Most financial advisors say that you should keep emotions and investing separate:
“Emotions cloud your judgment.”
“Emotions have no place among the pie charts and annualized returns reflected in your financial plan.”
“It’s best to compartmentalize your feelings and save them for your therapy appointments.”
But we’re here to say that this is a myth, and that emotions SHOULD play a role in money matters.
Where the Myth Comes From
This myth is partially derived from the conventional wisdom that thinking and feeling are two separate processes guided by different regions of the brain.
But modern neuroscience research has shown that those areas of our brains are actually highly interconnected by neurons that translate both cognitive and emotional messages.
For this reason, it’s nearly impossible to completely disentangle our thoughts and feelings. One pair of researchers highlighted a common experience that emphasizes this point: You may justify a car purchase by claiming you got a good deal, but the true determining factor may have been that you liked how the car made you feel.
Does That Mean We Endorse Making Panicked Decisions Every Time The Market Swings? Of Course Not.
Even when the market has our stomachs in knots, we provide much-needed objective reasoning to our clients. In fact, regardless of the market environment, nearly every big choice in our clients’ lives involves plenty of dialogue, analysis and projections to estimate how it would affect their future.
But both intuition and emotion play important roles in this process. A person’s history, their current situation, and their future ambitions influence every money decision they make; disregarding this is doing a disservice to their lived experience.
Rewrite the Rules with The Humphreys Group
Investments are so much more than just figures and statistics. They represent our security, independence, values and legacy. Some clients may view their investments as validation that they worked hard in life; others use them to support causes they believe in and give back to their communities. Some investors see their investments purely as assurance that their loved ones will remember them and live well after they’re gone.
While most advisors would prefer to focus on the analytics of the investments, it takes a special advisor to acknowledge the values behind the numbers.
We must talk more about our feelings in the context of money. We have seen that embracing our emotional side and having those pivotal conversations can lead to better financial outcomes. If you want read more about common money myths and how we can break them, download our free eBook, “Rewriting the Rules: Telling Truths About Women and Money.”
