#50 Megan McCoy – Transcript

Louis van der Merwe
Welcome to another episode of Financial Planners, South Africa. I’m so excited to have Megan McCoy in the studio with me. Megan is a board member of the financial therapists Association, a faculty member of Kansas State, a fellow nerd, and we discussed all the financial planning books that we are yet to read before the session. And I think it’s gonna have a be a lovely conversation just to talk about all these, the softer side of financial planning. Megan, so nice to have you here.

Megan McCoy
Thanks for having me. I’m so excited to chat.

Louis van der Merwe
I mentioned just before the session started that often our work can feel like a therapeutic session as opposed to a financial planning session. And I know you have a passion for therapy and starting out in that industry. How come these worlds all of a sudden feel like they collided and this hasn’t happened? 10 years ago, 20 years ago?

Megan McCoy
Yeah. You know, what’s fascinating is, I think it happened once before. And that was during the Great Recession. That’s when the first founders of financial therapy came together and said, you know, all my financial planning clients are talking about their emotions and their stress and anxiety. And all of us therapists, religion, all of our clients are talking about money, let’s, let’s collaborate and, and that was the birth of financial therapy during that high stress, time. And then, if you think about the tumultuous last couple years that the world has seen, with so many worldwide events, from from COVID, to Russian invasions to stock market fluctuations, like, there’s just been so much unknown, so much ambiguity, and I think it was the perfect breeding ground for financial therapy to get a renewed focus. You know, we put another stone to I think COVID had this this vulnerability, overall social media where people were like, mental health is important or well being is important. And it almost like that taboo kind of went down a little bit, which I also think facilitated this new Rise of financial therapy conversations.

Louis van der Merwe
So is it that that door is now unlocked, and it’s, it’s acceptable to talk about how you feel about this.

Megan McCoy
So I hope so it’s funny, because every time I meet someone who just learns about financial therapy, they always say something along the lines of like, I didn’t know this existed, but I’m so thankful I discovered it. Like, I didn’t know that other people thought the same way. As I did. It’s always like we find our people that recognize that you can’t talk about money, unless you’re you’re touching on these underlying dreams and hopes and, and future aspirations is to linked with our our psyche. You just talked about money as like Excel sheet.

Louis van der Merwe
I’ve heard that quite a few times, or financial planners that said, I really want to talk about the psychology side. And my clients want to talk about it. But I don’t necessarily have the skills, I don’t have the training. And I know this might be a little bit tricky speaking to a South African audience, but where should people start? Like start building these skills? Like what do you think is a good solid foundation?

Megan McCoy
Yes, like, I am such a massive fan of Brad Clontz. In particular, I think if you’re going to start anywhere, starting with facilitating financial health and, and money, mammoth, and those books are such a good entry way. The financial Therapy Association, unfortunately, is just us bound right now in terms of their certification. But they do have a monthly webinar that anybody can jump on or even watch a recording if the time doesn’t work. It’s at 12pm on Fridays, Central Standard Time. I’m not sure how that translates. But it can be recorded. That’s great ways to get little touches of it. And also my kids state program is an online program. So if anybody wants to take some continuing education, education courses, I promise I tried to make class fun and interesting to give you that little foray into this world.

Louis van der Merwe
So you mentioned that, you know, it is open globally, for someone to take this Kansas State program, how much of it is US centric? And how much of it’s kind of applicable to global audiences?

Megan McCoy
Yeah, so it’s four classes. The first one is intro to facial therapy. And this is counseling like skills, what are your communication skills? What are your listening skills? Also, how do you navigate resistance when your clients are saying they want to change, but they can’t actually make that change? And so I think that is so universal, for all of us who work with any kind of profession where you need change happening. Our next one is money in relationships, which is going to go into how did your family talk about money? How did you guys navigate it? And of course, what’s interesting is that there’s always going to be cultural differences that we should be aware of and appreciate. But that actually it’s It’s the beauty of families that even two families in the US may be as diverse as a family in South Africa, this family in the US. So I think those are very translatable. The next one is research in financial therapy, where we teach planners how to read academic literature and not get bored out of their mind. How do we how do we focus in on what’s important, what can we ignore? That one tends to be ill No us focused but it shouldn’t be it could be researched all over the world. And then our final classes behavioral finance, which is all these unset assumptions and shortcuts our brain takes to figure out money that sometimes works out for us and sometimes truly backfires. So they I think they are pretty universal, our larger master’s program, which is amazing program is going to be much more US bound, and they’ll talk about US taxes, but the actual financial therapy courses, I think, are universal.

