Psychology of Financial Planning

Introduction

Successful financial planners understand one crucial thing about their clients: Personal finance and psychology are inextricably linked. If someone is not good with people, they're not going to be a good financial planner. Because when a planner gives their client advice, they are facing off against hundreds of thousands of years of human psychological conditioning, as well as their client's unique beliefs, behaviors, habits, and background. Knowledge of clients' financial psychology has never been more essential to the practice of financial planning. As technology continues to advance, making information more and more accessible to clients, there is a greater need for each financial planner to maximize their relevance through a keen ability to understand, respond, and in some cases predict, their client's behavior relative to a variety of circumstances and life events. The financial planner is no longer the gatekeeper to client data, and clients are not interested in receiving cookie‐cutter advice. The value and future of this great profession is on the human side, being able to understand each client's circumstance – financial and otherwise – so that they are adequately heard and served in their own unique way by a trusted advisor.

Getting to know your client sounds like a simple proposition: Schedule a time to meet, ask about their goals, and just listen. But, as accomplished planners will tell you, it is so much more than that. Today's financial planning is ...