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Financial Therapy
170 Plays2 years ago
Managing your finances isn't just about holding, folding, spending and saving. In fact, how we approach money is often a complex web of our attitudes, desires, fears, goals, education, and relationships. This means that we often perceive our path to success as a set of financial behaviors when, in reality, being healthy financially requires engaging in the things that drive our behaviors in the first place. Enter Dr. Megan McCoy.
In this episode, we talk with Dr. McCoy on the 4 main ways (scripts) folks relate to money, the key difference between a rich and poor mindset, and why logic often fails to have the desired impact on influencing our behavior. Plus, the curious consistency of financial anxiety people have, regardless of whether they have a financial advisor, and how to approach financial literacy in the school years in a way that doesn't contribute to that anxiety.
Finally, the tangible power of optimism and the impact of COVID on, well, everything.
Have feedback about the show? Shoot us an email at podcast@uncommonwealth.com.
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Transcript
Introduction to Uncommon Life and Wealth Strategies
00:00:00
Speaker
Everyone dreams of living an uncommon life and the best asset you have to achieve your dreams is you. Welcome to the Uncommon Wealth Podcast. We're going to introduce you to people who are living uncommonly. We're also going to give you some tools and strategies for building wealth and for pursuing an uncommon path that is uniquely right for you.
Meet the Hosts: Phillip Ramsey and Aaron Kramer
00:00:27
Speaker
Hello and welcome everybody to Uncommon Wealth Podcast. I'm your host, Phillip Ramsey. And I'm Aaron Kramer. Thanks for tuning in. This is a fun one for me because this is one of the reasons why I was so attracted to Aaron Kramer when we first talked. Holy cow. What are we talking about? Can't wait to get the guests on the show, but let me tell you the story first.
00:00:43
Speaker
Yes. So financial therapy. This was one of the reasons why I was like, okay, this Aaron Kramer is a little bit different. So he called me, I was part of the FPA board. I still am of Iowa. And for some reason we got connected. Do you know why you did or just cause you wanted to be a member or what was that? I was trying to figure something out to get around other good advisors.
00:01:03
Speaker
Yeah. So he called and the three minute conversation turned into what, like 25. It was like an hour, which is pretty much typical with Aaron. But what he was talking about was financial therapy and like how money is, yeah, that's kind of the quarter, but it's really about what's going on in people's heads. And I was like, wow, that sounds a lot like how we practice. And there's not a lot of people out there. And I think that he felt the same way.
Guest Introduction: Dr. Megan McCoy on Financial Therapy
00:01:26
Speaker
So today we have the one and only doctor megan mccoy who is a financial therapist on we're gonna talk about all things therapy and money which two things that probably people are like i hate my life this is gonna be awesome so megan welcome to the show.
00:01:42
Speaker
Thanks for having me. Yeah. I can't wait to talk about it. And one thing that I want to unpack, and we haven't talked about this yet, is the difference between COVID, post-COVID and like pre-COVID, post-COVID. I feel like something has changed in people. And I have a feeling that you're going to be able to unpack more than I am or Aaron, but what has happened, what, we're not going to get there yet, but I do want to unpack that at some point.
Journey to Financial Therapy: Challenges and Motivation
00:02:06
Speaker
First, I would love for you to tell our listeners, how did you get into financial therapy? I think that you're a therapist, and then you kind of turn to the financial world from the research that I did. You can talk. You have the floor. Talk as long as you want. We love you. Glad you're on the show. I'm like geeking out over here. Let's go.
00:02:25
Speaker
Yeah, so I started as a therapist. I was a marriage and family therapist specializing in couples since 2008. Then I decided that I needed more skill sets. So I mistakenly went back and got a PhD, not knowing that PhDs are like research degrees. And so I was kind of in my doctorate program being like, I'm so bored of stats. I'm so bored of research. Get me out of here. And then the first ever financial therapy conference came to town.
00:02:50
Speaker
The only reason I came was that they let grad students in for free. If they had charged five bucks, I probably would not have been there. We've all been there. We've all been a broke college kid. We all knew. So that was like 2013 and I haven't looked back. So at that point I had like six figures in student loan debt, but the worst part was I didn't even know where they were housed. It took me like several phone calls just to figure out where my student loans were located.
00:03:16
Speaker
That's how avoidant and probably just not literate around money I was.