Louis van der Merwe
Can we break down some of these a little bit? You know, I think specifically, the clients resisting, I had a conversation this morning, with someone that committed to retiring at the beginning of next year. And through our conversation, she decided, oh, no, I just need to work another nine months, because I want to buy this new car. And it feels like these so many clients that they set themselves up for a really great be at retirement or spending time with their family. And then they kind of put a block up. And they say, Oh, I’m I can’t yet get that we would you start in that type of conversation to start kind of unpacking? What’s behind that?

Megan McCoy
I love thinking about retirement, you know, it’s wild is that humans longevity has increased dramatically over the last century. But what’s more than that is that our health, our health age, has dramatically improved. Someone at 60 and 70. Today looks dramatically different than someone who’s 60 or 7020 years ago, even. And so I think retirement hasn’t stuck in this old view of when we had pensions when we were going to pass away when we were sick and weak. And now we have this vitality, that makes retirement have to be transformed. And so there’s there’s a great thing on TED talk. I heard one time that in Japan, I think it was retirements translates roughly to the reason I wake up in the morning, our word for retirement, the English word means to end to to stop to slow down. I much rather dream about the reason I wake up in the morning than the ending of something. And so I think retirement conversations should look like what image Anthony describes. He says, open up that agenda and fill in what’s your beautiful day? What’s your wonderful retirement week going to look like? What are you going to fill it with? What is going to give you meaning and purpose? And then and then it’ll naturally become I can’t wait to retire until instead of I have to retire? You know.

Louis van der Merwe
So that concept of retiring towards something as opposed to retiring from not moving towards? It’s like something pulling us a little bit? But how do you bring those conversations back to that? So now you may be do this session with a client a couple of months ago, in the moment they throw a curveball in there. Like all of a sudden, it’s completely forgotten, like how do you tie that back naturally in your conversations?

Megan McCoy
So I love there’s this intervention in the therapy row called the miracle question. Have you ever heard this one before? It’s kind of

Louis van der Merwe
on your webinar?

Megan McCoy
I love the miracle question. It’s this idea that you actually tell the client this verbatim, you say like this is super corny. So you just have to bear with me because I promise is helpful. And you say I want you to wake up and don’t tell me what the miracle is. Tell me that you woke up and you have all these realizations, a miracle happen? What about your life is different? What about your day is different? Who are you with? What are you doing? What are you spending your time enjoy? Tell me about those little clues of that, you know, miracle happen. And that kind of naturally will translate so well into retirement where they can say these these little little things are different. I’m making this beautiful lunch, I’m making time for my granddaughter. I’m spending time lunching with my friends like those different things kind of help them visualize what’s missing and what can be possible in their lives. I think also, you know, it’s so human nature to always want to create change by thinking about logic, right? We’re always like, here’s the facts, why you have enough money for retirement. But people don’t with no logic if we did, we will all work out four times a week we’d all sleep eight hours we would all eat or vegetables. Instead we you are motivated by emotions. We’re motivated by our social persuasion when other people around us are telling us we’re, we’re motivated by these, these feelings rather than logic. And so I think when we get stuck with clients, we need to slow down and tap into the emotions rather than logic. I

Louis van der Merwe
love that because we always you don’t make emotional decisions. Is that even possible? Can you make a decision with out any emotion?

Megan McCoy
Maybe not. I don’t think it’s ever not clouded a little bit by it. There’s some tricks. I think if you write things down, you tend to get this one degree of separation from your emotions, you’re able to look at things like farther away For me, I use a different part of your brain when you’re writing than you do when you’re talking or, or thinking. And so I think that maybe gets a little closer if you did like pros and cons list. But I think always emotions is kind of underlying,

Louis van der Merwe
just making a lot of these resistance. Things seem like a good idea in the moment, oh, I just need to work a little bit longer need to save a little bit more, it almost seems like it’s all things that are quite positive from a financial planning perspective, right things that we try and ingrain in our clients through their lifetime of accumulating assets. But yet, when it gets to this big shift, and this next phase, it’s almost completely turned around.

