Although privacy experts may argue against the need for retirees and investors to disclose this information to their advisor, I believe that mental, social and physical details could help an advisor develop an appropriate asset allocation model. Advisors may also find this information useful in segmenting clients and prospects.
For example, after a steep market drop like we experienced last August and September, would you rather call a client who has an active sex life, recently met with some old friends or just left their volunteer role at the pet shelter, or chat with a client who's bored and subsequently checks their account balance three times a day? Which kinds of clients do you have or would you rather have? Those with a focus beyond their net worth are more likely to tolerate such a difficult or negative period instead of reacting emotionally and either pulling out of the market at the wrong time or switching advisors.
Don't be surprised if this approach to asset allocation also becomes a model for profiling clients. Forget classifying clients by their net worth or whether they're a "Driver" or "Amiable." Instead, imagine segregating clients based on their sexual activity, network of friends, propensity to volunteer, or at the very least, blood pressure, cholesterol and blood sugar levels. While this may seem controversial, the reality is when building a profitable business do you want your niche to be grumpy retirees whose business income may last five to ten years or healthy, happy clients with a life outside of their net worth and a business relationship that could last in excess of 20 years?
Assessing the effects of sexual activity, friendships and health on risk tolerance and integrating that information into a suitable asset allocation may be outside the realm of traditional financial planning now. But I believe advisors may soon be calling their client's doctor and therapist rather than just their CPA and attorney to create the ideal retirement plan and asset allocation. Eventually, risk tolerance questionnaires may look a lot more like an insurance application, making them a more comprehensive and involved process.
Robert Laura is the president of SYNEGOS Financial group, co-founder of RetirementProject.org, creator of the Laddered Dividend Portfolio, and author of Naked Retirement. He can be reached at [email protected].