Integrating Counseling in Financial Planning
00:03:20
Speaker
So I jumped in, I took financial counseling classes. A funny story is I actually took capstone in the financial planning program by accident first. So I had baptism by fire, but I love it. Now I work in a financial planning department and really get to devote my time looking at financial wellbeing. How do we reach that? And how can financial planners kind of steal what we already know
00:03:43
Speaker
kind of plagiarize what we know from counseling to better address their client's needs.
00:03:48
Speaker
Right. I love that.
Understanding Money Scripts and Beliefs
00:03:50
Speaker
I think there is something about it. Like here's a conversation that I had with a dentist. She was interviewing for financial advisors. And first I was like, how's that going? She's like, Oh, it's horrible. And I'm like, I'm so sorry. I totally understand. We're idiots anyway. So about 45 minutes into the conversation, we were having lunch. She was like, Hey, when are we going to start talking about my money? And I was like, Oh, Angelina, we've been talking about your money this whole time. Like that's, that's the kind of thing, right? Like it's talking about the person before we
00:04:18
Speaker
talk about the money. The money is a tool in order to help the individual realize some of their goals, but it doesn't have to be the main focus. When you make it the main focus, I think people, especially advisors, miss the point completely. So what would be your definition of financial therapy?
00:04:38
Speaker
Yeah. Oh, great question. So it keeps on evolving, but I come from, there's many different approaches to it. I come to the one that is across training of practitioners. I think I'm always going to be a therapist at heart, but I love that I now I'm fighting shoulder literally enough to provide the right referral, the right suggestions, the right first step to my clients.
00:05:00
Speaker
And I also train planners in our financial therapy certificate, which is really designed to help planners integrate counseling like skills, communication skills, conflict resolution skills, and also just knowledge on how our brain works, how our psychology works, how family works that kind of help them in all kinds of conversations while still being a planner.
00:05:19
Speaker
That's really amazing. Like I really want you like for our listeners, I know I can describe it, but not near as well as you can, but like financial money scripts, how that plays a part in like relationships and couples. Yeah. Okay.
Changing Money Taboos: A Post-COVID Perspective
00:05:33
Speaker
I love this idea that like.
00:05:35
Speaker
All since the money taboo was so strong, by the way, we'll foreshadow that I feel like the money taboo is lesser now post COVID and because younger people are less taboo about it. But when I was growing up as a geriatric millennial, we didn't talk about money. We didn't talk about that with our family. I remember asking my dad about how much money it made because I had to put on my FAFSA and my dad was awestruck that I would ask him how much money he made a year.
00:06:04
Speaker
And I was like 18 at the time. So anyway, the money taboos, I think sometimes facilitate beliefs around money that we take as facts, that we just think everybody thinks this way, the same way I do, because we never talk to other people and discover they don't think that way.
00:06:20
Speaker
So Money Scripts, there's a bunch of them out there, but this wonderful, wonderful researcher, writer, social media influencer named Brad Klontz created this thing called the Money Script Inventory that focuses on the four core ones that he saw out the most. There were money and avoided individuals like me that either felt inept at their financial, like didn't know anything about finances, or they had like some moral dilemma. Like I wanted to save the world since I was a little kid. Like I
00:06:46
Speaker
I knew I wouldn't want to be a therapist until like six. I had that like Charlie Brown therapy thing going on. So for me, a part of the reason I was in so much debt and wasn't paying attention to it is that I somehow equated saving the world with taking the vow of poverty almost. You know what I mean? Like I mean, give it all the way to other people.
00:07:03
Speaker
So that's money avoidant. I always call myself afford money avoidant. There's also people who feel like for other people to respect me, I have to show my success. I just show that I have accomplished things in life. Otherwise they won't think I'm smart enough, or they won't think I'm talented enough, or they won't think I'm hard enough worker, right? Those kinds of things. Those are money's status. Individuals, they seek this idea of like, I need status to symbolize to others I'm worthy, right? Yes.
00:07:28
Speaker
And then there's money worshipers who see money as, I don't know, the fixer of everything. It does solve a lot of problems. Let's not get that twisted. Like it's nice to help, but it's not going to fix everything, right? And so money worshipers sometimes are just struggling to acquire without realizing that's not going to be the end solution.
