focus to the future so they have the funds to enjoy moments beyond the one they’re living in right now.
A Saver will also walk into your office with a bounce in their step, just for very different reasons. Their impulse is to hand you every penny they’ve ever made so you can tuck it away into a nice, safe vault. They might talk about things they want to buy, but actually pulling the trigger on spending goes against every fiber of their being.
Savers are great clients, eager to grow their wealth and follow your lead. The hard part is encouraging them to pull some money out of savings to let it grow a little faster. The idea of an account balance going down doesn’t sit well with this personality, so you need to lay out clearly how a little spending now can make for more savings later.
Like the Spender, your Risk Taker clients are wide-eyed at the prospect of an exciting investment. Since the thrill of investing is what makes these people tick, it’s hard to keep them focused on what they have. The moment they buy a rental property, they’ll be looking to buy the next before seeing any returns on the first.
It’s hard not to get swept up in this energy, but offering measured guidance is what keeps a Risk Taker around for the long haul. Get them to commit to some low-risk, long-term investments so they can go after shiny objects without blowing through their retirement. Guide them toward investments over gambles and make sure they understand the difference.
The big difference between a Security Seeker and a Saver (the two naturally have a lot of similarities) is that the Security Seeker has more specific goals for their savings, while a Saver has more interest in seeing a big number in their savings account. Retirement is huge for the Security Seeker, to the point where they might overlook golden opportunities in the present.
You’re in a great position to help people of the Security Seeker persuasion. Not only can you help provide actual security for their future selves, you can show them that loosening the purse strings is a way to get there. They won’t respond to a pressure campaign or excited shouting from their Risk Taking spouse, but they will hear a credible voice telling them there’s a way to enjoy life now and still be set for retirement later.
When a Flyer enters a financial advisors office, chances are they were dragged their by a spouse. The typical Flyer can’t make heads or tails of their finances. It’s not that they don’t care, they just don’t really think about things in dollars and cents.
In one respect, this is the perfect client—eager to learn and get help, and likely to follow your advice graciously. On the other hand, you need to make sure you don’t impose your will too much. Be mindful of the Flyer’s interests and needs before getting too excited about what you can do with the money they’ve asked you to invest at your leisure.
You encounter all these personalities on a daily basis, usually thinking nothing of it. However, in those moments when the Spender really wants to spend and can’t understand why they’re meeting resistance, you have to know who you’re talking to. When you’re baffled by a wealthy Saver who refuses to enjoy their good fortune, remember what impulses they tend toward. When you’re frustrated by a Flyer who can’t remember if they have a 401(k) or not, keep their Money Personality in mind.
You become much more trustworthy when you think beyond the information you’re giving and really consider who you’re giving it to. You can be an encyclopedia of investment strategies, but if you can’t explain to a Risk Taker why they shouldn’t invest in a questionable startup when they’ve got a baby on the way, your knowledge doesn’t mean that much.
To get a better idea of how different people approach finance, and to learn your own primary and secondary personalities, visit 5MoneyPersonalities.com and take the free assessment. Learn a little bit about your own views on money, then have your clients take the test to get a better sense of why they do the things they do when it comes to saving, spending, and earning.