Wealth Management & Financial Planning

Wealth Management & Financial Planning

Money Can’t Be a Taboo Topic

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Religion, politics, and money. As children, many of us grew up believing that these topics were taboo – or at least unmannerly – in conversation.  The rationale to avoid uncomfortable topics at the dinner table seems questionable, and clearly ignores two important aspects of human nature. First, we all have biases; and second, we simply don’t know what we don’t know.

A bias is the lens through which each of us view life. Research shows that most of us carry forward our childhood beliefs. If our parents didn’t discuss money, we’re likely to avoid the topic as well.

Many people ask how I wound up working in the financial world. Growing up, my family had college educated, loving parents and yet very little understanding of money. More than once, we dealt with the consequences of that missing knowledge, waking up in the morning with the electricity turned off. Undoubtedly, such experiences influenced my career calling to teach others about money rather than English or history. Most of my family were public school teachers.

Today’s point is that our past informs how we view the world today and can most certainly influence our financial future. We must recognize our preconceived beliefs and we must remain diligent to keep our biases from distorting how we approach the investment process.

A second challenge when it comes to investing is even more difficult.  It is very hard to recognize what you do not know. How do you research what you do not know? How do you know what your advisor does not know? Obviously, these are rhetorical questions as the answer is impossible, but you can create a filter to ask yourself good questions.

Over the next four weeks, we will be diving into specific areas to better understand our resources. As a fiduciary – I am legally responsible for taking care of your money as if it were my own money in the same situation – four things drive my daily process: risk and volatility; fees and expenses; taxes both today and tomorrow; and real return. Each week we will examine one of these issues with the goal of helping you assess and guide your retirement strategy.

Knowledge will not help you overcome your bias, however. You are still programmed to believe what you believe politically, religiously, and even financially. As a parent of two wonderful daughters, I appreciate the difficulties inherent in discussing family finance. As a professional money manager. I can attest to the problems that arise when money stays off the conversational table. Children don’t learn about the dangers of debt, the wonders of compound interest or the confusion of the tax code without meaningful though challenging dialogue.

“Income” is a taboo topic for many people, so start by talking about what percentage of income should be saved and why. Talk about money building money. The concept can be easy to discuss and fascinating.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column offset=”vc_hidden-lg vc_hidden-md vc_hidden-sm”][vc_widget_sidebar sidebar_id=”sidebar-main”][/vc_column][/vc_row]

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