Advisors’ ‘peaceful lack of anxiety in talking about money’ helps them lead clients to success, Mellan says

This is Olivia Mellan’s second appearance on the IA 25. Read her profile in the 2006 IA 25 here. Click here to view the complete list and Special Report schedule for extended profiles for each of the 2013 IA 25 honorees.

“We live,” Olivia Mellan told us, “in an adolescent society” marked by a short-term orientation, where people “don’t plan ahead and look at the whole picture.” That is where advisors can help, acting, as Mellan likes to say, as “therapeutic educators” who “walk the talk.” Since they “have a peaceful lack of anxiety in talking about money,” they are then able to lead their clients to apply the tools needed to achieve their goals.

So if that’s what advisors can do, what does Olivia Mellan do? She has been a couples therapist for decades, is creator of the “money harmony” concept, is a highly entertaining (and educational) speaker, runs multigenerational family workshops and is the author of five books with her long-time writing partner, Sherry Christie. As a therapeutic educator herself to advisors, Mellan’s influence in the industry is subtle but real. Particularly over the past few years, Mellan has expanded her Psychology of Advice column in this magazine to explore areas as diverse as the rising incidence of divorce among older people, the latest advances in brain behavior and how to help client couples with divergent expectations and needs prepare for retirement.

The theme throughout these feature stories is consistent with her writing and advice: In life, even loving people will disagree with each other, and the professional advice-giver’s job is not to come down on one side or the other of the argument, but to encourage a process where each side truly listens to the other, in a safe environment, before any decisions are made. It may sound simple and self-evident, but like most “simple” ideas it can run counter to our instincts, especially if we’re Type-A personalities who, sure of our own wisdom, want to accelerate the decision-making process because, well, we are so sure that we are right. After all, that’s an advisor’s job, right? To share your hard-won professional wisdom about money and the markets with your less wise, less sophisticated clients, and to make plans and choose investments that will benefit those clients, regardless of how those clients feel about those choices.

That gets back to Mellan’s bedrock principle of money harmony, the idea she first came up with in 1982 that people have a lifelong relationship with money that is either in balance or not, that each individual has a certain money personality, and that having more money will do nothing to restore that balance. (A re-issue of Mellan’s seminal work on money harmony is due out this year.)

In her process of researching and writing with Christie, Mellan practices what she preaches. She’s happy to admit that she has long leaned on advisors like Peg Downey, Alexandra Armstrong, Dick Vodra and Mary Malgoire to make the connection between her therapeutic insights and how advisors work with clients.

“Advisors need help,” Mellan said, in learning “how to listen to clients with patience and empathy and to help them lighten the emotional charge” around money, usually based on what clients learned about money as children, “so they can listen to the advice advisors are giving them.”

Pale imitators of Mellan’s approach have appeared, but her insights remain fresh and unique. One piece of advice she has for advisors comes from how she works with her own psychotherapy clients. “When people come into therapy, I ask them, ‘How do you feel about being here? What do you hope to get out of it?’ I think advisors should ask these same questions” because the answers will help set up the expectations for success for the planning relationship, and because, like Mellan with her clients, “you will meet them where they are.”

What about the naysayers who denigrate advisors who follow Mellan’s approach as being practitioners of only the “soft side” of financial planning? “They’re not therapeutic educators; they’re not providing holistic financial planning if they put down emotion. Brain studies show emotion is always involved in financial decision-making; people never make decisions based on their rational brain.”