Megan McCoy
Right, right. That’s what you know, we I think for when we made the switch from pensions to defined contributions, there was a lot of media around, we’re not going to have enough money like the Americans are, especially America, but the world is in a retirement crisis. And so I think there was this like, mental shift that happened that made people more frugal, more scared to spend their money. And we know because of mental accounting, people spend their retirement money different than they spend their paycheck. Like it feels almost like guilty or to spend that withdrawal, which you should mentally see as a paycheck. But it’s different somehow. And so I think recognizing that some of our clients who are financially stable may need some help making this shift to saying you’re safe, you have a plan in place. This is what you’re allowed us, especially with the noise around us regarding all the uncertainties around the markets, I think it’s important conversations that have and recognizing that potentially fear or anxiety might be underlying that.

Louis van der Merwe
Is that just kind of feeling the the layers of the onion away thinking, Okay, what’s behind this? What’s behind this?

Megan McCoy
What’s behind it? Yeah, I always liked this idea of always imagining every behavior someone’s doing serves a purpose. So when you’re looking at your client, and you’re like, that is a dumb behavior. Like that doesn’t make any sense. You have to shift and say, I don’t understand what this behavior is, protecting or doing or helping my clients. You know, like, a good example is I talk a lot about supporting adult children and navigating like, When am I supporting my adult child to help them? And when am I just kind of enabling them? And so when you have a client who’s spending so much money on their adult child, you might just be like, oh, so don’t. But then if you look under that, like the layer, you describe, say, What purpose is a surfaces keep their child close to them? Does this make them feel less bad about something that happened 10 years ago to their kid? Does this make them feel like they’re still serving a caretaking role that they’ve missed? And once you can get to that, then you can kind of fix the problem, which is not the giving the child the money, but whatever purpose it’s serving.

Louis van der Merwe
That reminds me of a pot that Rick Kayla says in every podcast, you know, once you unpack the emotions behind the decision, every seemingly illogical decision makes complete sense. And it becomes logical and it’s like, okay, well, now I understand why you’ve made this. I picked up a book over the weekend. It’s the financial psychology by Dr. Alex curiam. And in the foreword, I spotted your your name, saying, Oh, I just wanted to say thank you to Megan for for allowing you to build this book, this book and put it out in the world. And it’s so wonderful, because it starts talking through all these unique li American problems that people go through. And I looked at them like, Hey, we’re going through this as well, right? It’s very similar. It’s the same anxieties. And in about the middle of the book, he talks about naming the emotions behind your money. We can you talk a little bit about what are the practical things we could do to help our clients kind of put a label on the emotions? Because usually, you know, once you become comfortable with like, oh, there isn’t emotion, figuring out really what that is, can be quite tricky. Yeah,

Megan McCoy
there’s a couple of great exercises that I love. One of them is called the money egg that Rick Kaler really designed, where you draw out all your early money, memories and kind of describe how they shaped you, you can probably use your internet search engine to find great examples of that online. There’s another thing called a money genogram. That was from the mental health world, but it has been used by a lot of estate planning specialize people who kind of look at where these family stories come from. And if anybody’s interested, I can send you the link. But there’s an article by Mumford and weeks as the authors, and they have these beautiful questions about what did you love about how your parents handled money? What do you wish they did do differently? What did you observe growing up those what we call financial socialization that we received as a kid shape our money, beliefs, and because money is so taboo to talk about, we don’t have an opportunity to share with others, these unsaid partial truths that are part of our reality. And there’s also great Eat inventories that you can give your clients. My favorite is Brad Clontz, his money script inventory. There’s a large, amazing organization called data points that actually has that online that planners can send their clients and but it gets to the money beliefs that they have, they might not even realize they have are holding. No hope it does a lot of stuff

Louis van der Merwe
is but as you were talking and mentioning children, or recall you saying that your kids are kind of growing up now. But I’m curious, what are the things that you consciously did with your children around money when they were small that other parents might miss without this training? You know,

