Riley Saunders: The Psychology of Financial Planning | Next Gen

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At the end of the day, you need to understand your own thoughts, feelings, and emotions around money and why and how you got there before you can even begin providing an experience or a journey with your client.

Welcome to Barron's Advisor: The Way Forward Next Generation, a special series spotlighting the emerging leaders shaping the future of financial advice. Twice a month, we'll be digging into the strategies, insights, and game-changing moves that will help you take your practice to the next level. I'm your host, Allison Tucci, and today with me is Riley Saunders, a financial advisor at Cassaday and Company. And today we're going to be talking about that intersection between perseverance, psychology, and purpose. Let's start with your journey, Riley. You received a master's in personal financial planning. Is that correct?

That is correct. From Kansas State University.

That's fantastic. I don't think a lot of financial advisors have had that experience. Can you tell me a little bit about what drew you to receiving your master's?

I had just finished getting my CFP. The COVID-19 pandemic had hit, so I had some more time on my hands since I wasn't going outside. And really, I wanted to find a niche within the financial planning space, particularly within that kind of the psychology of financial planning. So I did some research across different schools and organizations that offered some sort of higher-level education program, and I came across Kansas State's program, and they really are, in my opinion, pioneers because the psychology of financial planning is such a newly recognized space within the financial planning industry.

Why is it important for a financial advisor to understand the deeper insights of the psychology of money and the behaviors behind it?

I would say the psychology of financial planning does not provide at all a quantifiable return. You can't say, I, we did this deduction and because of that you saved $10,000. However, I would say that the alpha, if you're truly emotionally intelligent and in tune with your clients, is almost infinite because it's not about providing a quantifiable dollar amount of value. It's about creating a sticky relationship and having them remaining as a client.

Money scripts. Can you explain really what money scripts are? How can a financial advisor leverage them to really help have a conversation with their clients?

So if we take a step back before we get into money scripts, I want to talk about financial flashpoints. And financial flashpoints are effectively an event typically in childhood that are so emotionally powerful that it leaves a lasting imprint into your adult life. I think a very common example is a mother and a father fighting over money, having an argument about money.

That makes sense.

Arguments around money tend to be more intense and actually last longer than arguments around any other subject. And Because of that high-stress, high-energy subject, that effectively can create events that are sort of passed down to the next generation. So, you know, a family member losing a job could be one. Financial infidelity could be another one. For example, your parent buys a present off Amazon, but instead of having it shipped to their house, they have it shipped to the neighbor's house so that when the other parent comes home, they don't see the box at the door.

Gotcha. So financial infidelity is more like you're buying something without your spouse or your partner really being in the loop about it.

Right.

And I'm assuming then like the larger purchases are probably a little bit more catastrophic to those conversations.

Right, right. And these two researchers, Gundmundsson and Danes, they basically came up with a definition. It's called family financial Financialization. And effectively, the core of the message there is that so much of what we learn about money, our lessons, our thoughts, feelings, emotions around money are directly related to your family and your parents. So what I did at Kansas State that I thought was really helpful for me personally and would encourage other financial planners to do, and if they want, do it with their clients, is actually make a genogram.

What's that?

A genogram is effectively— imagine on a piece of paper, just a family tree.

Okay.

Okay. And you can use a genogram to understand a whole plethora of information. So it could be, these are common illnesses in my family, so what are the likelihood that I'll have XYZ illness? Oh, wow. Okay. Or, you know, my my, you know, for example, my grandmother had XYZ mental health issue. How does that, you know, flow down to me? And what we did is sort of all that, but also we peppered in the money scripts, which I promise I'm going to get to. And basically, if your parent or grandparent or aunt, uncle is money avoidant, money worship, money vigilant, you kind of see the ripple effects of how that was passed down generation to generation.

And that corresponds to their financial health probably in each of those situations and how they dealt with the money during that time.

Sure. Yes, exactly. So money scripts are basically, they're unconscious beliefs that you have around money that typically stem from those financial flashpoints I alluded to earlier. So it was established by Brad Klontz and effectively there's 4 money scripts. Money avoidance, money vigilance, money status, and money worship. So let's start with money avoidance. Typically these types of people, I know it's in the title, but they don't really want to face the reality of what money is in society today. And that could be as simple as not looking at bank statements, or I think a very common one many people can relate to is maybe you have a night out on the town You wake up the next day and you don't want to see the credit card bill of what you bought last night.

Yeah, exactly. Especially if you're going out in New York.

