In a follow-up to a presentation we told you about in early June by Professor Richard Taffler (see posting – “Leading academics on Freud, finance and quacks“), we stumbled upon this useful example of how the investment management community is channelling old Sigmund.
In this article, Investment News reports that “Wealth management, family office and other advisory firms increasingly are using psychology â€” and psychologists â€” to work both with wealthy clients and the advisers who serve them.”
While the story covers a more practical instance of the emerging field of emotional finance, you can see that it shares the same common theme as Taffler’s work (and also Denise Shull’s recent guest posting on AllAboutAlpha.com).
While Taffler and Shull both argue that emotion affects trading decisions, the Investment News piece shows that emotion (quite naturally) also affects the wealth management relationship. Ergo, by getting into the heads of their clients, wealth managers can better address the sub-optimal decisions they make. As one expert cited in the article suggested, within 10 years most financial management firms will offer psychological counselling.
Note to laid-off Wall Street professionals: consider becoming a shrink.