Today’s financial landscape is experiencing a renaissance that affects both the client and advisor. Stocks can be traded for zero cost, computers are very capable of designing and implementing efficient portfolios, and overall management fees continue to compress. And yet, the service model used to combat these changing industry forces has largely remained the same.
There exists a significant opportunity for financial professionals to challenge this shift by introducing the science of positive psychology into the service model. Positive psychology is a science that focuses on what is right with an individual, not what is wrong. It studies such things as well-being and the role values and strengths play in creating a good life.
There is much to be learned from this science for developing service models that provide direction for positioning the client and their money in ways that cull out true client concerns and provide optimal solutions. When applied toward the financial domain, it can provide perspective on issues regarding life and money giving guidance for how the portfolio can be used as a tool for creating authentic desired life outcomes.
It Starts With Well-Being.
The very foundation for creating the right client experience starts with just that—the client. By using well-being (personal and financial) as the measurement, the advisor better understands what is truly on the client’s mind. What keeps them up at night, or what concerns them while they are driving their car down the freeway, can be a better gauge for offering solutions than advisor directed anchoring for what they should have concern for. While the financial professional does have valued knowledge for the land mines to avoid, they would be even more effective if they first understand what the client’s perceptions are before offering additional expertise to the situation. The relationship stands to flourish when solutions are congruent with preexisting concerns.
These items can easily be extracted by using a well-being index that measures both personal and financial well-being. Most only take 5-10 minutes to complete and follow a simple multiple-choice format.
The index also provides a measurement for the on-going success of the relationship. In the end it’s not about the advisor telling the client that they are doing a good job because of this or that. These things may be necessary, but it’s more important that the client observes that their personal and financial well-being has improved through their relationships with the advisor. It is this kind of authentic measurement that the advisor should strive for.
Smarter Goals and Better Relationships Through Strengths And Values
Periods of life transition provide the best opportunity for financial advisors to shine. Often these transitions are connected with significant financial implications. Positive psychology tells us that we experience more success, are happier as individuals, become more empowered, and create states of “flow” when we utilize our strengths and connect our values to our life and the activities we engage in. By utilizing a psychometric strengths and values survey, the advisor can help the client better reflect on “What’s next.” Whether it be a transition of empty nest, recent divorce, pre-retirement, or a millennial wanting to connect their money to personal values, insight gleaned through these tenants of positive psychology provides virgin opportunity for understanding clients better, creating better client goals, and ultimately creating a new, more successful curve for success in the relationship.
A process including the science of positive psychology can provide a better approach for positioning the advisor as a partner that understands their client and how their money can be an essential tool for creating better well-being and ultimately a better life. Afterall, the client isn’t usually saying, “Give me the best return possible at the lowest fees.” Rather they are saying “Show me you know me and show me you care about me and I will be your client for life.”