How to Make Your Clients Happier

By Danielle Labotka, Behavioural Scientist


When it comes to financial advising, it may seem like the best way to make your clients happy is with the Midas touch. After all, who doesn’t want their investments to turn into proverbial gold?

But King Midas wasn’t happy with his gift, and maximizing your clients’ wealth may not be enough on its own to make them happy, either.

Looking at Maslow’s hierarchy of needs, it is easy to see how money can be directly converted into the needs at the base of the pyramid—physiological needs (like food and shelter) and safety needs (like security of resources). However, money does not so readily convert itself into the higher needs like belonging, self-esteem, and self-actualization. Instead, clients may need guidance from their advisor to see how their wealth can support their long-term happiness and life satisfaction, which may be facilitated through insights from positive psychology.

What is positive psychology?

Positive psychology is the study of what makes a life worth living, and the field is interested in understanding how factors like resilience, strength, and growth can help people flourish. Though there are many ways to apply positive psychology, one of its most promising uses in financial planning lies in helping clients define and pursue meaningful goals.

In goal planning, insights from positive psychology may help clients unpack life goals (like having a meaningful connection with family) that drive their desire for more tangible goals (like buying a vacation home for family trips). In positive psychology, the PERMA framework outlines components that contribute to well-being: positive emotion, engagement, relationships, meaning, and accomplishment. Recent research from Morningstar found providing such a framework during the goal-setting process helped people shift their focus from tangible goals to life goals. In turn, these life goals can help advisors build meaningful and flexible financial plans that help clients be where they want to be.

Positive psychology may be helpful in getting clients to pursue those goals, too, by orienting them toward their strengths. For example, in one study, people were asked to list their personal strengths and how those strengths can help them achieve financial security in retirement. Compared with those who didn’t do this strengths-based exercise, people who did felt more capable in preparing for retirement, had greater clarity in their retirement goals, and had taken more steps to prepare for retirement three months out. As such, clients may be further empowered to work toward their financial goals when they can see how their strengths can contribute to attaining their goals.

There is an important caveat about positive psychology for financial advisors to note. Namely, positive psychology does not mean shunning your clients’ negative emotions (like panic during a market downturn). Not only are those negative emotions very real to your clients, but they can also affect how they act for better and for worse. Keep in mind that positive psychology may serve you well in some interactions with clients (like goal setting) but not all of them.

How can I incorporate positive psychology into my practice?

Though positive psychology is not a panacea for all that ails your clients, using positive psychology can help clients understand and pursue their goals and, in turn, feel more satisfied with their life (and with you!). Here are some tangible steps for using positive psychology in your practice:

  1. Bring positive psychology into goal-setting discussions with clients. Understanding clients’ tangible goals and life goals is vital to financial planning. To that end, we have designed a process for goal-setting; the process first incorporates a framework to help clients identify their tangible goals and then incorporates the PERMA framework to help clients identify their life goals. At the end of the process, you will have a better understanding of what your clients want to achieve with their money and why those goals will make them happier.
  2. Help clients identify how their strengths can help them reach their financial goals. Clients may be more likely to pursue their financial goals if they see how their strengths can help them do so. Take time to help clients identify their strengths by using tools such as the VIA Survey. Then, have a conversation about how those strengths can contribute to their goals. For example, a client whose strength is humor might be able to use that humor to shake off stress during rocky markets, which helps them achieve their goals because they didn’t sell off investments in a panic. This is a place where you can help clients make connections between their strengths and realize their goals they could not make on their own.
  3. Continue your education on positive psychology. We have only covered a sliver of positive psychology in this article, so continuing your own education may help you find other places to incorporate positive psychology into your practice. Consult sources from researchers in the field and experts in financial planning to expand your knowledge base over time.

In the end, clients aren’t just looking for you to turn everything into gold; they are also coming to you for emotional support. Positive psychology may help you better address these emotional needs clients have and, in the end, make you both happier.




The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.


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