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The 6 Personality Traits of Successful People

Money is what makes all your clients’ priorities possible, Jean Chatzky, financial editor for the Today Show, told FPA Annual Conference attendees earlier this month.

And if they’re constantly worried and stressed about it, they’re probably going to stumble upon what seems like more than their fair share of problems. Though this might sound a little like wishful thinking Chatzky claims it’s true: more happiness will lead to more money for your clients.

Chatzky outlined the six traits of successful and wealthy people that she identified through her research. Chatzky conducted a study of 5,000 people and found that personality traits are just as important as good financial habits.

Here are the six factors Chatzky found were key to success:

Happiness or optimism. Happiness is key to success—just not too much of it. Among Chatzky’s study participants, those who were too happy (a 10 on a scale of 1 to 10, 10 being blissed out) weren’t as successful as those who were an eight. The eights were better problem solvers, they lived longer, were more successful, earned more money, had higher amounts of emergency savings and received greater evaluations from their colleagues. If your clients are too happy, perhaps find a way to make them a little more cognizant of reality; but if your clients are miserable, figure out how they can make themselves happier.

Resilience. Thomas Edison “failed” hundreds of times when inventing the lightbulb, but he didn’t see it that way. He said he succeeded in proving that hundreds of ways didn’t work. People who have resilience can overcome problems in their work, personal and financial lives more readily than people who aren’t resilient.

“The best news about resilience is that you don’t have to be born with it,” Chatzky said.

Connectedness. People who had built up a good amount of social capital—connecting with people—were more successful than people who did not have good connections. These people made time to connect with people despite their “busy” schedules. Successful people not only made time to connect with friends and family but also to forge new relationships.

Passion. Having passion about a career is what moves people from a life of financial struggle to one of financial success. The people who have passion just want it more than others. These people are not just pursing a job or even a career, they are living and doing what is their calling. Figure out what your calling is and live your passion.

Financial Habits. Successful people are habitual savers, have appropriate debt, are able to level emotions and have a long-term plan, Chatzky said. Chances are your clients have better financial habits than the average American (most of whom are terrible savers), but it’s never a bad idea to reinforce their good habits.

Gratitude. You always want more if you’re not grateful for what you already have. Chatzky said gratitude is key among successful people and as a result of them being more grateful, they are also more generous (giving to people and charitable causes), less depressed and healthier.

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Ana Trujillo Limón is associate editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.

 


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Life After the Storm

Hurricane Harvey devastated Texas and came for parts of Louisiana in late August. More than 51 inches of rain inundated Houston, according the National Weather Service. USA Today reports that more than 30,000 people have piled in to Houston shelters.

Now that the storm waters are starting to recede, the full scope of the damage is starting to come into focus. According to AccuWeather, the total damage is expected to reach $190 billion, almost four times the amount of damage caused by 2005’s catastrophic Hurricane Katrina. Insured losses, according to CNBC, are expected to reach $20 billion.

There is a long road to recovery ahead. Here are some tips to keep in mind as you begin to assess and address the damage to your businesses and to your clients:

Take care of you first. With 475 members in the FPA of Houston chapter, no doubt you are suffering yourselves. Carolyn McClanahan wrote in Financial Planning that you must help yourselves before you help others. But when you do have some semblance of starting to recover and you’re ready to reach out to your clients.

Let your family, friends, and clients know you’re OK. You can Tweet, post on your firm’s Facebook or Twitter page.

Jonathan Swanburg, CFP®, an adviser affected by Harvey, wrote in Financial Planning how when he reached out to his clients, they only wanted to ensure that he was safe.

“When I sent out an email on Friday morning praying for our client’s families and explaining our firm’s contingency plans for flooding and loss of power, none responded on the business issues at hand,” Swanburg wrote. “Instead, they all expressed concern for my team and our families.”

Make sure they’re OK. Call them when you get a chance. Many of them might not answer but try until they do. Ensure they are physically and mentally alright before tackling the concrete financial issues. The emotional toll of this catastrophe will be just as high as the financial toll.

Many might need extensive repairs not covered by their insurance. According to the Washington Post, majority of the homeowners in areas hit hardest by Harvey don’t have flood insurance. Citing data form the Federal Emergency Management Agency, the Washington Post reports that only 17 percent of homeowners in the Texas counties hardest hit have flood insurance.

“Unfortunately, most families in Houston do not have flood insurance and are going to be struggling for a very long time,” Swanburg wrote.

If your clients are among those without flood insurance, look into federal disaster relief aid (go to DisasterAssistance.gov), U.S. Small Business Administration disaster loans, or home equity loans. Be advised that homes must first be repaired before a home equity line is approved.

