Financial Advisors: What’s Your Money Philosophy?

I find it interesting that when I ask financial advisors to describe their philosophy about money, few are able to succinctly define theirs. This inability of advisors to be able to articulate a philosophy really shouldn’t surprise any of us, I guess. I don’t recall it ever being a significant consideration in any of the industry courses that I’ve taken. Notwithstanding this lack of industry and educational support for developing a money philosophy – mine is that everything we do for clients should help with their subjective well-being – it seems to me that it’s just good business to be able verbalize a higher calling to what it is we do. 

Certainly, most advisors are looking to improve their clients’ wealth through investment planning, tax planning, risk management, debt management, retirement planning, estate planning and more. But to what end? As noted, my end was in support of my clients’ well-being. All of the different services that I provided was to be in support of helping them achieve that well-being. And though I intrinsically understood this to be my philosophy early on, I myself couldn’t verbalize it coherently, in my early years in the business.

It wasn’t until I began studying Positive Psychology, and all of the empirical research around money and happiness, that I actually put any significant amount of time into thinking about my own money philosophy. I started by reading dozens of research papers on the subject. I even had my MBA students do the same as part of their Personal Finance course curriculum – and then I graded them on their research reviews (good for them, good for me). But it wasn’t until I read Elizabeth Dunn and Michael Norton’s book, Happy Money, The Science of Happier Spending (Simon & Schuster, 2013), that I learned to better articulate what I meant by helping clients’ enhance their subjective well-being through their use of money.   

Dunn and Norton’s book is basically a meta-analysis on the decades of research that has gone into deciphering what makes people happy in their relationship with, and their use of, money. The book concisely describes the five key methods of using money to make us happier:

  1. Buy Experiences
  2. Make It a Treat
  3. Buy Time
  4. Pay Now, Consume Later
  5. Invest in Others

I won’t spoil your own reading of their book by going any deeper into these five key elements; suffice it to say, however, that they gave me the “how” of my own money philosophy.  Money can bring you more happiness – more subjective well-being – when you use it to buy experiences over things, to enjoy a treat, to buy more free, fulfilling, time…and so on.

So, yes, investment planning, tax planning, risk management, debt management, retirement planning, estate planning and more will help your clients amass more wealth. But to what end? The research tells us that more wealth beyond a very moderate level does little on its own to improve our happiness. It’s understanding how we use the money we earn and the wealth we accumulate that can add to our happiness and well-being.   

For me, the five key elements of Happy Money have made it easier to conceptualize and articulate my money philosophy. Great money management, along with these Happy Money spending strategies, enable financial advisors to help improve their clients’ happiness and well-being. If you haven’t done so yet, enjoy the read, and live your money philosophy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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About the Author: Tony Ramos

Tony Ramos is a seasoned expert in business funding and real estate investment, with a remarkable journey spanning over 20 years. His expertise in flipping properties and implementing the buy-and-hold strategy has positioned him well in the real estate investment sector. Tony's profound understanding of financial strategies extends to teaching individuals and businesses how to become debt-free and leverage the power of LLCs for funding. For insights, mentorship, or collaboration opportunities, Tony can be reached at Connect with him to unlock the potential of smart financial strategies and embark on a path to financial success and freedom.

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