Having the ‘money talk’
Local financial planner Lori Sackler tries to destigmatize the taboo
Why does a young woman planning to become a pianist suddenly change her major to business and finance?
For Lori Sackler of Tenafly, who holds a master’s degree in music, the decision simply made sense.
“I lost my mother when I was in graduate school,” Ms. Sackler said. “It was a defining moment for me. I needed to be financially independent and create a new path for myself.”
Ms. Sackler first earned a master’s degree in business, became a CPA and a CFP, and then earned a CIMA designation at the Wharton School. (CIMA is the Certified Investment Management Analyst certification program.) She said that in addition to her own need for financial security, she saw a bigger need for sound financial advice and guidance.
She decided to do something about it.
Now a financial adviser and senior vice president and senior investment management consultant at Morgan Stanley Wealth Management, where she leads the Sackler Group, Ms. Sackler — who is also a longtime board member at the Kaplen JCC on the Palisades in Tenafly — noted that women comprise less than 20 percent of the practitioners in her field.
“It’s been that way for some time, but we’re trying to change it,” she said. “Morgan Stanley understands that they’ll have better success in transitioning wealth and retaining assets after the death of the traditional male client if they can relate better to women, who not only inherit the assets but now already control 40 percent of the U.S.’s wealth — and women financial advisers are well-suited to relate to the female client.”
There are, she said, “fairly big gender differences” in dealing with the issue of money, which research links to differences in brain physiology. “There are differences in how women plan, in risk tolerance, and in personal communication styles,” she said. Women “want to talk things through and be listened to.”
Ms. Sackler, author of “The M Word: The Money Talk Every Family Needs to Have About Wealth and Their Financial Future” and now “The M Word Journal,” said that statistics show that people who engage in financial planning — especially those working with a trained professional — “are more optimistic and confident and have less anxiety and fear.” Quoting John Lennon, “Life is what happens while you’re busy making other plans,” she stressed that the planning process is not static.
Times have changed, and we must change as well, she said. For example, as responsibility for retirement falls increasingly on individuals and employees rather than on companies, “the onus is on the individual to save more.” Some clients have sought help in managing their savings right out of college or on getting their first job. “It’s the power of compounding,” she said. “The longer the interest is compounded, the greater the nest egg.” But, she added, for many it’s more common to seek advice “when faced with big decisions or life events.” These may include changes in financial circumstances, retirement, marriage, remarriage and merging families, caring for an older loved one, or estate transfers.
Not all the news Ms. Sackler delivers to her clients is good, and not all clients take her advice. “I’ve seen people make emotional rather than rational decisions,” she said. “They make mistakes,” like the clients who used their savings to help buy homes for their children and then, when they suffered a financial reversal, were in a bind. Still, she said, “for the most part, I work with those looking for third-party advice and for whom I and my team can have a meaningful impact. Working with good advisers can help avoid problems.”
Ms. Sackler — who with husband Michael has two grown sons, Henry and Eliot — is the creator and former host of the radio show “The M Word” on WOR. Her goal, she said, is to “destigmatize the most taboo of topics, and provide guidance for the discussions that will preserve family finances and relationships and serve as the basis for better communication and closer connection. “
In her new book, she provides families and their advisers with the tools they need to conduct the money talk successfully. Using a step-by-step decision tree, she presents a detailed road map based on a five-step plan.
“The ‘M Word Journal’ presents a road map,” Ms. Sackler said. “It deconstructs the process to guide the reader through life’s transitions while focusing on three takeaways: Identifying the information they will need, defining the ‘how to,’ including determining the obstacles keeping their families from having productive conversations and planning, and providing guidelines to pick the right third-party professionals to help while creating a process that is repeatable.”
Ms. Sackler said that having enough money for retirement seems to be people’s major concern, even when they have sufficient resources to carry them through. “It’s based on consumption patterns,” she said, calling it “a humbling experience” to inform a family of limitations on future spending. Factors such as inflation, particularly in health care, are also of concern, “though this is a bigger issue for those on a fixed unearned income. Inflation over time can become a big obstacle.”
One problem in our society, she said, “is that we don’t discuss the importance of financial literacy. Kids are pretty smart. They see how we spend, how we use our money, and how we save it, but we don’t always talk to them about the topic. If there’s a disconnect, they see that too.”
“Millennials are more informed,” she continued. “They’ve lived through 9/11 and two economic downturns; they’ve seen their families struggle; they have unprecedented debt. They’re more like their grandparents than their parents. They’re very cautious and they’re not particularly trusting of institutions.”
In general, though, “there’s a problem talking about money,” which often is rooted in issues of control and trust. But the reasons are varied and can be hidden below the surface. “First, it may be cultural — it’s impolite to talk about it,” she said, a taboo dating back to our founding fathers, reflected in our language and national character, which is both materialistic and democratic at the same time. Second, there may be an evolutionary component where it’s perceived as a threat.
“Third, there are gender differences, cited above. And fourth, every family has a money history with defined personalities that can be charted across generations. They’re deeply embedded.”
While financial planners must have the requisite financial skill set, it doesn’t hurt if they’re also adept as “psychologists, and you need to understand your clients and their psychology,” Ms. Sackler said. “It’s very personal. You have to dig deep.
“In both my work as an adviser and my personal life, I’ve seen family stress around money decisions, tearing apart both a family’s finances and personal relationships because there was not adequate planning and communication. There’s a 70 percent failure rate in transferring wealth across generations.” With $59 trillion to be distributed over the next 50 years, that’s a large problem. And, she said, breakdown in communication is the biggest reason.
Ms. Sackler’s books have been written to provide guidelines for overcoming obstacles in communication, whether due to gender, generational differences, or other issues. On Wednesday, June 1, the JCC in Tenafly will host an interactive dialogue featuring Ms. Sackler and WNBC-TV reporter Jen Maxfield. The two will explore the issues involved in having successful family conversations that affect major life transitions.
Ms. Sackler said she wants those who attend the June 1 meeting to “walk away with the initial tools they need to move forward.”
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