There are plenty of stereotypes about how certain people behave around money — stereotypes I've often seen contradicted in my experience as a financial planner. Let me debunk some of these money myths for you.
Myth One: All millennials are mooches.
The 30-year-old client came in for the first time. She asked a question that, if you were to listen to the financial media, no one has ever asks. “Can I pay off the student loans my parents took out for me without any tax consequences?”
Say what? Young people sending money to their parents?
I’ve never heard that mentioned in my almost 20 years in the industry. According to the myth, millennials are unemployed and live rent-free in the basement, while expecting their parents to pay for pricey destination weddings.
My sensitivity to what I hear in the media on this issue started when, to prepare people’s taxes, I started asking clients if they had lent anyone money who hadn’t paid them back.
That’s when I started hearing it. “Hasn’t paid me back? Will never pay me back? Yeah, that’s my Dad.” It’s not common response, but I heard it several times a year.
In fact, I’ve heard about just as many parents trying to mooch off their kids as the opposite. My conclusion: If you have more money than other people in your family, there is a small chance you’ll deal with a mooch — um, I mean, a relative with boundary or entitlement issues.
Myth Two: Women care more about spending money than investing. Men care more about investing than spending.
Perhaps this was true once upon a time. In my practice, however, I regularly see women who are more interested in money, saving, and investing than their husband. Conversely, I see men who love to spend — sometimes more than they know is wise — and enjoy the finest in life.
Recent research shows that while men might score better on a pop quiz about interest rates and bond prices, men and women show no difference in investing and spending behavior.
Myth Three: Financial advisers work only with rich patriarchs.
When I first started in financial planning, I sat next to an established planner at dinner. He described his ideal client: “Men over sixty who have made a lot of money who just want to make sure their families are taken care of.”
“Oh, “ I said, “you work with patriarchs!”
We laughed at my joke. However, in my male-dominated industry, I dare say this is the ideal client of a lot of advisers. I call the pursuit of these clients "Searching for Victor Newman," after the ultra-rich paterfamilias who drives his family nuts on The Young and the Restless.
Working in the industry has assured me that patriarchy is on the wane. I’ve only had one client who said that “taking care of his family” was what he aspired to, and I’ve talked to hundreds of people about their goals and values.
My experience is that both men and women want to make sure that their kids and partners are taken care of both financially and emotionally. They work on the project together.
This bias gives consumers the impression that advisers only want to help Victor Newmans. Here are three organizations that help both advisers who aren't hunting for that client and consumers who want to meet them:
- National Association of Personal Financial Advisors, or NAPFA (napfa.org)
- Garrett Planning Network (garrettplanningnetwork.com)
- Alliance of Comprehensive Planners, or ACP (acplanners.org)
And my answer to the client in the fortunate position of paying back her parents? After consulting with an attorney on her specific situation, I told her to go ahead.
Bridget Sullivan Mermel helps clients throughout the country with her comprehensive fee-only financial planning firm based in Chicago. She’s the author of the upcoming book More Money, More Meaning. Both a certified public accountant and a certified financial planner, she specializes in helping clients lower their tax burden with tax-smart investing.