Help with the insurance processes. CNBC reports that insured losses from this storm could reach up to $20 billion. And it will likely be some time before adjusters can get in and assess the damage. Advise clients to make only repairs that prevent further damage until adjusters can come. Have them take pictures of everything. Save all receipts for materials, housing, meals, and storage. Encourage them to file claims as quickly as possible. Keeping receipts will also help with claiming a casualty loss on their tax returns.

Utilize your contacts to expedite getting your clients the help they need. McClanahan said that insurance agents are overwhelmed during disasters. Adjusters work on a first-come, first-served basis, so if you have connections in the insurance industry, utilize them to better serve your clients.

“While Harvey was a catastrophe for millions of people,” Swanburg wrote, “it was also a reminder that at its best, financial planning is a uniquely personal business built around wonderful people and lifelong relationships.”

If you are an FPA member set to renew this month and were affected by Harvey, FPA will extend your membership while you’re recovering. If members affected by Harvey have registered for FPA Annual Conference, refunds will be issued if you are unable to make it. Contact Member Services for more information, 1-800-322-4237 or email MemberServices@OneFPA.org.

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Ana Trujillo Limón is associate editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.


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Use These Behavioral Tips to “Science” Your Clients on Saving

According to a 2017 study from the Employee Benefit Research Institute (EBRI), only 61 percent of responding American workers reported having saved money for retirement, with 56 percent of respondents reporting they are currently saving (at the time of the survey) for their golden years. Only 18 percent of respondents feel very confident that they are doing a good job preparing for retirement, with another 38 percent feeling somewhat confident.

As a financial planner, this isn’t news to you, though it may be more disappointing for you than most given your line of work. As someone on the front lines of trying to help people understand the value of saving for anything later in life, you know it can be an uphill battle.

In this post, I want to provide you with a few tools to help your help clients get past some of the standard pitfalls around saving, using the very science that generates the issues as your weapon. Helping clients understand the reasons behind why we make excuses to avoid saving may be just what they need to overcome these challenges.

Excuse No. 1: I don’t have enough money to save.

For some investors, this is a valid excuse. If the money’s not there, it’s not there. For others, however, it may be the type of Catch-22 situation that you can help attempt to reverse simply by understanding behavioral tendencies. In other words, the old adage telling us that “the more we make, the more we spend,” is actually deeply rooted in behavioral science.

One of the more useful qualities we have as human beings is our ability to quickly adapt to changing circumstances. But some experts like James Roberts, professor of marketing at Baylor University, believe that our adaptability may hinder us in terms of saving and spending. He uses the example of a college student who wants to get out of his or her dorm, then moves into a rental house but gets tired of having roommates, then dreams of a small house, then a bigger house (and on and on from there) to show that our minds very quickly move on to the next step when we attain a goal or desire.

Another reason behind our penchant to overspend and under-save is simply that we may have seen it from our parents and them modeled the behavior. In other words, over time, we have fostered and intensified these bad habits which, as we all know, can be extremely difficult to break. However, some researchers believe that we have the ability to change almost any habit through repetition via a series of mental processes.

While you (and by extension, your clients) can be the judge of whether this might work for you, I would recommend picking up the book The Power of Habit by Charles Duhigg, which takes a serious look at habit formation and the science behind why we do what we do. Besides the interesting case studies and frameworks, the heart of Duhigg’s theory centers on the importance of simply understanding that habits can be broken:

“Once you understand that habits can change, you have the freedom—and the responsibility—to remake them. Once you understand that habits can be rebuilt, the power becomes easier to grasp, and the only option left is to get to work.”

The point? Clients may be, in some ways, relieved to hear that the negative behaviors that keep them from saving money are not totally their fault (thanks a lot, science), but an equally important part of the message is that there are ways to fight to overcome these ingrained habits.

Excuse No. 2: Retirement (or other savings goals) is/are just too far in the future to focus on today.

I was meeting friends at the National Western Stock Show in Denver a few summers ago, and when I arrived, I realized that I hadn’t purchased tickets (and as a result, probably could have reached up and touched the roof from the nose-bleed seats I had to grab on-site). My immediate thought was, “How did you not think to do the one thing you needed to do prior to attending that event?”

According to a recent study, part of the answer (beyond my own struggles in staying organized) may be that I made the plans too far in advance for my brain to plan for that contingency. This story dovetails well with one of the most common excuses for failing to save for retirement (or other goals)—investors just don’t have the wherewithal to plan that far ahead. If it’s difficult for us to plan for an event a few months down the road, remember that your clients are looking at planning 30 or 40 years into the future.

According to Dale Griffin, associate dean and professor of marketing at the Sauder School of Business at the University of British Columbia, we can look at “temporal construal” and “loss aversion” as potential behavioral biases that make it difficult to make good decisions about our future. Griffin explains “temporal construal” as the tendency for far-off events to be mentally experienced differently than closer events.

