The lesson here is twofold. Firstly, humans are risk averse. Every single thing we ask our clients to do is psychologically hard. We should never forget this or lose sight of the difficulty of what we are asking them to do.
Secondly, we should take it upon ourselves to model taking intelligent risks for our clients by seeking them in our own lives. Think of the most meaningful things that can happen in a person’s life—starting a graduate program, having a child, taking a chance on love, founding a business. Every single one of these actions is rooted in risk and uncertainty. By experiencing and understanding the nature of these risks ourselves, we can better guide our clients through similar challenges.
6. We will never have enough. We know now with a great deal of certainty what makes people happy. And it’s not money, but rather:
• working for something bigger than self
• getting a little better each day
Money can be a vehicle for making each of those things happen, but it is never the primary driver of meaning and joy.
One of the occupational hazards of our work is that money can become too real, too important, and too large in our minds. Years dedicated to mastering financial planning and investment management can inadvertently elevate money to an unhealthy level of importance, often resulting in personal misery.
We must remain clear-eyed about where money plays a role in our happiness and be wary of equating monetary fulfillment with true meaning. Money is neither the root of all evil nor the source of all happiness. By recognizing its proper place, and teaching our clients to do the same, we enable the pursuit of a more fulfilling life.
7. “How” is easy, “why” is hard. While most advisors are highly skilled in financial management and portfolio maintenance, the client’s priority lies in their personal “why.” Research has shown that investors who have a clear mission that informs their investment strategy are more likely to outperform their peers.
It's not uncommon for advisors to mistakenly equate complexity with effectiveness, concentrating on the “how” rather than on the client’s why. We need to reimagine our purpose and remember that one of the most powerful things an advisor can do is to help clarify their clients' values and keep them front and center throughout their financial journey.
Financial planners possess the profound ability to shape lives positively. By supporting clients in defining their “why” and integrating it into their planning, we enhance not only their financial decisions but their overall well-being. Financial journalist Jason Zweig's perspective reminds us that behavioral finance is both a window to view the world and a mirror for self-reflection. As we enter a new year filled with opportunities, let us commit to serving our clients with diligence, honesty and clarity. We have the unique skillset to make a lasting, beneficial impact on our clients' lives and those of their families for generations. Let's use this powerful gift wisely and for the greater good.
Daniel Crosby, Ph.D., is chief behavioral officer at Orion Advisor Solutions.