financial advisor

Q&A With Financial Advisor Chris White

February 22, 2017 By Amanda Blankenship Leave a Comment

If you’ve ever felt overwhelmed by your finances, you are not alone. More than half of Americans consult a financial advisor before they retire and even more people seek financial advice once they’ve retired from the workforce.

So, what can a consultant do for you? Luckily, we’ve gotten to chat with Chris White, a seasoned wealth management advisor, to learn more about financial advice, investing and get some advice for you, our readers.

Meet Chris White

Chris White, as mentioned above, is an experienced wealth management advisor and strategist, who has invested on behalf of hundreds of individuals, families, couples and institutions for over 25 years. During that time he has worked with hundreds of wealthy individuals, couples, and families, and with many institutional investors. He said that he has always had an interest in how emotions and experiences early in life can affect someone’s finances.

White found how emotions and investment decisions are linked together so interesting that he published a book, “Working with the Emotional Investor.” The book explains how early life experiences of love and loss shape people’s risk-tolerance later in life. “Working with the Emotional Investor” draws on White’s own life experiences, and on research in human behavior, psychology, and social psychology to explain how people approach investing under both normal everyday circumstances and under high-stakes circumstances.

Q&A With a Financial Advisor

It is obvious that White’s experience and research can be valuable to someone looking to invest or better manage your wealth. So, what does Mr. Chris White have to say about consulting with a financial advisor?

Q: What’s Your Personal Financial Advice to Investors?

A: Understand how your own emotions impact you when it comes to investing. For example, do you tend to be a cautious, risk-averse investor or more of a high-risk “high roller” willing to take chances to see your wealth grow?

Also, Be sure to communicate your wealth management goals/priorities to your advisor. If there are particular personal or family values that shape your thinking as an investor, share those as well. And don’t forget to share your degree of risk-tolerance too. Be willing to trust and work closely with your financial advisor to co-design wealth management plans that are aligned with your personal values, investment “philosophy,” and risk tolerance.

A good advisor should be willing to work closely with you to understand your needs, interests, and priorities as an investor.

Q: What role does emotion play in financial decision-making? How does emotion impact decision-making?

A: Based on my professional experience as an advisor, people make decisions about investing based not on logic or reason but on emotions. Their feelings about money and investing often are rooted in their early life experiences of pain and loss — associated with family, friends, relationships, and love.

These formative experiences can include: the ‘imperfect love” a child received from their parents; childhood events that featured danger, threat or loss; the influence of key authority figures in a young childhood life; family values and culture, and much more. Such factors shape the development of an individual’s ‘emotional template’ which governs how they relate to the world around them.

As adults, a person’s emotional make-up then greatly influences their risk tolerance, their feelings about gain and loss, their capacity to trust others, and their ability or inability to act in their own financial interest, especially in high-stakes circumstances. For example, a person who experiences significant personal or emotional loss or pain as a child may, as an adult, have little trust in others, have a deep-seated need for security and control, and be very risk-intolerant when it comes to investing.

Q: How can Investors Use Emotion to Meet their Goals?

A: It’s important for investors to understand their own emotional make-up and personality as it relates to investing. People display different personalities when it comes to investing, especially under pressure.

Generally there are 3 types of personalities that investors display: They can be “Fixers”, “Survivors”, and “Protectors.” Fixers are very results-oriented; Survivors tend to be idealistic and mission-driven; Protectors tend to think about others when it comes to making investment decisions. It’s important for investors to understand the characteristics of their own personality type, so that they keep their emotions in check, especially in times of economic uncertainty or roiling markets.

Q: If investors have trouble managing their emotions, what can they do?

They need to work closely with and trust their advisor. They need to let their advisor help steady and ground them in times of market upheaval. An astute advisor can suggest good courses of action to take, especially when an investor feels under stress (e.g. is operating in their “dark zone”.) A good financial advisor will advise different clients differently, based on that client’s identified personality type

Q: Where should investors go for more resources on this topic?

Check out White’s website, chriswhiteauthor.com. You can also purchase his book “Working with the Emotional Investor,” a relevant read for investors of any financial means who want to better understand their own emotions and feelings about money and investing, and how these factors influence their attitudes about money, wealth creation/conservation, investing, and financial planning.

