In these unprecedented times, learning in community can provide engagement and encouragement. Here at RobustWealth, we embrace that sentiment wholeheartedly. Last month I hosted the second installment of our RobustWealth Roundtable series. My distinguished guest was Dr. Joy Lere, a psychologist and professor who works with professionals at the intersection of behavior and business. That afternoon, the mind was top of mind.
Joy began by sharing her experience working as a clinician and consultant. In her years of practice, she has observed that money is intimately and irrevocably connected to all aspects of our lives. Money can be thought of as the canvas upon which many hues of our personality are splashed. Through behavioral coaching, individuals come to recognize, not resist, this notion. Improving our relationship with money may positively and profoundly affect our overall wellbeing.
This relationship is complex and easily influenced by outside factors like market volatility, political tensions, and economics at the micro and macro level. Over time, we come to see history repeat itself. From a psychological standpoint, Joy explained that when we experience something new, we learn a lot in the short term, a little bit in the medium term, and not as much in the long term. In the moment, it may feel as though we’re experiencing an indefinite phenomenon. Eventually, the intensity fades and we once again see familiar cycles of human nature.
Joy also shared that we can examine cycles of human behavior in the everyday by way of “choice architecture.” Nudges, as championed by the likes of economists Richard Thaler and Cass Sunstein, are a type of libertarian paternalism designed to grab the attention of our autopilot brain, providing positive recommendations and reinforcement. In our current age of decision overload, it may aid organizations to offer these nudges and default clients into the best options, depending on their personal financial goals. Remember, all advice should be given in adherence to a fiduciary standard.
In order to present this caliber of advice, Joy encourages advisors to recognize when a client may need professional guidance extrinsic to their practice. For example, the presence of a mental condition such as depression, anxiety, or compulsive buying necessitates a collaborative care approach between specialists. This is especially important today, with the current pandemic leaving in its path of destruction unforeseen levels of financial anxiety. We want our clients to meet their goals and we accomplish that by first meeting them where they’re at.
As we look to the future, it can benefit the financial services industry to be bullish on behavioral economics. This field of study continues to expand, showing opportunity to enhance the impact of advisors and investors. Knowing this, professionals who are mindful to stop, ask, and listen can provide more value to their clients. Amidst a crisis, there is opportunity to be a hand to hold and a voice of assurance. After all, we’re all human.