Knowing Self Increases Financial Capability

Core to my passion is seeing people take more personal responsibility for their financial decisions. In the end this is actually key to your financial success, and overall quality life. To take more personal responsibility means increasing your financial capability. I believe there is an obligation on yourself to get the right financial education and also on your financial advisors to help you by providing it and guiding you. In the end, you need to be able to make more informed choices about the products and solutions you are buying, and not just rely on others to decide for you.

At the moment the regulators in the countries which lead financial planning such as the USA, Australia, the Netherlands, Singapore and Ireland are pushing the consumer financial capability point hard. Just recently, the Irish Financial Regulator released a “Preliminary Report on Financial Capability in Ireland June 2008″ based on extensive consumer research.

The key point that is coming out of the Irish report is that you as the consumer must develop your skills, knowledge, attitudes and behavior. To me this goes to the very core of the Financial DNA Discovery Process. To educate you about your financial behavior and to provide a framework for your financial advisor to guide you. What you will find is that when you go through Financial DNA the increased knowledge and emotional comfort will make you more confident in the decisions made. As you make better decisions success will build more success.

There is interesting research from the University of San Diego which says: 5% of your wealth comes from investments and 95% from your behavior. So what should be the core of your financial education? Learning more about products or yourself?

If you would like to see what you can learn about your financial behavior then click here. Also, you can participate in Financial DNA by clicking here.

Family Transparency

A common derailer that I have seen in many families is a lack of transparency. There is key information which is not being disclosed to other family members and, in some cases, to key people in a family business. Usually, this is caused by the holder of the information not trusting the other family members in some way. What is the cause? This is in part that person not trusting themselves and also having a desire for control and to manage outcomes. You will more often than not see this coming from the family leader who has a more naturally dominant behavioral style. You will also see this approach generally in at least one of the children. Interestingly, they expect transparency from everyone else.

Of course, there are times when it is appropriate not to disclose some sensitive information but you need to think very carefully about it. How will the other person feel?

The problem is that some of the other family members may either outright resent it when they find out. This will particularly be the case for those other family members who are very methodical and like plenty of information. Their tendency to trust is also lower. There will be others who will let it go for a few years, and then have a violent objection later when a problem emerges. Either way it does not build trust.

Whilst more open communication flows do create vulnerability which is difficult for some, it saves destructive behaviors later on which can rip a family and/or its business apart. Ultimately, this costs a lot more financially and non-financially.

One of the big points that I am bringing out in family meetings is to understand how to provide information to the different family members so there is trust. After all, trust is the currency of any family.

Organizing a Family Meeting

How can you have sound family communication if your family never properly gets together as a family unit? Why are you holding back from organizing a family meeting? Are you concerned it will not be worthwhile? More importantly, are you concerned about some hot issues that may get raised? What happens if someone gets very emotional? Will the cost be too high?

These are no doubt very valid reasons for not organizing a family meeting. However, do you want greater family unity, and hence greater family harmony, wealth and ultimately a quality life? If yes, the key then is to start planning a family meeting and hopefully make it an annual event. Remember, every family has some level of dysfunction so you need to realize that but not let it deter you from having a meeting.

In planning the family meeting, whatever your place in or relationship to the family, you need to have a positive mind-set. The meeting is more likely to be successful if every one comes to the meeting wanting to enhance family unity and achieve a positive outcome. You may not necessarily get every issue resolved so do not expect that to happen. However, if a dialogue on some key issues is opened up in a positive way then this is a great start to building family unity.

Choosing what you want to talk about as a family unit is also very important. This will somewhat differ for each family depending on the state of family dynamics, the circumstances the family in, the opportunities and the problems. Certainly, it is safer to choose areas to discuss that will minimize the potential for confrontation. This is particularly important until the family is used to meeting and handling conflict together. Once the understanding is developed the more difficult topics can be raised. You also need to ensure that the whole experience of the family meeting is warm and exciting, even if there are large and/or financial issues to discuss. Everyone should want to come and look forward to it.

If need be, consider hiring an independent family facilitator to guide you through the process.