Myth #2: Emotion and personal values should be kept separate from money and investing

Print This Post | Published in: Blog, Financial Myth Busting Series, Get Smart |


Most financial advisors will tell you that emotions and investing are two things best kept in isolation. Emotions cloud your judgment, they say. Emotions provoke irrational behavior and have no place among the pie charts and annualized returns on your financial plan. Best to compartmentalize your feelings and save them for your therapy appointments.

We might be surprising our peers in the industry when we say this, but here goes: the idea you’re your emotions should remain separate from money and investing is a myth.

This myth is partially derived from the conventional wisdom that thinking and feeling are two separate processes implemented by different regions of the brain. It shouldn’t be difficult to detach yourself from your emotions if you just turn off that part of your mind for a few minutes, right? Well, modern neuroscience research has shown that those areas in our brain are actually highly interconnected by neurons that translate both cognitive and emotional messages.[1] For this reason, it’s nearly impossible to completely disentangle our thoughts and feelings, try as we might. 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, when the determining factor may truly have been that you liked how the car made you feel.[2]

Now, does that mean we endorse making panicked decisions every time the market swings? Of course not. Even when the economy has our own stomachs in knots, we’ve surely provided much-needed objective reasoning to our clients. In fact, regardless of the market environment, nearly every big choice in our clients’ lives involves a good deal of dialogue, analysis, and projections to estimate how it would affect their future. But it’s important to acknowledge that there is an equally important role for intuition and emotion throughout 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.

Perhaps nobody illustrates this point more eloquently than psychologist Jonathan Haidt. In his book, The Happiness Hypothesis, he asks us to imagine an elephant, which represents our emotional side, and its rider, our rational side. The rider, perched atop the elephant, holds the reins and seems to be in control. She excels at thinking long-term, beyond the moment. But this control is precarious because the rider is so small physically, relative to the elephant. Anytime the elephant disagrees with the rider as to which to direction to take, the rider will lose because she is completely over-matched. This happens every time our elephant chooses instant gratification over our rider’s long-term goals: we overspend, sleep in, risk too much, procrastinate.

But the elephant’s essential strength is that it provides us with much needed motivation. Emotions like love, compassion, sympathy and loyalty prompt us to take action on behalf of ourselves or others. Besides, when the rider is left to her own devices, without the resolve of her elephant, she’ll go nowhere. This happens when find ourselves consumed by analysis paralysis, overthinking, or just lacking the enthusiasm or courage to take the next step.

Here’s the deal: you need both. Our rider provides the planning and direction and our elephant provides the energy. Both are crucial. Both are necessary. A reluctant elephant and a rider living in her head can ensure that nothing changes. But when they move together, change can come easily. So many investors – especially female investors – are told to ignore their elephants. We love this analogy because it demonstrates how focusing on emotion can be such a powerful tool for positive change.

It’s helpful to identify with both our rider and our elephant in nearly every financial conversation, but especially when we talk about investing. Why? Because investments are so much more than just figures and statistics. They represent an investor’s 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 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.

So, what can we do to overturn this notion that investing and emotion are divorced from one another? For us, the answer is obvious: talk more about our feelings in the context of money.

In Our Experience:

  • As advisors, we believe that expertise and empathy both have a role to play in money matters. Anyone who focuses on one at the expense of the other is presenting a false choice.
  • We have seen that self-reflection leads to self-knowledge, which leads to self-confidence, which in turn leads to better decisions and timely implementation.
  • It’s not just about feeling good. That’s important, of course, and we want as much of that for ourselves and our clients as possible. But we’ve also seen that embracing our emotional sides and having those pivotal conversations leads to better financial outcomes.

Our Advice to You:

  • Whether you’re setting personal or financial goals, consider the power dynamic between your elephant and your rider. Do you need to unleash the power of your elephant? Or is it time for your rider to pull back on the reins a bit?
  • Consider working with a financial advisor who shares this approach and who is willing to tackle these issues with you. There are a range of “discovery” methods and tools that advisors use to frame the process and the discussion. We are big fans of Money Quotient, a non-profit that offers financial advisors tools and training to help and inspire clients to look inward to maximize resources and live purposeful lives. You can find such an advisor here.
  • Join! We regularly host Conversation Circles for women who are interested in straightforward and authentic discussions focusing on the important non-numerical aspects of personal finance. This is a chance to talk with other women about what matters, to discover ways to apply our unique strengths to our finances, and to share our stories, experiences and collective wisdom.  Our circles are structured and facilitated, and include time for personal reflection and building community. We explore and discover and share – but have exercises that lead to concrete actions steps too. You can learn more here, and let us know if you’d like to join us.

Ready for a deeper dive? Give us a call if you have questions or would like to talk – we’re here to help.

What’s next?  Stay tuned for Myth #3:  Women are more risk averse than men.


At The Humphreys Group, it’s no secret that we revere the many ways women today are breaking through gender stereotypes. Lately, we’ve been especially fascinated by stereotypes that permeate discussions about women and money. These phrases probably sound familiar: “Women aren’t interested in investing. They lack confidence about their financial decisions. When women do invest, they’re too risk averse.” By and large, these – as well as many other commonly accepted notions in finance, by the way – are all myths.

That’s why we’re writing this series of articles busting myths about women and money, and shining a light on the data that disproves them. We’re also sharing what we’ve learned from our work with clients, and offering some thoughts on what we can all do to re-direct the conversation from myth to truth.

[1] “Emotion, cognition, and mental state representation in amygdala and prefrontal cortex,” CD Salzman and S Fusi, 2010

[2] “Emotion and cognition,” Michael de la Maza and David Benz, May 2015