Posts Tagged "financial adviser"
May 11, 2021
Psychology Added to CFP Certification
Financial advisers have no shortage of clever strategies to dispense to their clients. The tricky part is getting the psychology right.
Human beings have all kinds of hang-ups about money. Presumably, someone who’s walked into a financial adviser’s office has broken through the first barrier to getting help: denial. But even then, blind spots and fears can get in the way of a client choosing or executing a financial plan, even if it’s clearly beneficial.
To that end, psychology is being added to the educational curriculum – along with the longstanding topics like risk management, tax planning, and investing – required for advisers to get certification as a Certified Financial Planner, or CFP.
Money “is a very emotional topic,” said John M. Loper, a CFP and director of professional practice on the CFP Board. That, he said, is a compelling reason for addressing clients’ psychological issues head-on: “If you can’t connect with your client, it’s going to be difficult for them to take your advice.”
The idea came out of feedback the CFP received in a 2019 study, but COVID-19 pushed the issue to the forefront, he said. The psychology curriculum will include managing crises, such as pandemics and stock market drops, that have severe financial consequences.
Wells Fargo’s Michael Liersch, who has a PhD in behavioral finance, said that giving financial advice is challenging because some people are uncomfortable even starting a conversation about money. In families, it’s often a point of contention between husbands and wives or parents and children. Talking about money risks exposes big differences in how it should be used, and the conversations can turn negative.
“People think it’ll be disruptive, so they don’t bring it up,” said Liersch, head of financial advice and planning for Wells Fargo. …Learn More
January 29, 2019
Are We Able to Judge Financial Advisers?
Let’s get this out of the way first: the vast majority of financial advisers would not take advantage of you.
But that doesn’t eliminate the problem of discerning whether an individual adviser can be trusted. About 7 percent of U.S. advisers have misconduct records in civil or regulatory proceedings. If someone draws an unlucky card and picks a bad one, how would they know?
In certain situations, they might not. A new study finds that various things can trip people up and make them trust an adviser who is giving out bad advice. These influences included a good first impression of the adviser. And one way for an adviser to make a good first impression is by initially confirming the client’s own views on investing before introducing poor advice.
The subject of this study – judging the quality of financial advice – is important at a time workers are carrying a heavy load of responsibilities for managing their 401(k) accounts, and the accounts are becoming more critical to their retirement outlook.
The adviser study was conducted by an international group of researchers. Their online experiment was done in Australia, where employers are required to provide workers with a retirement savings and investment plan – Superannuation Accounts – similar to 401(k)s.
Trust is tricky to evaluate, and the researchers put a lot of thought into designing the experiment to minimize flaws in the results. They asked nearly 1,300 Australians to evaluate advice online about four investment topics. Under each topic, one adviser presented good advice, while the other presented bad. The researchers varied the order for presenting the good and bad advice to the participants.
They generally had a good sense of when they were getting good advice. But there were exceptions: …Learn More
About Squared Away
Learn more about our blog and its writer, Kimberly Blanton, a former Boston Globe reporter.
