When people gossip, it’s always about someone else and more often than not, there’s a comment on someone’s behaviour.
People watching or, more correctly, behaviour watching provides fodder for the chat magazines and the tabloids. This, in turn, has led to the huge growth in reality TV whether it’s the X-Factor, America’s Got Talent, Big Brother, Masterchef or Iron Chef (take your pick). The list goes on. There seems to be a delight in seeing the rawness of someone else’s behaviour being exposed especially under pressure.
But behavioural attitudes aren’t just confined to those that appear on TV. We all have them and they really only become most apparent when we are under pressure. One particular pressure that is common worldwide is that of financial pressure. Our behavioural reactions can manifest themselves in a number of ways.
Sometimes when money isn’t available for a pressing need, people can and do become extremely stressed. This is because their expectations about life and their personal perceptions about what, in their eyes, they are entitled to can create a mental stress that makes them feel totally uncomfortable.
On the other hand following the receipt of an extreme surplus such as a win on a lottery or a receipt of a relatively large inheritance people can choose to react differently. Some will rush to spend as if there is no tomorrow. Others may look to squirrel it away. In either event it may be because of a previous bad financial experience. Either reactions may hark back to their childhood when they grew up with very little or possibly too much or it might reflect a reaction to recent events such as a post Lehman’s fallout. How they react to negative experiences can vary considerably. Everybody has their emotional touchpoint when it comes to money. These touchpoints are unique to them and quite often are rarely, if ever, apparent to an onlooker.
And this is the problem that all financial advisers face. Without knowing the true deep rooted personality of the individual, one cannot start to really advise anybody on any matter, never mind dealing with money. This is why psychologists and therapists always start a client relationship by exploring the client’s personality and what brings any individual to where they are at that moment. It is only when that the realisation of the effect of past events is reached can any healing process, if needed, then start as well as setting out a foundation for the future.
Really good financial advice is similar. It needs the client to realise what in life has brought them to where they are now and how these past experiences and personal behaviours have influenced their historic financial decisions. It is only by acknowledging our past can any work meaningfully begin towards any future. Indeed, a good financial adviser is part money man/woman and part therapist without, in many cases, ever realising the latter.
Over the years many new clients who come to me for advice have assumed that I am the financial magician and that I will make their money problems disappear. The truth is I and all other financial advisers are merely facilitators to help steer our respective clients towards a better future. We may know about investment markets, the need for protection and finance as well as the nuances of specific financial products but the real work starts and finishes with the clients themselves. Unless they acknowledge their strengths and struggles both financially and personality wise, no meaningful progress can ever be made.
Einstein once said that “Insanity is doing the same thing over and over again and expecting different results.” As financial advisers we need our clients to recognise their past behaviours and while we should reinforce their good habits, we also need them to understand how some of their past behaviours may have affected their financial affairs and why they need our advice and facilitation skills.
People watching is not just something to apply to other people and comment on their reactions under pressure. Our clients also need to relate this approach to themselves before they move forward with their own financial planning.