Financial empathy matters because it creates a safe space where people can express their financial vulnerabilities without the fear of shame.

Empathy, as defined by the Merriam-Webster dictionary, is “the action of understanding, being aware of, being sensitive to, and vicariously experiencing the feelings, thoughts, and experiences of another of either the past or present [or future] without having the feelings, thoughts, and experience fully communicated in an objectively explicit manner.”

If you had to read the definition above three or more times, out loud and slowly to fully grasp its meaning, you are not alone. I, too, have spent a lot of time trying to understand the depths of empathy. And, even after establishing a comfort level with its meaning, I’ve spent several years clumsily fumbling around trying to place my knowledge into practice. In other words, I’ve failed my way into learning how to be more empathetic.

Those failures, however, have been the catalyst for extraordinary growth in my mission to find ways to improve the financial well-being of underserved populations.  Initially, I thought that individuals simply needed the right information to make better economic decisions. Just educate someone on the components of a credit score, or provide helpful tips and tools on how to budget and track expenses. And voila—all is right in the world again! That was until I started realizing that many of the clients I was working with were not following through on my recommendations. Back then I would have been ashamed to admit this, but I began to blame my clients—not my thought process—on their failures.

I had externalized my shortcomings to such an extent that I started doubling down on my suboptimal way of doing things. I never questioned whether or not tracking expenses was an appropriate tool given a client’s strengths and weaknesses. My focus was on how I could explain the idea better. I never thought about why someone would be reluctant to establish financial goals. Why wouldn’t they? Who doesn’t plan for their future? My clients just needed to be reminded of all the good that awaited them if they stayed the course regardless of structural barriers, beliefs, and attitudes about money.

When I reflect on those interactions with clients, it was never about them. It was about me. I failed them because I was creating a bridge towards financial well-being that was deeply flawed by my unconscious biases and the belief that I was well within my right to pass judgment on those who would not listen. This sense of moral authority absolved me of any obligation to grow professionally. If they did not get it—well, that’s on them, right?

Despite what I would have claimed back then, I was not creating a space—physically, yes—but not an emotionally safe environment that nurtured growth. I am not just talking about a safe space for my clients. I am talking about a safe space for myself. If I could not be vulnerable enough to admit to or see my shortcomings, how could I ever expect a client of mine to do the same?

Presently, there are many books and journal articles that share insights on how to identify and address the cognitive bias of clients. What about the cognitive bias of financial practitioners? If needed, how do we encourage behavioral change in financial coaches and counselors?

My proposed solution: Financial service providers must embrace the vulnerabilities they wish to see in their clients.

Establishing financial empathy is just as much about us—financial service providers—as it is about the people we passionately serve. That said, during my upcoming presentation on why financial empathy matters, I plan to share several deeply humbling stories where I have lacked empathy and what I learned about myself along the way. These “I failed” moments have had a profound impact on my ability to now create the types of safe spaces where one can express their financial vulnerabilities without the fear of shame. It is in these spaces that bridges can be built to withstand the weight of our work as we carefully guide our clients safely to the other side.

I look forward to you seeing at AFCPE 2018!

Michael G. Thomas Jr. is an Accredited Financial Counselor® and 4th-year PhD Financial Planning Candidate at the University of Georgia. He has co-created and facilitated financial literacy programs for kids and adults as well as given a TED talk on the importance of financial empathy. Michael co-hosts an NPR affiliated radio show, Nothing Funny About Money, and provides financial counseling services to underserved populations.  His research focuses on understanding what factors influence financial well-being in low to moderate-income populations.

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