Relationship-Focused Financial Planning
00:07:49
Speaker
And then all the financial planners who are listening know the last one, which is money vigilant, that they think money is important, that money needs to be protected. The only downside is that sometimes money vigilant almost are too secretive or too stressed about their finances. So losing it up and seeing balance is kind of key with that script.
00:08:10
Speaker
I love that. I love it. You know, it's interesting because I've told this to people and they probably are like, you're in the wrong industry. But I'm like, I don't really love money. They're like, I'm sorry, what? I love people and I love what they want to do with their life. And we use money to help them achieve that. But I heard this one thing and it was really kind of like profound to me.
00:08:33
Speaker
They said the difference between, there's many differences, but one of the differences between a rich person and a poor person is the poor person believes that they have the hope that the money will change something where the rich person realizes that it won't. Does that make sense? Like, yeah, they can buy everything, but it's not going to buy your happiness. Like there is something mentally that has to trigger, but the person that's poor is like, Oh, as soon as I get money, Oh, I'm going to have all this, you know, Oh, it's going to vote.
00:08:58
Speaker
Not true, but very interesting. And then I would say that I do love money because there's a transfer of trust that happens. And there's not a lot of, I love relationships too. Like that's gold to me, Eric and all that. But I love relationships and I love that there's a transfer of like, okay, now there's a trust level that I'm giving, you know, like I've never wrote them a big enough check and giving it to somebody like, I got you, you know.
00:09:21
Speaker
And then back to, and I'm gonna let Erin ask the next question, but back to Angelina at our lunch, okay? Two weeks later, she calls me and she was like, hey, I just came into a lot of money, what should I do? And I remember I was like, oh, I think you should do this, that and that. And she was like, how did you know?
00:09:39
Speaker
I was like, well, I listened like, I don't know. Anyway, so I do think that people that understand this therapy part can help people at a different level than the person that's just like, well, this is a big wire house is what we do. Put you in a, you know, box in a square. Like we're, we're definitely going to try to do the things in a customized way because people are different, right? Okay.
00:10:02
Speaker
So I'll get on my soapbox. But I do. I also get excited about it. Aaron is super excited. Go ahead. I don't know, man. I'm like, it's over here. Like, I don't know. I have so many questions. We got to make this last three hours. Like, how about like explain, like, do you see you like, because you led the master's program, right? Are you still doing that? Nope. I am taking more time for research. So we have an amazing new director named Derek Sensenig, who was fantastic. Well, so.
00:10:31
Speaker
Well, in your experience, how much have you seen that like us financial planners like struggle with like the therapy side?
Master's Program in Financial Therapy
00:10:40
Speaker
Because, you know, a lot of us are like numbers driven, like we love Excel spreadsheets and all these things, which tends to be like all you struggle on the emotional side. But in my experience, all the and for more reasons than not, like I probably am attracted to these people, like
00:10:55
Speaker
uh, that are good advisors are like, Oh, in another life, I'd probably be a therapist. And you're like, Oh, that's totally makes sense. But I know there's a whole school of them that is not like that. Yeah. Yeah. So this is great. Our master's program at Kansas data is set up to help three different tracks, right? So one is those who are career changers or didn't get a financial planning undergrad. So you can get the CFP content, right?
00:11:21
Speaker
What is advanced financial planning, which is like tax and safe planning and more complex and going deeper than the original content designed by the CFP board. And then with the financial therapy track. So some of my students picked K-State to do financial therapy. Some of my students were CFPs who found our program for the advanced planning and were forced to also take the financial therapy and they come in dragging.
00:11:49
Speaker
And like the first couple of classes is always like, I don't want to be a therapist. How do I have the line? No, that's important. We have to have a boundary between what a therapist is and what a planner is. But then by the end of the class, they always write this reaction paper, exploring their own beliefs around money.
00:12:07
Speaker
And every one of them almost uniformly said, I did not want to take this class. I did not select this class. I cannot tell you how much it improved my own relationship with money. My relationship with my family members around money. Yeah. I feel like I'm going to be able to do the work better now with my clients over and over again. So, yeah, that's awesome. It's so funny because I think, you know, me and Philip and I know a couple of other of my friends that are mentors to me, like in the financial world,
00:12:35
Speaker
I've been like, I can't wait for the, it would have to be like a struggle not to take the financial therapy classes and be like, Aaron, your finance plan, I go, I can't be focused on the state planning, all that stuff. And for the record, like we're not talking about people who are all numbers. Like, yeah, that's just like good for you guys. It's amazing. You're wired that way. We're just not.