Megan McCoy
we have some fun books like The for money, there’s been that gardener is great. I love that book. Jamie bossy has one. It’s called Milton the money dog that I love. So we have these fun books that we read about money. We also do. A small allowance is $2 a week based on chores. But what’s cool is that we do interest every week with our daughter. So we get a practice multiplication, we practice discussing, like if you leave your money in the bank, you’re making money, if you take it out, you won’t have as much money getting multiply, we also something very important to us is charitable giving in teaching our kids to be grateful for what they do have and recognizing we should help the world be a better place. So if they take money out to give to a charity, we match it. And we have a lot of discussions about all this is exciting looking west, you’re getting going to give to the charity of your choice. So those little things are a fun way to be able to get numeracy school skills, be able to talk about money and needs and wants and gratefulness. So that helps. Now, I do want to be very clear that I still get very uncomfortable at times talking. One day, my daughter asked me how much money we had in our bank account. And like all this stuff came up for me like, why do you want to know that it’s not your money, blah, blah, blah. But I had to like do all this deep breathing and be like, you know, that number doesn’t matter as much because we have accounts that we’re saving for your college, we have accounts in case something goes wrong, that we can protect our family and emergencies. And it gave a good conversation about how these multiple accounts work in synergy, rather than some number that would make sense to a five year old.

Louis van der Merwe
I’d love to hear what the response was when she heard the number. Well, that’s the fun was the relief for was

Megan McCoy
that by the time the conversation went on, she didn’t she got bored. actually made it to the number and that’s the funny thing about financial socialization is that we put all this emphasis as parents to say the right thing. They’re only listened to bits and pieces at a time it is the cumulative experience of like, is money, something that causes stress or anxiety? Or is it something we can talk about openly and have conversations that that is what is going to shape your children long term that peace and okayness think long term is what’s good. That’s so valuable

Louis van der Merwe
to Yeah, because someone having a little tiles like this pressure around getting every interaction, right. But it sounds like it’s more like this cumulative knowledge that you’re passing on to them through your interactions.

Megan McCoy
Yeah, and teaching them that you’re a person who wants to talk to them about it, that you’re there for them whenever they have questions down the road. I think that’s cool.

Louis van der Merwe
I’m very excited to have met God now. And that’s the author of The for many beers. It actually it’s once I heard that kind of structure around, there’s only four ways that you can use money and it’s spending giving, investing and saving. And it’s like, oh, wow, actually, that does make sense. And I’m using that with myself and with clients. Visit element of simplifying things so that people don’t feel alienated.

Megan McCoy
Yes, like Carl Richards the napkin. I don’t know if you guys ever seen the napkin guy he liked euros on this theory, simplistic drawings to explain more complicated experiences. His his strategy works so well, like, I think the research around physiological arousal and they’re so great ones by John Grable and Derek Lawson and Sonya looter that show that when we are physiologically aroused, meaning we’re stressed or anxious, or we’re worried, then we don’t think as clearly we’re not able to process information. We did a study recently with all the financial planning association in the US is clients and we have about 300 400 clients, all of them recorded high financial anxiety. These are the people who have more money than the rest of the general pot because we know that despite efforts to make it more inclusive, financial planning does tend to be higher wealth individuals. They also have someone who’s taking care of them, they’re doing all the right things, and their financial anxiety is high. That needs everybody’s is high, right? And so when you’re talking to your clients, that simplicity that breaking things down, that helping them recognize that money is just a facet of spending a little bit less than you make. That kind of thing really gives them the ability to listen, while they’re physiologically aroused,

Louis van der Merwe
I really wonder if the rest of the populations money, stress would necessarily be higher. You know, in our interaction to in South Africa, there’s a very big gap between the people that have and the people that don’t have. And we often see the people that don’t have as a lot more content, they tend to live happier lives. They actually so grateful for what they have. So I’m just curious to hear what your thoughts are on that. Oh, that’s

Megan McCoy
so interesting. Yeah, you know, that there’s a great article that’s called Money doesn’t make us happy. But it buys us the opportunity for happiness. And it goes into all this great research. And one of the studies that kind of hint at is there’s some studies that show thinking about money, too much tends to make us more focused on ourselves than others. And this is funny, because we talk about money too much. But hopefully, we do the second day, the anecdote, the same researcher who really led the charge in saying, you know, maybe people who are think about money, too much are too self focused. What they did afterwards was show a quick clip of some family in need some family who had little bit less some family that needed help. And immediately those people switch their gears from looking so internally focused, being a little egocentric to saying, how grateful they have for what they have, how they want to make the world better for that family, how they want to help. And so I think, if we can take the takeaway from that research line is, again, facilitating our clients to have terrible conversations, thinking about how can we link them at what they have to safety, and making the world a better place? I think that can really help decrease anxiety, too.

