July 19, 2022

#327 Karen Eley – Transcript

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Ben Nash
Hey guys, Ben Nash from the XY advisor team. And today I’m pumped to be here with Karen Eley. Karen is a money hedge expert at women talking finance. Karen comes from a background of being a financial advisor, which he did for almost a decade and a half. And I think we hear a lot of talk about money coaches, but there’s still probably a fair bit of confusion out there about what they do, how they help. And I’m also keen to pick Karen’s brain about how we can bring more coaching conversations into our relationships with clients. So Karen, thanks for joining us.

Karen Eley
Hi, Ben, thanks for having me today.

Ben Nash
Look at something that’s been getting a lot of attention. I think over the last few years, we’re hearing more about money coaches a bit, a few more money coaches sort of popping up online, a few more structured programs about around money coaching as well, which I feel like we’ll talk a little bit more about as we go through today. But I think there is still a lot of confusion out there, from myself included. Can you maybe start by telling us what is it? What does a money coach actually do?

Karen Eley
Yes. So it’s important, I think, to start off with duality. And just like there’s two sides to $1 coin, there’s actually two sides to managing our money. And as financial advisors, you work on the practical side of the coin. And that’s things like cash flow investing, superannuation, retirement planning, those things are all external to us. But as a certified money coach, I work on the other side of the coin, which is the emotional side. So it’s really around looking at a client’s behaviors like emotional spending, or not taking enough risk, as well as their their mindset or their beliefs around what meaning are they attached to money. So, money coaching is basically a bridge between two worlds. So the financial services industry, and the field of psychology. And what we do is we recognize that the traditional financial advising is largely unable to solve what are essentially emotional and behavioral challenges that a client has with money in their relationships. So you kind of work on the outer side of money. And as a money coach, we work on the inner side, if that makes sense.

Ben Nash
Yeah, it does. And I think that definitely related, like, I know that I’ve seen it with a ton of clients that you can crank your spreadsheets and models and show clients what is going to make them you know, achieve their wealth goals or make them more money. But for for a lot of people because there is so much psychology in making these decisions that people just end up sort of stuck. And there might be something that’s underlying that maybe isn’t even conscious for them that then it holds them back from doing things even when you can see. And it could be something like people overspending or struggling to save, or it could be something that for where people are in a decent financial position, but they’re just terrified a risk or making a mistake. And it is it is really paralyzing. So I’m keen to unpack, you know, how you go about tackling that and what we can do to guide people through those conversations. But just before we get into that, how does it work from just from a technical point of view around licensing and advice, like, where, where’s the compliance line? And how does that side of things work when it comes to money coaching?

Karen Eley
Yeah, so in the field of money coaching, it’s not regulated, so anyone could practically set up their own money coaching shop, I take a very different approach to that. So I think it’s really important that some kind of certification is done around being a money coach. So it’s very clear that you know, the lines and the distinction between factual advice, general advice and financial advice, and we definitely play in the space of factual advice. I myself am a license authorized representative of an AFSL. But just for general advice only, and that is really when I’m just working on the education side. So actually empowering people with the knowledge of how particular financial concepts work. But I’m into the in the current landscape, there is no regulation around money coaches.

Ben Nash
Interesting. And so you would probably be more familiar with the money coaches that are out there than I would be is it common that they would be authorized reps and fall under general advice or do most of them have no, sort of rip status?

Karen Eley
Most of them pretty much all of the ones that I’m aware of and know don’t have any licensing at the moment and I worked. I operated under Synchron for a couple of years and I was at of all of their hundreds of ARS I was the only one with a general advice license. So I think it’s a combination of either not wanting to go down the licensing route, because I obviously still have PII and CPD points and all of the same regulations that financial advisors had. So there’s there’s that element to it. But then there’s also there’s, there’s not a lot of AFSL, that will take on a general advice. Either, I imagine.

Ben Nash
Yeah, it’s interesting. I wonder if the ASIC focus on the the fin fluences sort of thing will might change the licensing around that for people in this space in the future? I know that that’s more of a social media and like, external thing, but I feel like a lot of the sort of same principles apply.

Karen Eley
Yeah, I don’t disagree with your brand at all.

Ben Nash
So Karen is talking about like, people and their behaviors and thinking around money? How does that? How does that all sort of form like, Where does it start?