00:12:56
Speaker
Yeah, we are. We could definitely boil down the numbers and we have software to help us with that. But I like the numbers, but I just like the emotion of like, yes, I'm a big goals person. Yeah. If you don't know why you're like how you operate, you're never going to get to that big goal. Like that's an athlete of any sort.
00:13:15
Speaker
If you have big things in your past or your beliefs that are holding you back to really get where you want to go, that's what needs to get found. And that's through like therapy and stuff. Numbers are numbers. We can calculate numbers. Like I'm not saying downgrading the other planners are like, I like crunching numbers. Cool. Numbers are pretty simple. It's math.
00:13:34
Speaker
Like the complication of the biggest, most complicated muscle in you, maybe in me head, I'm like, it's your brain. You know, because even if you have the perfect recommendation, like you are so skilled at financial knowledge, people don't listen to logic. I would have not stayed up until like one o'clock in the morning watching reality shows last night. I would have gotten up and worked out and I'd be drinking water instead of my third cup of coffee. If logic works like, you know,
00:14:02
Speaker
we have to find ways to engage with our clients with emotional pleas or connecting it to the motivation or understanding what the negative behaviors serving a purpose for. All those things are counseling like skills that you can learn to be a better number guy.
00:14:20
Speaker
Yes. It's so true. And I think it's such an important skill for planners to get this because if you do have a good relationship with people and because money is so important to people, you end up getting into people's lives. You hear things that you would never expect to hear from a couple as a financial
00:14:41
Speaker
You're like, you're telling me what? I was like, now I want to cry. Why did you put this burden on me? And it's like, but like to be able to handle that, but also like, and I know I love this side. So, I mean, and I've read those books, like I know Dr. McCoy, like I've told you like the.
00:14:56
Speaker
know, facilitating financial health, all those. Oh, yeah. And it's like it tells you where your line is. And so like you it kind of helps you degrade the conversation. Hey, here's a card. You need to go talk to this person. You're not trained in this. Right. But like it is you hear a lot of stuff that is so personal. So it's it is that.
00:15:15
Speaker
And I think this is the reason why I think it's so important. Going back to flexing the most biggest muscle you have. At times, things are not going to go your way, right? And if you have and understand your why, you can push through those. And what I would say is an advisor, I mean,
00:15:31
Speaker
all of our plans, all of our plans, like Mike Tyson was right. Everyone has a plan to get punched in the face. All of our plans are different than what they started with, but understanding what happened and understanding why that happened and understanding why they're so important to keep pushing you through and adjusting accordingly to get you to your ultimate goal. And like, we're not casting judgment on like, Hey, this happens.
00:15:55
Speaker
No problem. How can we adjust? So let's understand too, what went wrong here, you know? So I think that's super important. Okay. So let's talk about, you have a really great relationship with FPA, the financial, yeah, yep. Certified planners found it like all that stuff. I would love to hear just kind of like how that relationship started, where that is currently and like, what is your role with an FPA, that kind of stuff.
00:16:21
Speaker
Yeah, so I'm so lucky for falling into all this providence, like good situations throughout my career. Recently, I was able to fall into a research project with the most amazing team of researchers. They are actually the money quotient team, Carol Anderson, her colleague Deanna Sharp, which if you haven't heard of money quotient is about finding your client's values and
00:16:47
Speaker
just a powerful motivation of understanding life planning those counseling skills we're talking about. Anyway, FPA offered their very first grant funding to researchers, and the money quotient folks in me decided to do a study really about how to foster trust
00:17:04
Speaker
in finance planning client relationships.
Building Trust in Client-Planner Relationships
00:17:07
Speaker
We had some really interesting questions like we asked both planners and clients, do you think your clients would leave you if you could get a better ROI, or if they found a better communicator, or if they knew their values more. And over time, we found that the clients reporting that
00:17:22
Speaker
where values was more important than return on investment and planners were over at a rating them we also did a funny show anxiety scale in there and we asked clients how funny show anxious you are and then we asked planners how anxious do you think your clients are so
00:17:39
Speaker
To put some context to this number, we know that about 72% of Americans have financial anxiety in our study of just financial planning clients, which tend to be skewed higher. Well, have a steward of their finances and their planner. What do you guys think the anxiety rates were lower?
