The emotional benefits of financial advice
It’s always challenging to measure abstract things. Quantifying humour, love or freedom isn’t easy, as it’s often subjective and defined by an individual’s experiences. However, it’s important to investigate the link between our finances and emotions because they impact all of us. Today, we’ll be focusing on the emotional benefits of financial advice.
So what’s most important?
Vanguard has researched and ranked the most important human-led interactions investors value from an adviser.
At number one, they are looking to develop a connection and relationship with their adviser. In a time where so many areas of customer service are now without human interaction, it’s important to connect with a professional on a human level when it comes to something as important as finances.
Empathy towards personal situations and needs was next, followed by feeling listened to and understood. Others included feeling understood, gaining trust and having the investor’s best interests at heart.
Why is emotion so important when it comes to money?
Given that financial actions are often heavily based on logic, it’s important to dig deeper into why emotions play such an important role.
The silver shekel appeared in the middle of the third millennium BC. It was the first example - unlike Sumerian barley before it - of a currency with no inherent value. You couldn’t eat it and it was too soft to make tools with. It represented a giant leap in human psychology. Not only was it needed practically to keep up with the evolution of economic activity, such as the increased sophistication of trade, but it also represented an awareness of universal fairness.
As Yuval Noah Harari states in Sapiens, ‘money is the only trust system created by humans that can bridge almost any cultural gap, and that does not discriminate on the basis of religion, gender, race, age, or sexual orientation.’ Therefore, just as love and guilt impact us, so does money.
It’s impossible to pinpoint the place where money ceases to be an object and becomes intertwined with emotion. This will be different from person to person. However, it is widely accepted that money has deep ties with emotion, and that’s part of the reason why - as social creatures - we value real human interaction when it comes to financial advice.
Increased confidence, less anxiety, more control
A good financial adviser can help improve confidence when it comes to financial decision-making. This is achieved through providing us with better knowledge, awareness and support.
This sense of confidence when making financial decisions often has a knock-on effect when it comes to feeling more in control of the future. A better understanding of financial problems can lead to reduced mental health triggered by financial stress.
Final thoughts
Financial advisers can support more than the numbers in your bank account. It’s part of the job of the makeup of a capable financial adviser to promote trust, confidence and dignity in the conversations with clients.