Working with the Emotional Investor: Financial Psychology for Wealth Managers (Praeger, 2016)
Emotions, not logic and reason, are what typically drive investors in making critical investment decisions. So says experienced wealth advisor Chris White, CFA in his new book, Working with the Emotional Advisor: Financial Psychology for Wealth Managers (Praeger 2016).
While popular wisdom suggests that investors make investment choices based on rational thinking, White, who has counseled hundreds of wealthy individuals, couples, and families over the last 25 years, says investing is often an emotional exercise shaped by a person’s earliest life experiences, especially those related to pain and loss. For that reason, White says effectively counseling clients about investing requires that advisors understand not only their clients’ financial goals but also their emotional make-up.
Borrowing from behaviorist theory, neuroscience, and social psychology, White argues persuasively that understanding one’s clients as emotional “systems” is key to pursuing investment strategies in line with an investor’s temperament and risk tolerance.
White’s book is filled with numerous tips, stories, and case studies, based on his extensive experience in the wealth management business. He writes in a style that makes this book easily accessible both to wealth management professionals and to everyday investors in search of a clearer path to wealth.
By reading Working with the Emotional Investor readers will learn:
- Why all investing and risk-taking by clients is emotional – driven by psychological factors such as early experiences of love and traumatic loss, and by powerful, sometimes subtle family dynamics that a child experiences early in his or her life.
- Why every client, based on their unique emotional/psychological make-up, displays a unique personality type in the context of the client-advisor relationship, and why this type can change based on perceived risk and on factors such as market uncertainty and volatility.
- The unique personality types – “Fixers,” “Survivors,” and “Protectors” that emerge when market stakes are high.
- Why advisors need to develop critical social skills and emotional intelligence to “read” their clients accurately, and to adjust their own behavior and style of client engagement accordingly.