00:17:57
Speaker
71%, so 1%. Wow, you nailed it. Nailed it, I'd say. I was so close though. We did not expect only 1% difference between the general public having 72% rates of financial anxiety and our financial planning clients having 71% are planners to neither because they said, hmm, among my clients, I think about 35 to 40% have financial anxiety. So way underestimating how interesting clients were.
00:18:25
Speaker
Wow. We got to do a better job. Um, did you, I don't know. Did you pull on some of that data? Did you guys use data points to help with that? No, but I love data points. I'm so glad you're bringing them up. I use them. I use them for, um, a couple of the inventories I use with my undergrads, but financial planners can use them for the Klontz money script inventory. We talked about earlier and a bunch of other like, we haven't.
00:18:49
Speaker
Yeah, we utilize that every client, you know, this is something funny that I think it's kind of reassuring because normally when you talk to advisors, they're always like, we're amazing. You know, like, so when I, you have like a new client conversation, I had one this morning, I just said, Hey, let me tell you what we've done wrong. And they're like, let me hear. Right. And I said about three years ago, we just took people at their word of like, what's your risk tolerance? Well, hi, because the market has been going up for a long time. Yeah.
00:19:18
Speaker
And now we're like, okay, we're not going to take your word for that data points. We're going to send you a investor profile and we're going to kind of get a good idea, a better idea than just like, we're going to take the emotion out of it, right? And so that's something that we've done in the past. I think that, okay, we can do better.
00:19:34
Speaker
and grateful for Aaron. He's like, there's a thing called data points. And we're like, all right, let's invest in something like that because it's important. Right. And then also, too, I think it's wise to be using other people's research, not our own. Like, we don't have to reinvent the wheel. We don't have time for that. So there's other way smarter people than than we are to be able to help us with this stuff. I want to go back into that study you guys did. So why do you think? I mean, your professional opinion or what if you found the data
00:20:02
Speaker
Why is it the people that have financial plans is so highly, in my opinion, like, or not my opinion, my guess would have been like, oh, it's toilet or they have a plan. They know the outcome. We've had Monte Carlo simulations ran like we're good. Like you should feel so good. Like, why are you more anxious than the people over here that have no idea?
00:20:19
Speaker
Right. You know, part of it might be the context of the ambiguity of everything that's happened the last five years. You know, there was a lot of unrest and people do way better with bad news than potential for bad news. You know what I mean? And so I think there was a lot of like, is Covid coming back? Are we going to a recession? Are things changing? And I think that ambiguity was worse than if we actually had gone to the recession. Yes.
00:20:45
Speaker
So that might be potentially it because what we know is that financial stress is, it's clear, like it makes sense. If you don't have enough money, like when I was a grad student and wouldn't have paid $5 for a conference, that's financial stress, right? Financial anxiety is absent of some kind of marker that you're not finishing well. You have enough in your bank, but something makes you worry that that insidiousness of like, is everything going to be okay? I wonder if a lot of us are dealing with that in general because of COVID.
00:21:14
Speaker
Yeah, another thing that this I want you to touch on because you can talk about it so much more high level.
Optimism and Financial Decision-Making
00:21:21
Speaker
But first, I got to make sure you read the book. But did you read the psychology of money by Morgan?
00:21:28
Speaker
love it. I actually use his Warren Buffet story for my undergrads and I can see them like zoning out. And then when I tell the story about like Warren Buffet showing you worth 11 million to be invested like us, they're all like, wait, what? So when he gets into that book and he talks about how like
00:21:48
Speaker
money's so emotional, but we will believe, if you took two people and one person had this good reason of why the market was just going to tank, right? But another person had a way better reason how the market was going to stay good and stay going up. The person with the doomsday story was going to be on news everywhere and people are going to find him to be way more intelligent even.
00:22:15
Speaker
Yeah. Why is that? Oh, I don't know. It feels like, okay, so a funny thing about researchers is we don't like to say things are facts. We like to do 400 studies on something and say, the results suggest this is true, right? Okay.
00:22:33
Speaker
Right. And I think those doomsday, I don't know, talking heads just often present everybody's worst nightmare so convincingly, so confidently. So like this is going to happen. Yes, that shoe is going to drop.
