How does the right side of the brain differ from the left side - and why does any of this matter for financial advice?
Turns out advice and psychotherapy might be linked. And this is something startup advice firm Six Degrees is exploring.
The founders believe many wealth conversations rely far too much on logical and arithmetic thinking coming from the left side of the brain, and not enough on emotional and creative thinking, which is controlled by the right side.
Yet it is commonly accepted that managing money can be emotive and the industry has also been busy making links between mental health and money.
So, how can the industry make the most of what psychotherapy has to offer when it comes to giving advice?
According to Vicky Reynal, financial psychotherapist and author of Money on Your Mind, psychotherapy is "exactly where irrational money behaviours can be decoded, understood and therefore change."
She says: "Our stubbornly hanging on to one stock instead of diversifying investments could be about an anxious personality or a fear of making choices; our excessive risk-taking could be about an unconscious desire to seek punishment, or to prove to ourselves that we are ‘special’, either based on past (usually childhood) experiences; and a couple stubbornly clinging onto their different views on how/how much money should be invested could be playing out a power dynamic that could have been about any subject but found its expression in money.
"What needs to be resolved isn’t the money conflict, but the power struggle sitting behind it."
A new approach
Advisers Katherine Waller and Ollie Saiman believe there are valuable insights psychotherapy can offer for the advice process, for instance when it comes to preempting client responses. It can also help advisers to recognise and respond properly to neurodiverse clients.
With their new firm Six Degrees, which launched six months ago, the former RBC Wealth Management seniors have set out to approach advice in a different way, whereby a wealth strategy only makes sense once the true purpose of the wealth has been determined.
Financial planners and life planners may say 'that's what I do'. But while it is true that many planners dig deep to ascertain their clients' motivations for growing wealth, there is still a difference, say Waller and Saiman.
For a start, most conversations are still around products, says Waller. Whether it's to sell the best product or the product that best meets the client's needs and objectives, it's still about the product, "it is not around feelings".
This means "people make decisions based on actually things they can't control," she says, "the only thing they can control is how they're going to feel about it."
