How would you feel if you learned that your financial planner, your financial coach, or your financial therapist had faced bankruptcy five times?
When Michael Kitces interviewed me for his podcast several years ago, he said, “Rick, I want to hear about all your challenges, your trials, the things you did wrong, not what you’ve done right.” I said, “Well, that won’t be a problem.” Because that financial advisor or therapist who has faced bankruptcy five times? That would be me.
I still get positive comments on that interview today. I learned the value of sharing failures years ago, from a mentor who told me, “When you’re speaking to people, don’t tell them how great you are. Tell them all your mistakes, and they’ll relate to you because you’re just like them.”
Since then I have often told clients about some of my business mistakes as a way of helping them to avoid making the same errors. Also, one of the guiding principles in my financial planning firm is the idea that “we risk losing Rick’s money first,” which basically means we don’t put a client in an investment that we’re not willing to own ourselves. It’s a matter of integrity, and it’s akin to a financial therapist doing their own emotional work.
I strongly believe in being appropriately open and transparent with both financial planning clients and financial therapy clients. Letting others see your vulnerabilities means you are aware of those vulnerabilities and to some degree have made peace with them enough to feel confident in your own humanity and humility.
This does not mean being vulnerable is always easy or comfortable. For example, one of my fears about revealing my close encounters with possible bankruptcy is that the story will be misinterpreted. It would not inspire confidence in my financial planning if someone assumed I actually went bankrupt. In truth, one important part of the story is that I faced bankruptcy five times—and every time I did not go bankrupt.
Another part of the story is that those five bad business or investment decisions spanned about 40 years of my business career. They also involved multiple businesses, since a part of me is a serial innovator and very entrepreneurial. It is also true that making bad decisions and facing financial failures is normal for individuals that build significant wealth. Despite my five near bankruptcies, I’ve been successful enough in my business ventures and investments that I could have retired at age 57. I continue to work because I really love and enjoy what I do.
I think the difference in those who succeed in building wealth despite mistakes and failures is persistence. They try again and again, and they learn from their mistakes. In my own career, I estimate that for every really bad financial decision I made, I probably have made five good ones.
In my first co-authored book, Conscious Finance, I wrote about learning from one of my mistakes that involved a business partnership. When the business was failing, I spent a whole weekend letting my thoughts around that go and feeling my emotions. I remember just lying on the floor feeling the pain and fear around everything it was going to take for me to dig out of that situation, all of the financial loss I was facing and the assets I was going to have to sell to pay off the debt.
Part of the reason for sitting with and feeling an emotion is to process it, to finish it, to let it pass. Because on the other side of a difficult feeling is typically lightness and clarity. This was true in that case. On Monday morning, I woke up with clarity about what I needed and wanted to do. My business partner wanted to continue and try to salvage the business. I was clear that I wanted to shut it down, take the losses, and move on. That’s not the decision I would have normally made at that time, but processing all my feelings of failure, insignificance, and fear had allowed me to make it. That failure, like others I have experienced over the years, helped me learn the resourcefulness to dig out of the situation, minimize losses, pay off the debts, and then carry on.
My business mistakes allowed me to experience how paralyzing a financial mistake can be, how difficult it can be just to keep going, to put one foot in front of the other. They gave me a chance to look at money scripts and burdens that were not serving me well and then to do things differently. Because, of course, financial failures are not about the money. And at this stage in my life, I am grateful for what I have learned from those mistakes.
Check out The Financial Therapy Podcast by Rick Kahler concerning this topic.