00:22:53
Speaker
I think a Glenn Beck, gosh, he was banging that drum for years. So eventually he's going to be probably right. Like, you know, but like it took him 24, you know, 12 years to be right. Like, I don't know. I don't know if you're right, man. You know, I live like that. Yes. In the book, he's talking about how
00:23:13
Speaker
And you can talk on this better because you understand the brain way better, like just be positive and having a positive outlook actually takes a lot more intelligence because you have to keep your frontal lobe cool, calm, and collected to think through it. And I was like, Oh, sweet. Cause I'm a pretty happy guy. I just thought it was just cause I ignore everything else. But like, how is with money and like making money decisions,
00:23:40
Speaker
Like how do you suggest people to like make those hard decisions for people? Cause I know like, I mean, I just learned a fact or a study that we make, like the average person makes 10,000 decisions a day, you know? And by the end of the day, like you should be making money decisions because it's so complicated. So for you, like, what would you suggest or give people advice on like making these hard money decisions? Like when they have the most brain power?
00:24:08
Speaker
Well, you're so right. We make so many decisions a day. That's why we rely on those shortcuts as heuristics that we sometimes blame for making good mistakes, but they are right most of the time. And so I think you're right that optimism is such a buffer against so many negative outcomes and so correlated with so many positive outcomes. One of the alumni from our program at K-State, Shane Annette is a faculty member. He researches how
00:24:38
Speaker
Optimism and hope can protect you from downturns in the hedonistic treadmill, you know, like stay happier. And I think part of it is our ability to story tell. Optimists are better at saying things like,
00:24:53
Speaker
that decision helped me get to where I am today or, you know, the kind of Nietzsche phenomenon or optimists are better at saying, um, that was the right decision at the time. I'm okay. Like they're better at telling the story. And some of us who are more realistic or pessimistic will use that story to create self-fulfilling prophecies about ourselves or our future or our financial situation. So the more optimistic, the more happy, the better your outcomes will be.
00:25:20
Speaker
reinforcing your negative. You can either positively reinforce your perspective or you can negatively continue to reinforce where you're going. What direction do you want to go? Because there's always ways that you can look at it very differently, right? Yeah, this idea of like equifinality, like there's so many paths we can get to the same final destination that
00:25:42
Speaker
If you made one bad decision out of those like 10,000 you made today, those other 999 will probably get you to your end goal anyway. So I think having that in the back of your mind, it can be powerfully uplifting. What other things in that study that you're talking about, did you find fascinating?
Financial Anxiety: Stress Benefits and Management
00:26:02
Speaker
Yes. Um, so a new thing, sorry, this is still about financial anxiety, but it's so interesting to me is I knew from my background, this thing called you stress EU stress is how it's written. You stress is at some level of stress. It's good for us, right? Like,
00:26:17
Speaker
I stayed up too late last night but I still got up and worked on some work because I have a deadline and I wanted to get it done by the deadline so I was up early and active. If I didn't have that deadline I might have laid in bed too long I might not have gotten up and been as active so there's some level stress that's good for us and we
00:26:33
Speaker
applied that to the anxiety levels. And we're like, do clients need a little bit of anxiety to do the right thing? Like, do we need them to do, be a little stressed so that they actually follow through our recommendations or show up for meetings? We found that like, you just need a, if you're too low of stress, you're not coming in. You're not engaging with your financial planner and the recommendations the way we want you to. So we want to lower our clients' financial, you know, anxiety, but not get rid of it.
00:27:03
Speaker
Yeah, it totally makes sense to me exactly. It's too high, like most of us, you know, shut down, you know, like, and like not make a decision, but it needs to be enough there to like make you that action mode. Yeah. Yeah. You know, and I should have said this too, when you.
00:27:19
Speaker
asked earlier about why do I think our sample clients had higher levels of financial anxiety. I wonder if it's also something we talk about is that we tend to have clients who have higher anxieties. That's why they sought us out in the first place, that they care about this, that they want to work on it the same way that a lot of our clients have a lot of financial literacy. Because if you don't have enough literacy, you might not realize that your financial situation is complicated enough to need an expert.
00:27:46
Speaker
Yeah. Yeah. I don't know. Before we start hit the play button on this, we're talking about that. You were bringing up that bell curve of like, Oh, I think that was fascinating. Yes. The Dunning Krueger phenomenon is that there's actually a bell curve with intelligence that we tend to be falsely confident when we don't know a lot about this topic. And the more we learn and dig into it, the more complicated it appears like.