Karen Eley
It starts in childhood, Ben. So between the ages of two and 12, are when we form all of our beliefs around money, or some people call it our money mindset. So as children, it goes back to the way that our brain is developed. So we have this amazing human brain. And there’s three elements to it. So we’ve got this primitive, instinctive part of our brain, we’ve got an emotional part of our brain, which is a limbic system. And then we’ve got our rational, logical part of our brain, which the Neo frontal cortex, and that part of our brain isn’t fully formed into between the ages of 21 and 24. And so that, that later part of forming our brain is where we make all of our rational and logical choices and decision making processes. So until we’re 2124, our brain isn’t fully formed. So when we realize that our money beliefs are formed between the ages of two and 12, it is with a very immature brain that is largely instinctual, and emotional. And when it’s instinctual, it is very much about fear and survival. And so it’s very much about looking at our environment around us, and what we need to do to fit in and feel safe for survival. And that can play out in different ways. But we are very heavily influenced by our family of origin, and the environment that we grew up in. So if we had parents that were both savers, it would feel very normal and safe to be a saver yourself. And so you might develop those patterns of behaviors around saving money. Or if you grew up with parents that were both spenders, then that would be a very safe and natural behavior for you to do so. All of our imprinting, when it comes to money, the purpose of money, whether money is good or money’s bad, or gets formed between the ages of two and 12. But they are formed with a very immature brain that is very emotional. So it’s not in a really good position to be able to make healthy or accurate assessments of the situations that they find themselves in. So yeah, we can have very flawed beliefs and mindset about money because it’s created so early on in life, but it forms part of our unconsciousness. And so we we just we have certain meanings about money that we attached to it that were formed, perhaps at the age of six or seven. But they they’re actually very limiting to us. But they’re also hidden to us. It’s kind of like, yeah, exactly. So we have a conscious things that we do that we’re very aware of. But then we also have subconscious things. So our physical or mental processes that kind of just run on autopilot. And if you think about, you know, the act of breathing, when we breathe, we’re not consciously breathing in and out, it’s one of those unconscious things that we just do that our body just automatically does, like an automatic pilot just just happens. Our money mindset is just like another function of the automated nervous system. And so we’re not really conscious or aware of it, but we just do it.

Ben Nash
Yeah, it’s I think that if you haven’t had a lot of exposure to this stuff, it is often an an unknown unknown. And I think I’ve mentioned to you when we’re chatting offline that I did a collaboration with a lady that was a breakthrough psychologist and she worked with people all around their limiting beliefs and behaviors and it was only through that that I got exposed to it for the first time and I would see these things play out with clients prior to that, but I just thought I’d you know, people just been been weird or that you know, there’s something there but I don’t know what it is. But when she started teaching me When we’re doing these collabs, about some of these limiting beliefs and how they can impact you, then it all started making sense. And after that, when I was seeing clients, I was like, oh, that’s that one I can see is a barrier for them. I sort of tried to bring it into some conversations, but obviously not with the same sort of structure that that as an experienced coach would, would do, but found that to be quite helpful, because like, as you say, that people aren’t always conscious of what’s there. Tell us, Karen, what are the common? What are the common things that like that you see that like the practical sort of issues or thinking sort of mistakes that people make the impact their money, actions and decision making?

Karen Eley
Yeah. So Ben, it might be helpful if I share with the listeners a case study. So it’s a client that I worked with, and it might kind of help bring it to life if I can. Sure. So I had a client that came to work with me and the financial advisor had sent her to me because she was working with her and her husband, and her husband was really engaged with all of the finances, he’d come along to the review meetings, and she was just kind of she would come sometimes, but just completely chippy checked out or barely listening. And but most of the time, she wouldn’t even come. So the financial advisor encouraged her to come and see me. And so I took her through the process that I take clients on where we go, you know, deep into their financial timeline. And what we uncovered with her is that one of her first memories around money for most people with, you know, pocket money or school banking or nicking $2 out of Mom’s Purse. So we went through hers. And what her experience was, was, when she was nine years old, her family went shopping. So it was her, her mom, her dad and her brother. And she was given a $50 note, which was a lot of money a long time ago, which is, you know, 30s now. She exactly, so she was given this $50 note. And so they all went shopping, she had it in her pocket, and her mom had bought her lipstick, she had bought a toy, her brother had bought a toy. And so they went to the counter to pay for it. And she put her hand in her pocket to get the money out, and the money was gone. And so the event that happened was that her father got really angry. So rather than kind of being really nurturing, and it’s okay, it’s just money, her father was so angry, it’s like, how could you lose that money. And what came out was that, you know, I should never let you look after the money from now on only your brother or I will look after money. And so this experience for her was deeply shameful, and embarrassing, and she disappointed her family. And so she took it upon herself at that very young age that she heard now new belief about herself, and money was that she can’t be trusted with money, someone else needs to look after it for me.

