Swiss psychologist Carl Jung noted: “Our relationship with money is often determined by beliefs that we developed long before we entered the world of investing.” Most customers cannot articulate their beliefs about money because they operate beneath their conscious awareness. Yet these beliefs are powerful, deeply rooted, and guide behavior.
For example, children from households where resources were inadequate or unstable often develop a belief in scarcity and a fear of “never having enough.” For adult investors, this belief can present itself in the shape of excessive control over funds or an excessive deal with performance and growth – even in the event that they are wealthy.
Likewise, one other child growing up under the identical circumstances may develop the other belief: . The external circumstances are the identical, but the inner narrative – and subsequently financial behavior – might be completely different.
Many of our money beliefs are established early in life, but some emerge later through significant life experiences.
One advisor recounted an experience with a really wealthy, widowed client who exhibited long-standing patterns of utmost frugality and strict financial control. Although two wealth management teams provided their insights, the advisor’s team found that the client’s financial behavior was driven by a deep sense of responsibility to guard his late partner’s legacy. The conviction: With gentle probing, the consultant led a meaningful conversation that resulted in the client being open to alter.
Many of our beliefs are inherited patterns shaped by our family of origin, and while these internalized beliefs form the premise of our financial decisions, much of our relationship with money can be influenced by the models we learn from our parents.