00:28:10
Speaker
Maybe if you think about your financial planning education, when you're in the intro class, you're like, I got this, a little Excel, a little time value money, I'm okay. And then you get into it and you're like, what are these tax codes? What are these estate codes? And so the more you learn about tax, the more you realize it's more and more complicated. But if you're only doing TurboTax, it doesn't seem so bad.
00:28:32
Speaker
Yeah, so true. I read something there like to keep yourself humble, but you have to keep learning because the more you keep learning, the more you realize how much you don't know.
00:28:44
Speaker
That's exactly it. That's good. That's good. Okay. Let's talk about it. So post pre COVID, post COVID, have you seen, or is this just something I feel like people are different and maybe you've already answered it as the anxiety of the unknown. What, what is this like? And I think that has changed people in a way that you just didn't know how you would change, right? Like just this level of anxiety of what's happening next.
00:29:11
Speaker
is not, that was probably over the normal level of stress that we wanted. And it's now like exposed some cracks, I think, in people, which isn't bad, right? Like, let's address them. But I do feel, and maybe you can confirm or deny, people are a little different now.
00:29:28
Speaker
Yes, you know, and it's so interesting. There's a couple things I see going on. And this is all just anecdotally my experience, not research based. But I feel like because we were isolated, we open up more on social media or other like phone calls or something. But I feel like people are much more transparent than ever before about
00:29:51
Speaker
money about mental health, about struggles. I feel like there's been a movement of like the perfection of, I don't know, the Kardashians or whatever is gone. And now we want people who are flawed or, or dimensional or not perfect. Like authentic. Like that story of like, here's the things I've done wrong with clients. That realness, I think is something that came about because of COVID.
00:30:16
Speaker
Hmm. That's good. Have you ever done a study like that was like six years ago and then we re-introduce this study, like is the results different?
00:30:28
Speaker
Well, what's interesting is we just did that US study that I was talking about that was funded by FPA and an organization called Alliance.
Preference in Financial Planning Sessions: Remote vs. In-Person
00:30:36
Speaker
That study was done two years ago. We just did it again in Canada. And of course, Canada and the US are different, but we're already seeing some striking differences. Their financial anxiety was lower than we anticipated.
00:30:49
Speaker
Interestingly, back in the FPA in America, what we found is that planners also believe that their clients wanted in-person sessions more than their clients actually wanted in-person sessions. A lot of clients are like, I love not going to the office. I want to talk about my money in my sweatpants. That's what we found in America. In Canadian, there was a move just a year and a half later to come back into the office. Their wanting to be in person was a little bit higher than America.
00:31:15
Speaker
We're still really early on this study, so I don't want to say being this factual, yeah. But this is only two years, and both of them were post the heyday of COVID, and we're already seeing differences. So I think we're going to keep on seeing changes based on how far we move from COVID, but also generational changes as what year you were impacted by COVID is so different. My daughter, for instance, was five when it happened? No, five and three.
00:31:44
Speaker
Their experiences of COVID was so much more dramatic and big than mine, you know? Yeah, so I think there's going to be lots of things that we discover moving forward. That would be so interesting to see that through your eyes because I know my daughter was hit like when she was in kindergarten, you know? Yeah. And she missed a lot of schooling because of it. Right.
00:32:04
Speaker
The ripple effect is going to be interesting. I feel like once a week or so I make a joke about the COVID kids saying something I would never have thought of like, oh, you know, like we need to wash our hands or something. Like as a kid, I probably wouldn't have said that so well. Yeah, we were at the zoo doing a petting zoo and my daughters were like, it's time to go wash your hands. And I was like, there's no way my six year old self would have said that.
00:32:31
Speaker
kids, though, I know you mentioned this a while back when I was talking to you, which I think is so fascinating. And I know I've tried to like re explain it and avoid doing a really bad job. So I'll let you explain it. But we have this belief that we need to increase the curriculum in schools about financial literacy, but how it doesn't actually help.
