The Family Money Story:
Looking Beyond the Numbers

The Stories

By Eric L. Weiner, MSW, Ph.D.

Woody Allen tells a joke about this guy who goes to a psychiatrist and says, “Doc, my brother’s crazy, he thinks he’s a chicken.” And the doctor says, “My God, that’s preposterous. Have you told him so?” and the guy says, “I would, but I need the eggs.” 

Why do clients do what appear to be irrational, nutty things with money? They over and under spend, procrastinate, and purchase lottery tickets knowing the outrageous odds against winning. They may insist upon a conservative investment strategy and then come in one day with a “hot tip” and want to risk it all. They continue to pay for insurance on a broken down family vacation home that hasn’t been visited in 20 years. Family members will argue and spend over 100 times the value of a family artifact in an effort to possess it. As financial advisors we need to understand the family money story and what is going on beyond the numbers. 

How do we make sense out of this?  

If we look at this from the traditional information gathering perspective it is difficult to understand. What do we discover about clients when we collect data on their monthly cash flow analysis, personal financial statements, loan information, investment planning, risk tolerance, retirement planning, tax planning, and charitable giving? This is just the tip of the iceberg with surface information but very little below.   

Unfortunately, clients make many financial decisions that are not based on their finances. Most of these decisions are based on beliefs and emotions that are grounded in their family history with money. This is why financial institutions and advisors need to search for more information about why their clients “need the eggs.”

What will help?

A genogram or family tree can help financial advisors understand their clients on a whole new level. A genogram gives us much more information about how and why an individual behaves and makes decisions. How can a financial advisor use the genogram to be more effective and productive with the client?

Jim’s Story

Jim grew up in New York and became a corporate executive making well over a million dollars a year. This was, of course, an exciting challenge for his financial advisor, Jennifer.  After one year of meetings and discussions, Jim and Jennifer could come to no agreement about investment strategy. Understandably frustrated, Jennifer decided to take the information gathering process one step further. She used the genogram. She asked questions to learn more about Jim’s relationship with money as well as his family money story.
To her surprise, Jennifer learned that Jim had experienced an impoverished upbringing, which resulted in a fear of letting go of his money. For Jim money represented security that he never had as a child. The idea of putting his hard-earned money at risk frightened him. He told her that if he risked his money he would never be able to get a good night’s sleep.

Jennifer also learned that Jim’s parents had lost a considerable amount of money in a business deal that hit the family hard. Jim reported that during this time his parents were distracted and distanced from him and his siblings.

Before Jim was able to decide for himself what was important about money, he learned as a child that he should be extremely cautious with any kind of financial transactions. Loss of money meant to him loss of security and family. Even as a successful and wealthy adult, these strong messages remained with him.

Jim’s family money story gave Jennifer insights into Jim’s reluctance to invest. She was then able to construct a new and successful strategy. She was also able to encourage Jim to take small, conservative steps. Jim is now reaping rewards on his investments and sleeps will at night.

Get Results

What may seem like a soft approach is just the thing that gets hard results. Client money goes to the financial advisor who captures the heart and the soul of their clients. Doing so means going beyond the basic financial information. After all, you don’t want to be caught leaving all your eggs in one basket.

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Published in “Beyond the Numbers: Bridging the Gap between Money and Emotions,” (e-newsletter), January 16, 2008.