{"id":22615,"date":"2024-10-14T22:08:33","date_gmt":"2024-10-14T22:08:33","guid":{"rendered":"https:\/\/www.thinkadvisor.com\/2024\/10\/14\/the-future-of-financial-advice-looks-a-lot-like-life-coaching-daniel-crosby\/"},"modified":"2024-10-14T22:08:33","modified_gmt":"2024-10-14T22:08:33","slug":"the-future-of-financial-advice-looks-a-lot-like-life-coaching-daniel-crosby","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2024\/10\/14\/the-future-of-financial-advice-looks-a-lot-like-life-coaching-daniel-crosby\/","title":{"rendered":"The Future of Financial Advice Looks a Lot Like Life Coaching: Daniel Crosby"},"content":{"rendered":"
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Behavioral finance uncovered investors\u2019 weaknesses. That\u2019s helpful, as long as their vulnerabilities aren\u2019t subjected to exploitation. Regrettably, that isn\u2019t always the case.<\/span><\/p>\n

\u201cThere\u2019s a dark way to use behavioral finance that emphasizes the foibles of the individual investor en route to selling them expensive products and telling them that that\u2019s the only way forward,\u201d Daniel Crosby, psychologist and chief behavioral officer at Orion Advisor Solutions, argues in an interview with ThinkAdvisor.<\/span><\/p>\n

The latest book from Crosby, the bestselling author and ThinkAdvisor 2024 Luminaries<\/a> finalist who focuses on the intersection of mind and markets, is \u201cThe Soul of Wealth: 50 Reflections on Money and Meaning<\/a>.\u201d While its theme is how love and money coexist, the tome also offers practical financial solutions.<\/span><\/p>\n

Only 33% of Americans have a written plan, the psychologist writes. That\u2019s because \u201cpeople take a, sort of, ostrich mentality\u201d with their money, he maintains in the interview.<\/span><\/p>\n

With automation\u2019s increasing capabilities to create financial plans and design portfolios, together with clients\u2019 need for their financial advisors to understand them, \u201cthe role of an advisor will look a lot more like a life coach,\u201d forecasts Crosby, rather \u201cthan someone who deals strictly with people\u2019s money.\u201d<\/span><\/p>\n

Here are excerpts from our conversation:<\/span><\/p>\n

THINKADVISOR:<\/b> \u201cWall Street needs you to think that you\u2019re incompetent so they can sell you junk. Wall Street depends on your believing you\u2019re bad with money so they can offer you expensive products and services to address your perceived weaknesses,\u201d you write. Please explain.<\/strong><\/p>\n

DANIEL CROSBY<\/b>: Certainly, one of the many sales tactics of finance has been to erode people\u2019s confidence in their own ability.<\/span><\/p>\n

There\u2019s a dark way to use behavioral finance that emphasizes the foibles of the individual investor en route to selling them expensive products and telling them that that\u2019s the only way forward.<\/span><\/p>\n

[In contrast], an empowering message helps investors become aware of their weaknesses, which do exist, but simultaneously arms them with practical solutions and products for moving forward.<\/span><\/p>\n

When an advisor uses financial jargon, the average investor thinks they know everything possible about investing; and they, the client, feel stupid. Why do advisors speak in jargon without explaining it?<\/b><\/p>\n

I think one of the points of jargon is to create distance between the professional and the client. That\u2019s true of other businesses and the medical field too. <\/span><\/p>\n

The best advisors educate and empower their clients.<\/span><\/p>\n

You write that many financial advisors tell you they wish they had earned a psychology degree instead of a financial one. Surprising since many don\u2019t want to pay attention to \u201csoft skills,\u201d insisting that their job is about the numbers. Your thoughts?<\/b><\/p>\n

That\u2019s changing rather rapidly. Accenture did a study a few years ago asking what people wanted from their advisors, and the No. 1 answer was \u201csomeone who understands me.\u201d<\/span><\/p>\n

And McKinsey did a white paper, \u201cOn the Cusp of Change: North American Wealth Management in 2030<\/a>.\u201d<\/span><\/p>\n

It said that in the future, financial advisors are going to be counselors because the process of creating a financial plan and designing a portfolio are increasingly easy to automate. <\/span><\/p>\n

So the role of an advisor will look a lot more like a life coach or life quarterback than someone who deals strictly with people\u2019s money.<\/span><\/p>\n

That\u2019s already big, and I think it\u2019s going to get a lot bigger in years to come.<\/span><\/p>\n

You must be \u201cbold\u201d when you invest. \u201cBeing risk-averse with your portfolio today could be the biggest real risk over the decades,\u201d you write. So even if someone has reason to invest conservatively, they should be bold? <\/b><\/p>\n

People are prone to take less risk than is prudent. That\u2019s the boldness I\u2019m speaking of. We\u2019re prone to a natural risk aversion [to keep the] status quo.<\/span><\/p>\n

I\u2019m not suggesting to be foolishly bold. But the average person should be bolder than is probably comfortable for them because our natural tendency is to be conservative.<\/span><\/p>\n

Given all the uncertainty about the election, the economy and geopolitical strife, why aren\u2019t folks moving more to cash instead of investing in the market at record levels, as they are?<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"

Behavioral finance uncovered investors\u2019 weaknesses. That\u2019s helpful, as long as their vulnerabilities aren\u2019t subjected to exploitation. Regrettably, that isn\u2019t always the case. \u201cThere\u2019s a dark way to use behavioral finance that emphasizes the foibles...<\/p>\n","protected":false},"author":1,"featured_media":22616,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[1],"jetpack_featured_media_url":"https:\/\/blog.lifeinsurance-orleans.ca\/wp-content\/uploads\/2024\/10\/the-future-of-financial-advice-looks-a-lot-like-life-coaching-daniel-crosby.jpg","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/22615"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=22615"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/22615\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media\/22616"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=22615"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=22615"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=22615"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}