Right. Exactly. Exactly. I'm realizing that quickly too. So the next one, I'll talk about money vigilance. Money vigilance is commonly seen, in my opinion, as the good script. And I don't agree with that. I can get to that later. But effectively, money vigilance is having an understanding of how money operates and works and using that to your advantage. And typically that involves a lot of accumulation of money, you know, not wanting to spend top dollar on the best brand when the next brand down does the job just the same and is half the price. So simple things like that, being very cognizant of how you're spending and how you're living your life because you understand that money is a tool to live the life that you want to live.

Because you were the one that accumulated it, it sounds like, during that time. Right.

Right. But the reason why I think it's not as black and white, good or bad, is because the biggest issue I have as a financial advisor, quite frankly, is convincing our clients that they can live above the means that they're currently living in.

Oh, interesting.

Right. So if you, if you think about it, it actually makes sense. So I like to equate it to going to the gym. If you go to the gym for 10, 20, 30 years, you know, every week, you start to build those muscles up and you start to get stronger and stronger and stronger. And that's effectively what people are doing when they're saving. When they're being money vigilant, they're saving and saving and saving for decades of their life, the majority of their life. And one day out of nowhere, the the switch just arbitrarily flips and you go from a working person to a retired person. So from the accumulation to the decumulation phase. And it's really hard when you've been effectively working out for so long and doing things so routinely to effectively give yourself the permission to spend the money that you work so hard for.

That makes sense. It's that accumulation to now spending transition that you have to make.

Right, right, exactly.

Okay. What are the other two money scripts?

The other two that I didn't mention are money status and money worship, which actually sound very, could be very similar. Mm-hmm. And there's certainly overlap, but the key difference in, in my mind is effectively money status is the belief that you're self-worth is equal to your net worth.

Oh, interesting. And I thought there's a lot of that actually today, especially with people being on social media and seeing, you know, going to Europe on the yachts in the summer and various different things. They oftentimes equate money with status or self-worth.

Right, right. Exactly. And then money worship, while similar, is more of the belief that Not necessarily my self-worth is equal to how much money I have or that. It's more of, oh man, if I just had a little bit more money, my issues would be gone. It's the idea that really it's never going to be enough and you basically just try to get as much money as possible to solve the current problem. But what we often find is that As soon as you solve one problem, another one comes with it. Ultimately, at the end of the day, our job as financial planners is to help clients achieve the goals that they're aspiring for. And quite frankly, I don't believe that you can truly understand what they're trying to do at a fundamental level without understanding who they are and how they arrive to their thoughts, feelings, and emotions around money. So it's all about connection. And the deeper connection you have with a client, the more likely the client's going to stay on and still be your client. And the more likely you're going to have success in getting what they truly want. It can be awkward. It can be uncomfortable at times to talk about emotions or trauma or or just stories that shaped how they feel today around money. But the quicker we're able to sort of go past that barrier and push through that, the quicker you're going to have a connection with a client that is much deeper than just financial planner to client.

You're listening to Barron's Advisor, The Way Forward: Next Generation. We're going to take a short break. Stay with us. Hi, I'm Kelly Cavanearo, Managing Director, Head of North America Institutional Distribution at Janus Henderson Investors. We believe working together is the way to work better, like combining your portfolio plans and our in-depth strategy, your valued assets and our valuable insights, your mission and our vision, working in harmony to seek the right investment opportunities. Janus Henderson Investors. Investing in a brighter future together. Welcome back to Barron's Advisor: The Way Forward: Next Generation. Let's get back into the conversation. So what's harder to talk about, money or feelings?

Ooh, that's a tough one. I think it depends on the client. I think it depends on the person too. I think there's stigmas with both talking about your emotions and talking about money. But in my opinion, I think it's— I actually think despite what my job is, I think it's harder for me to talk about money, at least personally with my social circle, than it is to talk about my feelings. I mean, I wear my heart on my sleeve and if I'm upset or if I feel a certain way, that a person made me feel, they're gonna know. And I'm not rash or brash, but I'm just really straightforward and honest. And I'm happy to be the person that wore his heart on the sleeve and told the truth about how he's feeling than hold resentment. There's not enough energy in the world to hold grudges or resentment. So I just, I try to nip it in the bud and then march to the next day. So definitely money, to me, is harder to talk about, mostly because I'm a little money avoidant. Some people that are money avoidant, when people ask how much they make, a money avoidant person is going to undercut themselves. They can make $100,000 a year and they'll say $75,000 a year or $80,000 a year. Because they almost feel a sense of shame or guilt over the fruits of their labor and others not having the same opportunities or resources as them. And that's kind of, for better or worse, kind of where I, where I lie on that issue.