Louis van der Merwe
Thank you. That’s so helpful and practical, then we can actually take away. I know, as part of your work, you do quite a bit of research, what are you most passionate about at the moment?

Megan McCoy
So I’m about to do a study this fall that I’m really excited about on financial infidelity. So financial infidelity, is at the at the plainest speak is just lying by omission or lying overtly about something regarding your money. And what’s amazing about it is that stats all over the place, right? If you ask somebody, have you ever committed financial infidelity rates are like 15 to 20%. But then if you say things like, Have you ever rounded down how much you spent? How have you ever not shared that you bought something new? Have you ever not admitted that you bought something awesome, this the numbers go way, way, way up? Right? And I don’t think that means you’re bad if you’ve done that, because I think some stats show Have

Louis van der Merwe
you ever told a white lie? No.

Megan McCoy
It’s a sign of something, right? It’s a sign that you can’t be assertive with your partner, or that you don’t have the conflict resolution skills, or you have some shame about what you’re buying. Or so I think financial infidelity is is like a portal into strengthening our relationship to improving what can be better in all kinds of facets of the relationship. So I want to do a big study on that in the fall, and that’s hoping work out.

Louis van der Merwe
And so what are you expecting to learn from this or together from this?

Megan McCoy
Yeah, what I really want to know is the reasons for the financial infidelity. So I’m gonna dive into the types of financial infidelity which there’s a great team of researchers Michelle John fro who has a nice list already, but I just kind of want to expand on that one a little bit. And then I want to understand the why and what maybe they wish they had done instead, you know, or what would keep them from doing it again in the future. And that’s where I want to get into,

Louis van der Merwe
we found that sometimes it’s, it’s helpful. Just having a word for this. I’d like financial infidelity and saying, Oh, actually, yes, that is what’s happening here. I’ve spent a bit of time training around financial abuse, and a lot of our clients never realized that they were victims of financial abuse. They just thought, Oh, my ex husband was a little bit manipulative. But actually, there’s kind of this trauma that comes with that. And there’s an impact.

Megan McCoy
Yeah, absolutely. Absolutely. I had such a similar experience this year, where I was teaching a course on financial abuse and one of my lectures, and someone disclosed that they realized through the course of the lecture that they have seen something similar. And so I think you’re right, like naming it and making it more clear, so essential. I mean, so many cases of financial abuse, like you’re describing can just be slightly controlling, slightly manipulative, that still has negative impact on your emotional well being and your relational help. Another thing to think about is it in the more extreme financial abuses, though, it’s a gateway for many domestic offenders like that is a way to control your partner take their ability to leave, take their ability to escape away and so 99% of domestic violence cases have a financial abuse component. It is often the first part of the abuse cycle. We Before it gets bigger and larger and physical,

Louis van der Merwe
what would you say if someone suspects that they might be suffering from financial abuse? or have someone that’s close to them that’s suffering from his? What’s the first step?

Megan McCoy
Yes. I mean, I would love to get everybody in the therapy office, I think therapy was always seen as something that is for people who are broken in the past. And now we know therapy can just make our lives richer, can make our lives better that it is striving for what we call positive psychology that is strengthening what you are, rather than saying when fix anything is you are already good. So that would be my dream. But my, I guess, the smaller step that one can take is getting financially literate, you know, simple things like checking your credit score, knowing your logins to bank accounts, like those smaller steps of financial autonomy can really be a protective factor.

Louis van der Merwe
I’m smiling, because it’s almost like we take these things for granted. Oh, someone should be able to do that yet. If you don’t know how to do it, it can seem like this mountain.

Megan McCoy
Yes, so I was the most financially illiterate person growing up, I did not like money, I wanted to be a therapist, since I was like a little tiny kid. So like, there was no, I don’t know, in my mind, I had to save the world. And if I saved the world, and money shouldn’t matter. And I don’t know where I got them from, because that’s not true at all. But so I’m so financially literate. And I remember being like 25, and having a tremendous amount of student loans, but not knowing how to pay them. I didn’t know where my accounts were, what the password was, where they were located. And I had a lot of student loans, like it’s pretty wild. And if someone asked me to just provide them, there’s my student loan account, the physiological arousal, the stress, the anxiety, the freaking out, I would have experienced would have been overwhelming. And when I was in my grad program, I was lucky enough to work side by side with amazing financial planners. So I traditionally trained as a therapist would sit along the planner, and it had these meetings and there were so many times that my only contribution to the sessions was slowing things down and saying, Let me walk you through how you can find your tax information. Let me walk you through how to find that login, you know, that little contribution was enough to let the financial planner help all these different things. But I was there to scaffold to make them aware where the limitations of their clients may be. And I think financial planners recognizing that not everyone is financially literate, not everybody’s comfortable talking about money. It’s really, really essential

Louis van der Merwe
for such a beautiful term that you use the hours the scaffold to allow everything else to sit upon. And it feels like the human side of financial planning. And by that I include therapy I can I can include the transition as work, the coaching work, it feels like that’s now becoming the new scaffold of financial planning.