“Events or ideas far off in time are thought of in abstract and general terms, with an unavoidable overlay of optimism; so thinking about yourself (or your children) in 40 or 50 years creates a mental image that is akin to pondering a vague, general, overly rosy idea rather than a detailed individual with real problems,” Griffin wrote in this Slate article.

In the same vein, studies on the theory of “temporal discounting,” or the idea that individuals prefer more modest immediate rewards to larger potential future rewards, have shown that we have trouble seeing future events in clear focus and difficulty in attempting to imagine what our future selves will look and act like. One can see how these types of mental blocks can affect our ability to take saving for the future seriously in the present.

“Loss aversion,” according to Griffin, is essentially the idea that humans are more likely to think about potential “losses” than potential “gains” in the long term. In other words, we are programmed to be more worried about future debt than what we might “gain” by saving for retirement, which may result in attempting to pay off our mortgages or student loans more quickly, at the expense of building a retirement account.

However, the idea that repetitious activities in the present, such as monthly mortgage or student loan payments, can help our minds focus on making decisions to solve long-term challenges in the present, can offer a glimmer of hope from a savings perspective. Specifically, the idea that providing ourselves with short-term rewards or benchmarks (instead of trying to visualize a single “number” or long term goal), may be helpful in building a saving habit for the long-term, and can at least provide a place to start (or something to hang our collective hat on).

In addition, these findings may help you help your clients look at the tendency to not save enough with a fresh perspective, and to consider fresh solutions. Instead of beating themselves up because they failed to meet their savings goal for the third straight month, they could try something more constructive and potentially even fun.

For example, you may recommend that they download of the many free face-aging apps available for iPhone or Android. AgingBooth and FaceApp are two of the more popular applications that use alogrithms and neural-network technologies to show us what we might look like when we’re much older. Although the accuracy of the imagery is certainly up for debate, I can attest that seeing my face aged years into the future was a disconcerting experience and provided a surprising dose of perspective.

Perhaps these applications give you a unique opportunity to break through the “temporal discounting” barrier and make the idea of aging more real for your clients. MerillEdge, in partnership with Bank of America, was one of the first to launch this type of application in 2014 (called FaceRetirement), and according to Bank of America, 60 percent of the nearly 1 million people who used the app chose to learn more about retirement and beginning to plan for the future.

Or, because the causes we have discussed have roots in behavior, perhaps finding a few easy-to-consume, investor-friendly articles to share with your clients on behavioral science will help provide some useful insights that they just didn’t have before. While we can’t say the same for all financial topics, it is an extremely interesting part of what you do as a planner and has the potential to engage a wider audience.

Excuse No. 3: I can’t save money because I lost too much in the last crisis.

There are certainly situations where this might be true, and if that’s the case, your client is in good hands working with a planner like you. For many others, and especially individuals in younger generations, the statement above is a prime example of the “sunk cost fallacy,” the very same behavior that kept me sitting in the theater during the fourth installment in the Transformers franchise instead of walking out after the first 20 minutes.

A “sunk cost” can be defined as any cost (not just monetary, but also time and effort) that has been paid already and cannot be recovered. The “sunk cost fallacy” is an extension of the human behavior of “loss aversion” mentioned above, in that we are programmed to focus more on the costs we have already accrued (and that we can never get back) than the future experience we are putting our time, money or effort toward.

Thus, the more we invest in something, the harder it may be to let it go (even if it turns out to be a terrible investment). I’m sure that every one of your clients can think of a time where they continued to stick with something for the sole reason that they had already put a lot of money or effort toward its completion – we all have. And to be clear, sometimes that can be a good thing (i.e., finishing a degree, completing a rigorous fitness program, climbing a difficult peak, etc.).

However, the “sunk cost fallacy” can become an issue with saving money, because subconsciously, our minds may be thinking about the money we have lost in the past and urging us to try to get that investment back. As you are well aware, this can encourage risk-taking and other behaviors that have the potential to cut into the portfolio your clients have worked so hard to build.

Conclusion

If this was easy, Amazon wouldn’t have 105,000 results on the search term “behavioral science.” The human brain is a powerful tool, and as such, each of the behaviors I mentioned here will not be easy to counteract.

Because these behaviors are all propagated by the mind, simply understanding the “why” behind our struggles to focus on the future is an important place to start. Learning how these behaviors may affect them in a saving capacity is only the first step for your clients—the next will be helping encourage them to put in the effort on a daily basis to overcome these obstacles.

Your clients are facing an uphill battle, but there’s nobody better than you to help guide them.

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Dan Martin is the Director of Marketing for the Financial Planning Association, the principal professional organization for CERTIFIED FINANCIAL PLANNERTM (CFP®) professionals, educators, financial services professionals and students who seek advancement in a growing, dynamic profession. You can follow Dan on Twitter at @DanW_Martin.