Rethinking Financial Education in Schools
00:32:52
Speaker
So I love, there's mixed results. I love the work by Willis is her last name, W-I-L-L-I-S. And she writes very tongue in cheek, the case against financial education. But what she talks about is how financial education, most research shows that it doesn't work. If it does work, it goes away right away. That it appears that kids need
00:33:18
Speaker
chances to do experiential practice with money, that once we teach them about money and then make them wait until 18 to do anything with money, it disappears, right? So it's great stuff. And then also, I just did a great study of my good friend Kenneth White, where we're looking at the relationship between quantity and quality of financial education, right? What we found is that the quality of financial education definitely improved financial knowledge and financial anxiety.
00:33:47
Speaker
quality, no, sorry, financial knowledge, but not financial anxiety, quantity of financial education did not improve literacy, but did improve anxiety. It was almost like the more they were getting financial education, the more they could say, I don't really have to worry about my finances because I'm checking off that box. Yeah. And those of them that had quality financial education, where again, going back to the idea of the Dunne and Krueger, we're realizing I have so much more I need to learn, right? Yeah.
00:34:15
Speaker
for children is wonderful. I think it needs to be not done by teachers who are pulled too thin, right? We give a 24-year-old this new curriculum on financial education, they feel insecure about their finances. Guess what they're teaching their students? Anxiety about finances. They're like, oh gosh, am I teaching this right? Am I doing it right? That's not what we want our kids to learn, right? So we need financial educators to teach our kids multiple time points with the chances to practice.
00:34:45
Speaker
OK, there you go. Sand fail. Yeah. Yes. Yeah. So I just put it on the education piece of those. This was super fascinating. Again, it's just a personal experience of mine. But my little brother joined the military, but he joined the military at an older age and the military makes everyone go through like a financial literacy thing. It's a natural. Yeah. And he came out of it like so well. I think he was like 24 when he entered and.
00:35:12
Speaker
I was like oh my gosh you can see good job you know but he's talking about all the young kids are like eighteen from high school and how he's like they're not listening at all they missed all of it.
00:35:24
Speaker
But just how like the different times that when him being taught at 24 had some life experiences, had to pay bills, you know, for a few years before he joined the military really sought in the need for that literacy. I love helping supporting military families. My research and my PhD was actually around military families. And one of the misnomers is we often say military members don't make enough and they don't.
00:35:48
Speaker
But if you look at 18, 19, 20 year old, 21 year old cohorts, military members are significantly wealthier than their counterparts, right? Like their counterparts in the civilian population. And so part of it is like, do you have to do everything right financially when you are so flush with cash at 18? Like, don't you have time? And that's interesting. But yes,
00:36:12
Speaker
I think the study of like the mindset of like, we're putting kids in high adrenaline situations, but we don't want them to react in their personal life with that same drive that they were teaching them to do in the field. So yeah, that's also cool. Yeah.
Dr. McCoy's Reflections and Invitation for Connection
00:36:30
Speaker
Megan, I can't thank you enough for just your wisdom and just your time and effort and passion into this, because I think it is, one, it's important, and two, I think it's needed. And so thank you for all the research you've done. Thank you for your time today. If our listeners wanted to reach out or hear more about you, what would be a good way for them to do that?
00:36:52
Speaker
Yes. My email is Megan McCoy at ksu.edu. You're welcome to reach out to me or my LinkedIn. Also, I am so remiss to not mention something at the beginning. You asked, what are my relationships to FPA and CFP board? And I went on the tangent about FPA, but I do want to mention that I'm co-editor for CFP board's journal. And so all the financial planners out there, please consider reading our articles and the financial planning review that is for our CFP members. Also, I helped write their client psychology
00:37:22
Speaker
textbook for the CFP board, which is for sale. And if you want to read more too, I also just wrote a book with some amazing co-authors called the financial planning counseling skills that also has a lot of these skills for talking to your clients, learning about their values, and really be able to handle those big emotions that come up. That's good. Awesome. Megan, you're a rock star. That's why we had you on the show. Thank you for being so astute and passionate about what you do. We appreciate your time.
00:37:51
Speaker
Thank you so much. Thank you. You've been listening to the Uncommon Wealth Podcast. I've been your host, Philip Ramsey. And I'm Eric Ramer. Until next time, go get some financial therapy. Yes. That's all for this episode, brought to you by Uncommon Wealth Partners. Be sure to visit uncommonwealth.com to learn more about our services. Don't miss an episode as we introduce you to inspiring people who are actively pursuing an uncommon life.