Megan McCoy
Yes, in the USA codified it. The CFP Board recently added client psychology to our education to our exam requirements. We just released a book that I hope is well received, actually getting to the skills of like, how can we get these financial planners who didn’t get a chance to have courses like love and money to understand that their couples may be coming with different views on money that their couples might not both be literate about money that one partner may need more support especially means that one partner who usually needs more support is the one who’s withdrawn and quiet and resistant. And that’s the one we should be talking to more. It’s kind of counterintuitive.

Louis van der Merwe
I can’t remember who had said but someone had this rule of thumb that you should always ask the non dominant spouse or the non dominant partner the question first, because the other one seems to have arrived. And that’s, that’s been so helpful for me in conversations when I want to try and steer it in like okay, well, we have to ask this party for the information first.

Megan McCoy
And bring that to like our earlier conversation about resistance was fascinating with coaching financial planners is that oftentimes when we have a resistant client, we tend to go with this like negative view, like what if something happened to your partner, blah, blah, that’s just going to cause their resistance to go up, because now you’re introducing more fear and anxiety. So I’d like to switch that and say, if you were able to be more of a partner around these finances, you would take some of the stress for your partner, you would be fighting for the goals you want, you would be making decisions that line up with your dreams and desires and kind of move away from the fear base, trying to motivate them to be involved to like a dream based reason to be involved.

Louis van der Merwe
So in South Africa, our financial planning profession and industry is very much revolved around insurance and it feels like the insurance and even some of it the investment space is driven by fear. It’s like if you don’t invest in this inflation is gonna erode your money or your spouse is not going to have enough money. When you find that balance between marketing fear, and actually marketing positive of outcomes, does fear still sell beta?

Megan McCoy
You know, there’s probably some kind of combination. I hope he is continuing. But one of my amazing doctoral students, Rommel strong was doing it study actually, pretty much close to Lee aligned to what we’re talking about his was about trust, but he was using three different stories to kind of sell the idea of having a trust in place one was a negative like, this is what’s going to happen if you die, you don’t have a trust place. One was just logic, here’s the benefits to having a trust. And one was, here’s all the beauty this is your family will be so much safer and better, blah, blah, and all this positive stuff as a third one, and he’s going to show those two participants and see which one is the most powerful indicator of change. I think that there’s probably some kind of combination that you need to get to. But I think we as humans, and I’m talking as a planners, now, we tend to not be very good switching tools in our toolbox, right? Like, we have this hammer, and we just use that same hammer no matter what, right? Instead of trying to figure out what’s a different strategy, that strategy didn’t work. Let me try differently. Instead, if we choose to fear base approach, instead of switching to a different type of approach, we just make it more and more scary. Instead of switching your tools in total.

Louis van der Merwe
I want to segue a little bit into that third section, you spoke about the kind of the heuristics the mental shortcuts. Yeah, like tell me, like how was that research going? Because it feels like we’ve had two decades of research around this be so many keeps on growing, but yet we still not getting it right.

Megan McCoy
Right now. I know. It’s interesting, because it is so diverse, because all the the cognitive biases that we use in behavioral finance, actually are from psychology, in their origins, or social psychology are some of the those kinds of disciplines, and so on Wikipedia, which I know as a faculty member necessarily is, but it’s actually way better than it used to be good but oh weak, a PDF, there is this amazing cognitive bias Codex, it is the most incredible thing of like, 1000s of cognitive biases, those are those mental shortcuts that sometimes work out for us. And sometimes though, there are so many, we can even stop, and we don’t know how all those apply to finances, but I promise they do. So I think it’s funny when I think about behavioral finance, I love the was it Taylor who used the word nudge? I think behavioral finance helps us, nudge your clients trick our clients into doing the right thing without having to think. And I think that is a beautiful supplement, let’s get those defaults in place where, for instance, setting up multiple counselors, their paycheck is divided into like a bunch of counts. They’re not using one big number, but rather multiple numbers. Those little mental accounting tricks are amazing. But at the end of the day, we can’t tap into our cognitive biases as well as we can in the heat of the moment. It’s only afterwards that we just said, that’s what happened because they are so unconscious, and part of our brain that is just primal and reactionary, rather than preventative or forward thinking,

