“Why do you look at the speck of sawdust in your brother’s eye and pay no attention to the plank in your own eye? …You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.”
Rabbi Joshua ben Joseph, Matthew 7:3-5 New International Version (NIV)
I was reminded of the quote above because we all have a speck or two of sawdust about money—we all work with money, whether as business owners or financial planners. So, our best antidote is to be aware of the unspoken life-assumptions: the planks that shape our own attitudes and behaviors around money.
This simple survey tool can shed some light on your money behaviors. Price’s tool will begin to give you language about your own and others’ attitudes and behaviors related to money.
Regardless of which side of the business table you sit at, being aware of your money type can help shape your attitudes and actions about the following:
- when giving or receiving advice
- when making good decisions about whether you view money from your business or your personal finances as “expenses” or “investments”
- present or future consumption
- something dreadful or awesome.
Drawing on the latest research in neuroscience, neuroeconomics and behavioral finance, Price refers to “three levels of management” in the brain that govern our financial decision-making: lower management, middle management and executive management/CFO.
This has been with us for millions of years and is the most primitive part of the brain. It is the part of our brain that is largely instinctive and reactive; it can trigger our fight/flight/freeze responses. We literally feel this when we erupt in anger (fight), feel our blood pressure rise (flight), or have our stomach churn or brain slow to a near standstill (freeze) at the thought of meeting with a financial planner.
This kicks in when the brain accesses conscious or unconscious memories and feelings from our childhood. This part of our financial decision-making can cause patterns of avoidance or resistance relative to money or other adverse behaviors due to uncomfortable feelings or associated money memories and experiences from childhood and beyond. They can also lead to behaviors like procrastination or rash, instinctive responses to a hot piece of market information. We “know” just enough to be dangerous!
Executive Management/The CFO
This part of our brain is the trained, rational decision-maker that takes a slower, more disciplined approach to money matters (rather than emotional, or reactionary like the lower and middle management brains!). This part makes the final decisions based on the best holistic information and strategic planning we give or receive on opposite sides of the financial planning table.
Other behavioral finance experts have noted that the key to good financial advising is to help the client keep all three levels of management talking with each other. The temptation is to appeal to the CFO—where most CFPs excel–and view the other two levels of management as not worth the time. However, the backlash comes when the other levels are not taken seriously and rebel causing our clients (and us) to make unwise decisions.
Recognizing the plank in our own eye is the first step to removing the specks out of our clients’ eyes!
Here are some ideas on how you might increase your self-awareness to become a more effective financial planner and business owner:
- Take the complementary survey.
- Read up on your archetypes and reflect on how they show up in your business. While Magician is the ideal money type, we all need both Warrior and Creator/Artist aspects.
- Examine points of frustration with yourself and your employees and/or clients: what archetype might s/he be operating from? What might you do to work with him?
Originally posted 2013-05-20 08:31:43.