Client Psychology by Charles R. Chaffin

Author:Charles R. Chaffin
Language: eng
Format: epub
ISBN: 9781119440918
Publisher: Wiley
Published: 2018-02-13T14:30:00+00:00

IMPLICATIONS FOR RESEARCH AND PRACTICE

Overall, the personality and financial behavior literature reveal relevant implications for financial planners and researchers. First, themes have begun to emerge from the literature that suggest personality can predict financial behavior. Conscientiousness and extroversion are generally associated with financial behavior that is conducive to goal achievement and asset accumulation, whereas openness, agreeableness, and neuroticism tend to undermine judicious financial behavior and present unique challenges that must be overcome throughout the financial planning process. It is important to note that each personality trait is neither good nor bad; each simply represents one’s natural patterns of thinking, feeling, and behaving that tend to be consistent across time and situations (American Psychological Association, 2017; Mowen, 2000). What the research has shown is that certain personality patterns may result in less desirable financial outcomes.

For the financial planner, understanding their clients’ personality characteristics can help them predict possible challenges their clients might face when implementing recommendations; financial planners will also be able to effectively tailor recommendations to meet their clients’ behavioral and psychological needs from the beginning of the financial planning process. Understanding where challenges might arise and tailoring recommendations accordingly can facilitate a more enjoyable and fruitful relationship for both the financial planner and the client. Moreover, while dramatic changes to personality cannot be expected in the short term, research suggests that personality can shift over time (Roberts & Mroczek, 2008). Thus, it is possible for a client to adjust certain aspects of his or her personality such that his or her financial behavior can improve (e.g., reduce negative affect, improve self-control, or increase task follow-through, etc.). For example, a less conscientious client may slowly become more conscientious over time. Fortunately, as people age they tend to exhibit increased self-confidence, warmth, self-control, and emotional stability (Roberts & Mroczek, 2008), which are characteristics that primarily support financial behavior. While personality can change, Roberts and DelVecchio (2000) note that personality trait consistency reaches a peak and plateaus between ages 50 and 70. This suggests that personality changes for older adults are less likely to occur.

From a research perspective, personality provides an effective framework from which to explore a variety of financial behavior to continue to build the body of knowledge that informs practice. The Big Five personality traits have been widely documented in the literature as the foundation of personality. The Personality Psychology field is very active in furthering our understanding of personality and how these traits manifest within individuals over the life course.

Second, existing research and the 3M model suggest that a complex network of psychological characteristics explain financial behavior. Specifically, financial behavior can be traced back to broader personality dispositions, but are more directly explained through narrow traits influenced by situational forces. Personality origins can provide insight into clients’ general tendencies to exhibit more specific traits and thus provide a foundation from which to explore financial behavior. Financial planners can utilize this framework (3M) to provide holistic financial planning recommendations that acknowledge the psychological roots of behavior. Understanding these psychological

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