Why Financial Psychology is Important to Financial Advisors

No matter what kind of financial advisor you are - whether you’re a financial planner, accountant, mortgage lender - you encounter common challenges related to your clients’ behaviour. All advisors frequently encounter the following issues:

· Watching clients engage in financial behaviors that are not in their best interests.

· Having clients not follow through on their financial plans.

· Facing resistance from clients when providing financial advice.

To help clients avoid undermining their own financial goals, it is crucial to gain a better understanding of their upbringing, background, and beliefs about money. However, the primary obstacle to learning these insights about a client is time. As an advisor, you typically have limited contact with your clients, often only a few hours a year, and during that time you must fulfill various other obligations (I’m looking at you Compliance!). By collaborating with a specialist in Financial Psychology who can meet with your clients, you can easily gain a deeper understanding of their financial behaviours and motivations.

Photo Credit goes to Carl Richards at the Behavior Gap