Psychology of Financial Planning

CHAPTER 3The Environment

Consider two professionals sitting at a conference table. While they are in the same place now, dressed similarly and perhaps even working for the same firm, they come from two very different backgrounds. One grew up wealthier than the other; they are of different races; and one experienced psychological trauma that the other didn't. If you were their financial advisor, would you want to approach your relationship with them in the exact same manner? Without working to better understand their clients' backgrounds, many planners could make a number of erroneous assumptions based on their initial behaviors or appearance in your first meeting. Given their different backgrounds, how might their priorities and worries differ? Could there be potential triggers that might elicit some emotion in one of them but not the other? What assumptions might you make about their worldviews based on their appearance, dress, or demeanor? Between any two clients, we can see these dramatic differences in backgrounds and life experiences manifest throughout the financial planning process. There are a variety of strategies a planner can use to help build a solid, trusting relationship with clients and to help them meet their financial goals. But before we dive into the strategies it's important to understand our clients and how their environment has impacted their financial psychology.

We are immersed in an environment that shapes our thinking and experiences around money. ...