Ben Nash
That’s interesting. I’m just thinking, I’ve got a almost three year old daughter, and she recently raided my coin jar and put all the money into her handbag, and now she’s got more money than I do. So I wonder what that’s doing for her. Her money, please. Be a Millionaire or something. Hopefully, it’s

Karen Eley
right. I could literally do a whole episode on how to parent your children around.

Ben Nash
Yeah, it’s pretty, it’s pretty amazing. And I think that there’s so many different sort of ways that that can play out. As I said, like, one of the big things that I see for the clients that we’re working with now is around this, this ingrained fear of of making a decision and taking action. And like they commonly when they’re good at saving, and they’ve got a whole bunch of money, but just so afraid of doing anything that puts that money at risk. And I think people recognize that they need to invest because saving money in a bank account is not going to be an effective wealth building strategy. But when it comes to actually doing it, they just get paralyzed. And it’s sort of then they start questioning different things. And it’s almost like they’re trying to come up with different different reasons or roadblocks that they can put in front of themselves to say why they shouldn’t do it or shouldn’t do something. Now, for people in that sort of situation. How would you how would you tackle it? Like, what could we do to guide them through that process of building the confidence to pull the trigger on something they ultimately know is a good idea, but just have these subconscious issues at play?

Karen Eley
Yeah, that’s right. So look, there are a lot of different behaviors that can play out, avoidance dealing with money or being too afraid to take risk. So not doing anything at all, or giving their their financial responsibility to somebody else. The one specifically that you talk about in terms of just being afraid to make a decision. As an advisor, I think it’s helpful to actually undo Stan, what is their greatest fear when it comes to money? Because fear is a big driver and motivator. So if we can uncover exactly what it is that the client is afraid of, then we can kind of address that rather than the external and say, Look, just teaching how about inflation and long term investing and the returns that you can get versus leaving in the money in the bank, that’s all very external to the client, we need to get internal about, what specifically is your underlying fear around that? And when a client’s not doing anything, and what not wanting to take risk? Quite often underneath that it’s either it’s a fear around making a mistake, or for sure, yeah. And so what I want to do as a coach is I want to go back into the into the clients childhood and go back early on to find out well, where was the origin of, of that come from? So by looking back into their childhood and different experiences, and reflecting on when was the first time that they made a mistake? And how was that responded to? So were they shamed for that were they embarrassed was, was it just not the right thing to do? And it’s about healing, what the client experienced earlier on, and now giving them the resources as an adult that they didn’t have as a child.

Ben Nash
And so how, for an advisor, like how can we? Or like, what should we do when we’re seeing a client that you can see that there is some sort of subconscious block there? Sometimes it’s, it can be smaller, sometimes it’s a bit more acute. Should we be looking to refer our clients to a money coach? Should we be looking to do more coaching ourselves? Should we build education around it? Or? Yeah, what what what would be your tips, there

Karen Eley
are been all of the above. So, look, I think it’s very valuable for every financial advisor to go through the money coaching journey and experience yourself, I actually coach a lot of financial advisors, and they’re quite surprised as to what can be uncovered. So that client that I was talking about before that was shamed about losing money, she was in her 30s. And this happened, you know, under the age of 12, she had no recollection, it wasn’t till we actually explored and went through there that we found this money memory that she had that had been blocking her like you said, so. So referring to a money coach can be really helpful for clients that have got really deeply ingrained fears or anxiety or behaviors that aren’t serving them well, from a financial point of view. But for advisors that want to have a look and see how they can support the clients themselves. Some really important questions that you can ask your clients to do, and it can always form part of your fact finding process is just get the client to reflect on share three money memories from your childhood. And it’s quite amazing what gets uncovered.