Louis van der Merwe
making, what are the things we can do to try and slow that brain down so that when you’re in that moment, you actually do catch that? Yes,

Megan McCoy
I think if you have motivated clients, they can do things like, you know, having the cooldown period before shopping online, where they put everything in the cart, and then wait 24 hours, and then go back and say which of these two I really want. Those kinds of things are a great behavioral nudge, that motivated clients can do against any of the defaults. So like, everything is paid before they see the numbers, you know, including their investment accounts, including their emergency savings account. I think those are great. I mean, the single greatest behavioral finance nudge, it came out of the US anyways, that you used to have to check a box to donate into your 401k to, you know, not donate, but to put money into your 401 K. And the greatest intervention of all time with now you have to uncheck that box to change retirement forever, just making it automatically default, rather than a decision, the more we can take away decisions from clients that they don’t want to make. They don’t have to make around our finances without taking away their autonomy, the better.

Louis van der Merwe
As humans, we’re not really good at decision making. These are all his theory. But it also tells us that we probably still pretty sucky at making decisions. And then we have to make decisions in really tough times when our spouses pass away, or when there’s this massive emergency. How long is a Is it acceptable to take a break from making decisions?

Megan McCoy
You’re so right that when first of all there’s a cognitive bias called decision fatigue that we do get worse and worse and making decisions if they’re too many coupled together. And second of all, yes, when you have grief or other complicated emotions that are fueled by like multiple things at the same time, it is so hard to make the sound decisions as one time is your friend, putting off everything you can put off. Taking care of just the emergencies and kind of like triaging your finances is the right decision.

Louis van der Merwe
I think this concept of decision making partners financial planners, helping people make better quality decisions is really coming up more and more.

Megan McCoy
Yeah, I mean, there is a great study that Tonya looter just published a couple of weeks ago that people who have financial planners are happier than their relationships are better that they’re less stressed. Like, I think it is part of that faith that someone else is, is double checking my work and making sure I’m doing the right thing, it feels good to know that someone else has my back, you know,

Louis van der Merwe
I was so excited to see that. And Angie Herbers was one of the early guests of this podcast, and there’s so much that we can do just to help our clients be happier, right, and just having a safe space, I think our conversations are becoming more therapeutic. It’s not trying to be therapy, but you know, there’s a little bit of a byproduct.

Megan McCoy
Yeah, it’s almost like being a good friend, like, we don’t tend to listen in our world. And so I think sometimes, the best sessions are just really actually listening to our clients. And it feels therapeutic, just because we don’t get that anywhere else where you are still within your scope of competence by being a good listener. But it feels so different than the rest of our interactions.

Louis van der Merwe
We know you outside of your scope of

Megan McCoy
you know, I heard this great thing from my friend, Christy Archer let it and she got it for someone else. And I can’t remember the original citation. But it was this thing about doing a person lives that client check a problem Check, check in a self check. And I think this is the greatest, I don’t know what they call a canary in the coal mine way of gauging if you’re outside your scope of competence. So the client check is our course our clients are going to get emotional every once awhile to Bosque and sesamin had an article where they they interviewed financial planners, not counselors, not coaches, not therapists, financial planners and ask them how often have your clients got emotional session, and 75% of them said yes, in the last six months, my clients have cried or gotten angry or frustrated my session. So clients are going to get upset occasionally. But if your client is physically physiologically aroused, either crying or angry or frustrated, every session is time to get some support. The next one is a problem check. Of course, when you’re dealing with, like, for instance, estate planning, grief, and all these psychological concepts are gonna arise naturally. But eventually, you should be circling back to those financial issues. So if you are finding that you’re meeting with this client and never talking about finances, it’s time to make a referral. And then the last one, the self check, I think it’s the most essential that you do a check on yourself. If you are exhausted after the session with your client. If you feel like you’re, you’re thinking and ruminating about the client all the time, if you’re working harder than your clients are working in that session, it’s time to really think about making that referral and getting support for your clients and for yourself.