What was that moment that you look back at and go, Yeah, I want to do this.

I think the moment where I said, okay, I think I'm doing the right thing is when actually I started volunteering. When I started volunteering for organizations that are financial planning oriented and basically giving my time back and mentoring people that are truly the next generation of financial planners. Obviously, I'm— I was a part of that and I'm still a part of that, but I'm starting to get phased out of the next generation. And it's really wonderful for me to look back and see any young aspiring planner and being able to help him or her in any way, shape, or form. Really, that's what gets me up in the morning. That's what makes me feel good. That's what energizes me is really knowing that the next generation of planners are are going to be strong and, and I can't wait to see what, what they become.

When we prepped, we talked about the CFP®, right? So in terms of the CFP®, I know you're comfortable with me sharing this. You didn't pass the first time, right? Can you talk a little bit about your perseverance, what it felt like to, you know, not pass the first time, what you had to do to get yourself up the next time and go take it the second time?

It was a bummer. You know, I'm a second-generation CFP®. I don't work with my dad. But he basically taught me everything that I know about money from a very young age. So, I almost feel like money to me is familial, but having not passed the first time, that was, it was necessary. I was, let's see here, probably 23 years old when I took it the first time, and my priorities were not straight. That's not to say I didn't prep or study. I studied so much, but I was also doing a bunch of different things. I was, I was just starting a new job. I moved. I didn't even have a place to live. I was living with my friend's parents. And, and effectively, I was always in some way, shape, or form distracted. Not necessarily socially from the standpoint of going out to bars, but it was more like, okay, I have the CFP exam in 3 weeks and I have to move in 2 weeks. So, it's just—

That's not setting yourself up for success.

No, no, not at all. Not at all. But, you know, it was good because it taught me something I already knew, but it just really cemented it is you have to be passionate about this industry. You have to have the perseverance and grit to take one on the chin and just brush your shoulders off and get back up. Another thing that I really lean into is that I'm really thankful for people that may not have full faith in me. I always say I'm thankful for my haters, and I'm honestly truthful about that because It's the doubt that drives me to prove them wrong. And maybe that's just my arrogance, but I'm just using the arrogance as a steam to power my dream. So when I didn't pass the CFP®, I actually had a coworker come up to me and he goes, I don't know if you should study for this round of the CFP®. I think you should get to understand concepts a little bit more in greater detail. That was a tough blow to my own ego, but I'll tell you what, it really drove me to get in the books again, get in the library and study hard because I wanted to make my dad proud. I want to make my company proud. But being who I am, I just wanted to prove that coworker wrong.

I always like to ask guests if there's just one thing or piece of advice or item that you can really provide that next generation on learning about the different things that you mentioned today. So what would be that advice that you'd give that next gen?

Be comfortable being uncomfortable. I know that's a cliché, but whether it's sharing your feelings or sharing your thoughts or views and emotions around money, I've always found in my life that the more open and honest I am, albeit uncomfortable, it's opened up avenues for people to understand me at a deeper level as a human. So be comfortable with the uncomfortable. And then my other piece of advice would most certainly be don't be afraid to get back up. You're going to get knocked down. You're not going to be 100% every day. You're not going to hit home runs every single game. But don't be afraid when you fall down to get right back up because everyone falls down. No one knows what they're doing. Absolutely no one. They're all flying by the seat of their pants. And some people are just really good at showing composure and coolness and being calm, cool, and collected. Just know that they were once in your shoes and no one knows what they're doing until, really, until it's almost done. They're building the plane as it's flying too. And the quicker you realize that, the quicker you realize that you do belong.

Well, Riley, thank you so much for sharing your story, your insights. I very much appreciate you being here today.

I appreciate you having me on, Allison.

The production team for Barron's Advisor: The Way Forward: Next Generation is Ellie Ismailidou, Rebecca Bisdale, Paul LeBlanc, Kinga Rojach, Joseph Lesby, and Alexis Moore. Melissa Haggerty is the executive producer. Jenna Mathis is the director of programming for Barron's Advisor Programs. Greg Bartalus is the editor-in-chief of Barron's Wealth and Asset Management Group. We'll be back soon with another episode. Thanks for listening. This podcast was brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.