Ben Nash
Hmm, I feel like that would be a good, good conversation starter as well, with clients maybe a little bit heavier, I suppose, depending on what the memories are. But

Karen Eley
that’s right. So, you know, sometimes it could be Yeah, mom and dad worked really hard. We never saw them. They we had everything that we wanted in terms of schooling, and clothes, and toys and all that, but we never got to see our parents. So you kind of ask them well, how did that impact you? And how has that shaped your beliefs and feelings and behaviors around money? Is it something that you do yourself or it’s something that you’ve decided you’re going to do very different as a parent with your own shop children. So ask those three money memories can really help unlock some, some motivations that the client has that you perhaps would otherwise be very unaware of. But it will explain a lot of things as to why the client does what they do. And I’m not suggesting you go and ask these clients, eyeballing them across the room, oh, just share with me your first three money memories, I think it’s something that you need to give the client some time to reflect on. So it might be part of a pre meeting or pre review, kind of the exercise that you get the client to do and then sent back to you.

Ben Nash
Interesting, and I I feel like yeah, for advisors that our our take on money or our views and philosophies around money, tend to influence what our clients choose to do like you. I know for us that we’ve got to we’ve got certain philosophies around how to invest money and how to choose investments and these sorts of things. And then we build education in around those philosophies to our clients. And I suppose it’s just if if people connect with them then that those are the people that end up working with us and then they tend to follow the same philosophies themselves. But I suppose As I’m thinking as you’re talking, and it’s like how much of what our money beliefs are, do you think flow through to what how we guide clients and how we advise them as advisors?

Karen Eley
I think they can, unless you have a really good awareness of your own band, I think that they can heavily influence the way that you work with clients. So understanding your own beliefs and biases and behaviors is really important too. Because I am, and I’m no different to you, Ben. So, I tend to attract clients that have similar challenges that I had. So I was an emotional spender. And I was through my 20s and 30s, and perhaps even early 40s, until I came across this work myself, so I tend to attract a lot of emotional spenders, that, you know, they earn really good money, but they kind of don’t know where it all goes. And they, they just seem to spend it all without knowing why. So I know that that is very much. There’s inner challenges there that clients need to overcome me just sending them a spending spreadsheet or a budget isn’t going to help or solve their problems that they’ve got internally.

Ben Nash
And so for advisors, how do we figure that out? How do we figure out what our beliefs are and how they might be impacting how we’re working with our clients?

Karen Eley
So you can go through their money coaching process yourself, that can be a really interesting eye opener. Or you could do what we talked about before, just for the financial advisor to actually reflect on their own childhood? You know, what are three things that you learned about money from Mum? Or what are three things that you learned about money from debt? And what significant events did you experience in your childhood? So did you go through a family divorce? Or did money flow really easily? Or was money really tight?

Ben Nash
I think awareness is probably is the key there. I know that that was one of the things that I picked up from the learnings that I had around these limiting beliefs and awareness as a first step. And then it’s like, what do you do to push through so for for advisors that recognize that there’s something there? Or when we see that in our clients? What, what practically two, can people do to move past what they recognize is something that’s maybe a little bit, you know, I’m trying to think silly is probably not the word but like, you know, maybe emotional or driven by our thinking, as opposed to something that’s fully logical what, where to where to from there.

Karen Eley
So you’re right brain, it very much does start with the awareness, and actually being able to see and observe, oh, this is what I’m doing. And this is why I’m doing it. So what’s the motivation behind it? It’s normally a protection mechanism or a survival mechanism for us that we created early on. And then it’s about quite often, then we have to unlearn what we learned as children. So if we saw that our parents weren’t investors, they worked really hard, or that their idea of wealth creation was buying properties and properties. And you and I both know that one of the keys principles to investing is about diversification. But they’ve never invested in shares before, they don’t know anything about shares. It’s taking small but significant steps in the right direction, you don’t want to overwhelm a client. So you don’t want to say, look, we need to do this. And you need to do that. It’s about taking small steps along the way, rather than taking those giant leaps. So it might be starting very small. And it could be around, firstly, educating around whichever particular strategy or asset class you think is appropriate for them, and getting them to start small. So they feel comfortable with it before going all in.