Louis van der Merwe
Thank you that is so valuable. You know, I hope that we get to a point where financial planners should be seeing therapists in order to help them improve and kind of I’m at that point where I’m looking to hire someone and just kind of unpack some of these things that can be helpful in our conversations. Part of my reading brought up internal family systems, and I have no clue what this is and how this fits in. Can you help me this is a very selfish question. But I’d love to

Megan McCoy
hear this. It’s so funny because my friend, Rick Kaler is really diving into it and he sees the tie in to finances so clearly. But in essence, internal family systems is one approach to therapy, where you talk about our ourselves as having parts, there’s parts of us that are strong, there’s parts of us who are scared, there’s parts of us who feel like they need a protector. And so if you’re able to recognize the multifaceted components of yourself, you can use them in a better synergy. So it’s a beautiful approach to therapy. And going back to your idea of like seeing your own therapist, I think planners would benefit so much from seeing the therapist and their own planner that I’m gonna reimburse her just coming up. But when you get to see your therapist, you can see all the nonverbals they’re doing all the different counseling communication skills they were trained in, you also are able to recognize that every therapist is slightly different so you know of this, you know, this client of mine would fit so well with us very positive, very future oriented there that’s this client over here. We really good to go back into a feeling origin examination so she would be better if therapy, you get all these insights on how therapists work. And so you get these skills that you can translate into your clients and also skills to make better referrals. I also think that’s what’s great about financial planners enlisting their own planner. So we just did a study with undergrads at University of Georgia where we had them go and see their own planner. And it was amazing than talking about it, like, what was it like to sit there waiting for the zoom to turn on how much the one of them said they felt financially naked. And I was like, that’s such a great word, but like to experience what it’s like to be a client, let’s you better empathize with the client, and lets you better recognize when your client needs some support are free to go slower or faster, or ways to make them feel more comfortable. So I think both can be beautifully powerful.

Louis van der Merwe
I want to ask you, Megan, like if someone is showing up financially naked in front of us for our first meeting, what are the ways that we can make them feel a little bit better and less exposed?

Megan McCoy
Yeah, oh, that’s so good. My friend, Megan Lurtz, has a great speaking thing that I just saw the other day when she talked about, we always, as people who understand the value of the softer skills of financial planning, the facial therapy, those kinds of things for counseling, coaching skills, we sometimes may ask questions that facilitate oversharing with our clients vaccinate. And the problem is when you overshare, you do kind of pull back, it kind of does make you not want to seek out again. And so we have to do a kind of dance where our clients know we’re there for them without making them go too fast without making them overshare before they’re ready. And so I think the idea of going slow is really really key spending time we call it joining both spending time, just helping them see you as a person see you as like listening ears, framing your work together, framing what your relationship is going to look like that at the beginning of your work with clients can be really powerful to kind of set the stage.

Louis van der Merwe
Wow, it sounds like such a delicate balance between nudging and prompting and going a little bit deeper, but then also slowing down and pulling back and creating that safe space so that they would want to come back. Because if they’re not coming back, then it’s probably not serving either one of us.

Megan McCoy
Right, right. And that’s why I think it was David ASCII I think you said like, that financial planning is an art rather than science that there is techniques and you know, each of us are a little bit different. So some of us can go faster, some of us can go slower, and you won’t know that until you get to practice more and more and, and really facilitate a space where clients can share feedback openly and honestly with you.

Louis van der Merwe
That’s so lovely. And Megan, I want to thank you as the teacher of this author of financial planning and making financial planners and their clients live better, more purposeful lives. It’s wonderful the work that you’re doing, and I wish you all the best for the future.

Megan McCoy
Thank you. You are doing amazing work too. It’s just so fun to talk to you.

Louis van der Merwe
If people want to reach out to you want to learn a little bit more about the dozens of papers that you’ve co published and published. What’s the best place for them to

Megan McCoy
do? You’re welcome to email me my email is just my name Megan McCoy at KSU. Edu that stands for Kansas State University period edu, and then also my LinkedIn profile. You’re all welcome to connect with me and I love conversations with other planners. So please reach out and good luck with everything.

Louis van der Merwe
Thank you so much. We’ll add that to the show notes and all the best.

Megan McCoy
Thank you