Other publications and websites White recommends are sites like www.wealthmanagement.com, Investment News, TheStreet.com and Planadvisor.

Have a question for Chris White? Leave us a comment.

Photos: Dave Dugdale and Chris White Official Website

Choose Your Financial Advisors Carefully

April 27, 2012 By Jennifer Derrick 1 Comment

There are a lot of people out there who want to give or sell you financial advice. Everyone from your brother to the guy on the infomercial has some system, stock pick, or trick that they want to turn you on to. And don’t forget the true financial advisors that work for your bank or brokerage house. Everyone has an opinion and an agenda for your finances. You have to be careful when accepting advice and choose your advisors carefully. Otherwise, you could make a big mistake or even be sucked into a scam.

Many givers of advice have good intentions and they aren’t out to intentionally hurt you. Whether it’s a family member, an author, or a talking head on TV, they may really want to help. However, they are not you. They don’t know your dreams and desires, your risk tolerance level, your financial knowledge level, or any of the other hundreds of things that factor into your decisions about what to do with your money. They’re just telling you what worked for them and that may not work for you.

Other people are paid to give you advice. Your banker, financial advisor, or broker are examples of these advisors. On the one hand, this could make them more reliable as you would hope that anyone who is advising people professionally knows what they are doing. Many do a very good job at getting to know you and your needs and dreams. Some, well, let’s just say they don’t try very hard. Some advisors are even unethical and are only interested in selling you the latest product to pad their commission. Their product may not help you at all. They don’t set out to hurt you, but neither is their advice helpful.

Then there are the outright scammers. These are the people who know their product is worthless but yet they want you to buy it so they’ll make money. They don’t care if you lose your shirt as long as they get paid. By the time you realize that their “advice” is bogus, they’re often long gone, leaving you with nothing.

To avoid getting completely burned, confused, or hurt financially, make sure you only take advice from people you really trust. Even then, do your own research before you act on anything anyone tells you. If someone tells you about a hot stock, for example, jump online and check it out for yourself. Or, call someone more knowledgeable or at a different firm for a second opinion. If someone tells you about a way to save money that worked for them, give it some thought or maybe try it on a limited basis to see if it’s something you can really incorporate into your life. What works for one person may be unacceptable or useless to you.

It’s not only the advice that you want to check out, either. Make sure you check out the advice giver, as well. You don’t need to run a check on Uncle Joe, necessarily, but check out anyone who’s giving you “professional” advice, particularly if you’re paying for it. Make certain that they are reputable and that they work for a reputable firm. Ask for references and check those, too, to make certain this advisor isn’t giving bad advice to lots of people. Understand the advice giver’s relationship to the product they’re encouraging you to use. Are they impartial, or are they getting paid a commission for selling it to you? Get a second opinion about anything that you’re unsure of.

And the same rule applies to financial advice that applies to most financial transactions: If something feels off to you, trust your gut and let it go. Your instinct is a powerful tool and if someone giving you advice is making your nervous in any way, walk away. It’s better to miss out on a great opportunity than to get sucked into a scam.

It can be helpful to get advice regarding financial matters. It’s a complicated field and the help of others can make it easier to understand and expose you to great options that you might not otherwise consider. Just be careful about taking advice and make sure both the advice and the advice giver are trustworthy. You’ll save yourself a lot of trouble and heartache in the future.

(Photo courtesy of Unlisted Sightings)

The Importance of Identifying the Cause of the Problem

February 5, 2010 By Wixx 5 Comments

Regardless of whether you are looking to reduce spending for the purposes of debt reduction, or for saving, the first thing that must be done is to identify where you are spending money unwisely. If you are not ready to be honest about a budget breaker, a vice, or a ‘treat,’ then you are not ready to take full control of your financial (in)stability. This may be hard for some people to be able to see, let alone to admit. Sometimes what is quite obvious to some, is totally unseen by others.

I talked to a few of my friends who are both financial advisors. They both came back to this exact point. Especially for those trying to dig themselves out of a financial hole, if they cannot identify how they got where they are it will be very hard, if not impossible, to get where they want to be. One said he asked his clients to discuss this with their spouses or write it down if they were single. Even if they would not be honest with him, they have to be honest with themselves before he could really help correct their course.

