Key Topic for Successful Planners: The Psychology of Financial Planning

Financial planning is an inherently emotional process for many clients. Creating and achieving financial plans involves identifying a client’s personal goals, which are influenced by a client’s mindset and emotional behaviors. Financial planners must understand what the client wants and why – including the influencing factors – in order to evaluate all the paths that the client can take to successfully achieve their desired outcomes.

Furthermore, financial planners must also recognize how their own attitudes, values and biases can impact their client relationships and services. An understanding of this collective psychology – the client’s, the planner’s, and the influencing factors – facilitates better communication and better outcomes between the planner and the client. This understanding can enable financial planners to ideate more solutions for their clients.

As certain parts of financial services become automated, financial planners with a firm grasp of psychology can continue to differentiate themselves. An article from WealthManagement.com highlights the growing understanding of this crucial element of client relationships: read the full article here.

Understanding the factors influencing client mindset, behaviors and decision-making – and the complex interplay between client psychology and planner psychology – is crucial in dispensing the right advice and providing personalized service. That’s why CFP Board updated its Principal Knowledge Topics for CFP^® professionals to include a Psychology of Financial Planning domain.

Learn more about how the psychology of financial planning can improve communication, relationships and results from a broader overview on the CFP Board website and by getting your copy of The Psychology of Financial Planning book today.