Ben Nash
And I’m just thinking as you’re talking, but is it is it maybe a thing that we should be looking back like, especially for clients that we’ve been working with for a while that maybe were suffering with some of this stuff at the start to maybe highlight some of those wins, and then use that, as you say, to sort of unlearn some of those beliefs is that

Karen Eley
yeah, that’s right. So it is really about acknowledging people because we quite often are our own biggest critic. And we’re, you know, we humanly designed based on that instinctive, productive brain to be looking out for danger. And what that means is basically being very fear conscious and looking out for all the things that could go wrong. So we tend to be more negatively wired than positively wired. So it is about the adviser having the opportunity to acknowledge to say, look how far you’ve come over the last 12 months and really celebrating and acknowledging that their progress as well because we tend not to do that.

Ben Nash
Love it. I think that helps with with this sort stuff that we’re talking about here. But also just generally, I think that’s something that we could all be better at that I think it’s the nature of generally advisors and our clients as well, that we’re always forward looking. And you always want to get to the next milestone and the next thing, but often when you measure backwards and say, Okay, well, what’s happened? And yeah, let’s, let’s celebrate those wins, that gives you the motivation to keep going and keep following the path. So I think definitely, yeah, definitely, you know, even outside of this something that we could, could and should be doing a little bit more of with our clients.

Karen Eley
Yeah, definitely. And I think also, sometimes we need to go through a process of forgiveness, Ben. So I work with clients that kind of like in their 30s, maybe 40s. And like, oh, I should be better off than I am, or I made this mistake with investing, and I lost lots of money or spending more money and not saved any of it. It’s about we need to start with a fresh sheet of paper. And this is where we are today. And being able to forgive those mistakes that we’ve made in the past, because it’s not helpful to us. And those energies and doubts get trapped in our body. So we need to release them and let go and just realize this as all of us, we did the best we could with what we had at the time.

Ben Nash
Yeah, absolutely. And it’s amazing that it doesn’t really matter where somebody is that they always think they should have done something differently, or better, like our clients, I think are probably younger than than the majority when it comes to advisor clients. But we talk to people that are in their 20s. And they’re saying I wish I started when I was you know, 18 or 21 or something. And we sort of think like, you’re 20, you’re probably starting like 30 years ahead of like where the average Ozzie would be heavily focused on this stuff. So

Karen Eley
absolutely. It’s such a different generational perspective, isn’t it?

Ben Nash
Definitely. Karen, thank you so much for sharing your your insights there. I think it’s super interesting stuff. And definitely coming more into the spotlight, I think as advice progresses into much more than just the dollars and cents. For anyone that’s keen to learn more about what you do, or to learn more about how they can do more in this space themselves. What’s the best way for them to reach out or what would you suggest,

Karen Eley
so people can reach out to me I spend a lot of time on LinkedIn, I put lots of newsletters and articles there. So they can they can reach out to me there at LinkedIn, the the certified training in money coaching, there’s one called the money Coaching Institute, which was founded by Deborah price, and that’s who I studied with, and I now train financial advisors in the space of money coaching there as well. So you can go onto their website and have a look there. They have a 16 week full blown certification course which really deep dive and get into the deep waters where you get coached yourself. And you have a couple of clients that you have practice clients and go through the whole framework of money coaching, which is quite a unique four step process. If you’re not ready to delve in that deep, you can go on backwards. And we have a 10 week course that you can do online which is live and their sin, sorry, 10 CPD points attached or the AFA have given us some CPD accreditation for that. And that will give you a real good insight as to what it is that money coaches do and how deep we dive in some of these emotions and things like clients, financial anxieties, and fears and anxiousness and all of those different emotions that clients can experience around money and going back into their money, story and biography. So there’s that 10 week course that you could do, but people are always welcome to reach out to me, I get lots of financial advisors, just having a little stalk on LinkedIn or sending me a message. So always happy to have a chat to advisors that are interested in this space, whether that they could integrate that into their own practice or whether or not they’re looking to form a relationship with a behavioral money coach that they can perhaps refer clients out to, or that they want to get coached themselves.

Ben Nash
Awesome. I love it. Well, Karen, thanks again, really appreciate you sharing your insights, and we’ll catch you on the next one.

Karen Eley
Wonderful. Thanks, Ben. Thanks for having me.

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