For example, there was a man who said his student loans were too much to handle, and he would be able to get out of debt with a consolidation loan. He did not realize that if he paid a little extra on his current loan each month, he would pay it off over five years sooner than the consolidation loan and save over $1750 in finance charges.

He is having trouble making the current payment and certainly cannot pay extra because he will not wake up early enough to make breakfast and save the four dollars a day that he spends in the drive-through. That $80 a month minus the cost of cereal and milk would be enough for him to pay the loan off in 22 months. Instead he will pay 84 months at $40 a month less than his current payment. What happens if the sausage biscuit goes up in price in the next year or three? He may find himself refinancing again before the seven years are up.

There is also a woman who likes to shop. She has $200 a month on her budget set aside for ‘shopping trips’ which is fine if she was not in financial trouble. She is having difficulty paying off her credit cards and makes a late payment, and its associated fee, about once every three months. What is she charging on the credit card? She is charging the portion of her ‘shopping trips’ that exceeds $200, which is quite ironic.

Until she admits to herself that she is not staying under budget, she will never be rid of that debt. In her case she needs to take it a step further and reduce that $200 budget to use the rest to reduce the debt. She told her advisor that her budget comes out just a few dollars short every month and she is making small adjustments to correct this, but is still off the next month. This means that she has to skip a payment on one credit card or the other every quarter.

What he told her was that the budget is a few dollars off, but the credit card debt went up by $150-$200 each month plus the interest, which means the payment due on the combined cards, goes up by $5-$10 each month. This is what she is not budgeting for. Just those few dollars is enough to throw her off to the point where she is making late payment fees which add even more to the amount due the next month. If she were to consolidate her debt, the credit cards would start back at $0, but unless she were to admit where she is going wrong, they will eventually be right back up where they are now. She will then have the same debt that she is having difficulty with now, plus the loan repayment.

I have a friend that is always baffled by the way I do my finances. It makes no sense to her how I am able to stay afloat in this economy when her husband makes more than I do and they are anxiously awaiting their income tax return to catch up on their mortgage payment. They come over once or twice a month to play games, and last month she commented that I did not have any wine. I said that was because there was no money left in the budget so I skipped the wine. Paying the bills before I bought the wine was a completely foreign concept to her. She found out that I actually would qualify for government assistance based on my pay, but I have too much money in my savings.

“How can you save if you are making a few hundred dollars a month less than us?” She asked me.

My answer was simple that I put money in savings after I paid the bills and before I spent any money on things like wine, new board games for us to play, games for my PC or game console, upgrades to my PC, etc. I had added a savings line right to my budget, so my discretionary funds ended up being smaller, but I had erased all debt except my mortgage, and I have enough in savings to feel comfortable.

This woman and her husband have asked me several times what my secret to financial freedom is. I gave her a container of homemade laundry detergent that I made from a simple recipe that I found on the Internet. She looked at me like I was insane. Last week she asked how I could afford to buy fresh vegetables for my kids to snack on. Apples were $3.99 a bag and her kids would eat a bag in two or three days. That is too much money for her already overextended budget to handle. Her kids were eating Oreos for snack that day. She did not see that one either.

Her husband told me a funny story. Well he thought it was funny. When they get up in the mornings, his girls have their pajama pants rolled up past their knees, and have kicked all of their covers onto the floor. These are the same people who always ask why I keep my thermostat set so low in the winter and so high in the summer. It is obvious to me that they are wasting money on their gas bill by making their girls sleep in a sauna, but they cannot figure it out. They keep asking me the same question, but do not understand my answers.

My advisor friends agree that for most people, it is food and entertainment that is causing them to overextend. They are told that it is children many time, but in reality it is not changing the way they handle food and entertainment once they have kids. A couple can afford to eat out more often than a family can. This can be because the couple has more money available for food, but mainly because the family is ordering more meals and each trip to a restaurant simply costs more. This sounds easy, but is hard for some to see. Likewise, it costs more to go to the movies once you have kids, but some folk just cannot give up the theatre experience. This would be fine if they made concessions elsewhere in the budget, but most do not. Simply if you have kids you have to buy extra tickets, or pay a baby sitter, to go out.

There are many places in our lives where we make decisions that affect our financial situation. Most of us understand that if we are not meeting our goals, we need to do something about it. Before whatever we do to try to help can actually help, we need to identify the cause of the problem itself.

How to Maintain Your Finances in Difficult Times

October 2, 2008 By Jennifer Touchette 2 Comments

When my mother died, I worried a lot about my father. How will he cope? What will he eat? Despite my worrying, I didn’t need to worry much about his finances. His forethought saved his financial life, despite our family’s terrible loss.

Dad always has been a stickler for details. This carries over into his bill paying and investments. During their marriage, he was the one who took care of the bills. He was the one who managed the income. He was the one who made sure they could afford their comfortable life.

Of course my father reeled from the loss of his wife. We all did. Mom and Dad’s lives had meshed together well from the time they started dating. They had a good life together.

Two years later, dear Dad is slowly piecing his emotional life together. During this time, it seems he has ignored his finances. In reality, he has been able to rely on advice from his trusted financial advisor and the clear, efficient way he managed their money before and after Mom’s death.

Deposit money electronically

I remember when the miracle of automatic deposit became a reality. Ever since its inception, Dad faithfully used it for both his and Mom’s paychecks. When they retired, they set up their Social Security and pension payments to be deposited automatically too. By never having to step foot in the bank to physically deposit a paycheck, it was easier for him (and Mom) to resist taking cash out.

Pay bills electronically

Dad was also an early subscriber to automatic payment. Every bill that could be paid through automatic withdrawal is paid from his checking account. This was a blessing in his time of grief: the money was deposited automatically, the bills paid automatically, and he could keep an eye on his checking account from time to time through the bank’s telephone banking system. Although one doesn’t want to make a habit of this, it was good there was one less thing Dad had to worry about during the first months without Mom. Dad is again taking care of his financial housework, which includes balancing the checkbook and tracking investments.

Get an advisor you trust

Dad’s financial advisor has been a family friend for years. Happily, she is also really good at what she does. With a lot of common sense, and a good feel for what amount of risk her client is willing to take, Dad’s advisor was able help him make the most of the money my mother left. This financial advisor helped reinvest my mother’s retirement portfolio to provide consistent income for my father, a plan that was way beyond what even my father – with his savvy saving and spending habits – could imagine.

Pay more than required

When my mother was sick in the last year of her life, the credit card bills and medical expenses piled up. Dad chipped away at these expenses during his first year alone by paying as much as he could to each creditor over the months. By paying more than the minimum required by the credit card company, he taught me that you can actually make headway on your bill. The next month’s bill has a chunk out of it so the interest is less. It is truly delightful to watch your bill shrink away.

Keep good records

There were also a lot of loose ends to tie up with insurance after Mom’s death. Final claims had to be filed, final bills paid – all that detritus had to be finished. This was not easy, but Dad had kept paperwork on the treatments, unreimbursed expenses and payments made by himself and the insurance companies. When there were questions, he was able to produce documents to provide the information. His tax preparer was able to use the paperwork on unreimbursed expenses on the taxes as well.

Share the hiding spots

Yes, it’s morbid, but when tragedy hits, it’s comforting for your trusted person to know where your will is stored, where the bank accounts are, what debts are outstanding, and where your important financial records live. If you’re a widow or widower, this is especially important. My parents took me on the tour every few years, and since Mom’s death, Dad continues to keep me apprised of where his finances stand. This includes where he keeps his credit cards to where he stores the safety deposit box key.

Update your will and beneficiaries

While you’re at it, make sure your will is updated. Do you have someone to take care of your children? Have you appointed an executor to be your personal representative? Is that still someone you want to represent you? It is also important to make sure the beneficiaries on any accounts are up-to-date. Families grow and change over the years, and your stated beneficiaries may need to change too.

There is so much to be done when tragedy hits. Unfortunately finances are one of those things that need to be monitored whatever happens. It makes a tragedy a bit easier to bear if one’s finances are set up well.