Webinar The psychology of financial advice

(00:04) Hello, good morning. Thank you so much for joining this inaugural session of Money Mindshift Week. I'm Tom, I head up Money Mindshift. And just to explain very quick what this is, money mindshift is a educational campaign at Aegon, our mission is to help people live their best lives. This is the, the way we teach people how to live their best lives. We call this money mindshift. You're perhaps all aware of the term money mindset. And money mindset suggests that the way we think field behave around money is set, but we call it money mindshift to suggest that it can be shifted right the way we feel, think, behave around money. How should it be shifted? Well, in a way so that we acknowledge that money is a tool, a tool to help us fund the lives that we wanna live.

(00:54) And we believe that advisers play a really important role here as well. And that's what we're bringing to life in Money Mindshift Week among other things. And in this session today, we are looking at the psychology of financial advice. As I said before, this is the first session of a number of sessions, and I will pave for the way for some of the other sessions that are up a bit of housekeeping. I'm happy to take questions along the way. I will look at the q and a section in transition points of this webinar of this, of this session today. And if that's okay, I suggest we just get started. So what I brought to the table as an agenda is these things here. So I want to reflect briefly on the difference of logical problems versus psychological problems.

(02:00) And the clue that I'm giving here is that there is logic and method and structure in the way that we feel, think, behave, and so on, and that we can sort of unpack this and that this is worthwhile unpacking. So when looking at the logics in Psycho logics, I want to look at different components. I want to look at instincts. I want to look at meanings. I want to look at the psychology in the market cycle. I want to look at the psychology of future thinking, some implications in here on how to think about goals. And lastly, I give you some very concrete ideas of how to get started. And these may be even slightly controversial ideas of how to get started when they are perhaps a little surprising. So, the learning objectives are here. This is CPD content. And the CPD certificates will be disseminated.

(03:04) You will find them in the q and a section of this window here towards the end. The only other thing I wanted to say was that many of the things I'm talking about here are things that I learned in conversations that I've had with guests on my podcast called The Money Mindshift Podcast. Some of those snippets of conversations I will bring into this session today. But others can be found still on the podcast. So, just to plug a few Brian Portnoy, for example, he spoke on how to build wealth, and Brian is a trainer over in Chicago who's training financial advisers on positive psychology, behavioural science, what that means on wealth planning. John Dunkley, who is now a trainer at Plannex Next Gen, he joined the podcast on how to be happy and how to build financial plans that consider what we know from Positive Psychology about happiness and how to find happiness.

(04:13) Dan Haylett, he is one of the guests as well. He's at Money Mindshift Week. He was on the show for an episode called How To Spend. So you get the idea, you get the picture. Many of those insights that I'm talking about here in this session, I have learned myself from guests on the podcast. So just to plug, if you find this sort of material, this insight here, interesting, then go check out the podcast as well. Then without further ado, let's go into the session. And I wanted to begin with logical problems versus psychological problems. And here, I chose this as a starting point here which is of course just projected savings balance on a 4% withdrawal rate. And an adviser, when they present this to a client, they want to tell a story along the lines of, you'll never run out of money.

(05:14) So the adviser looks at this and they look at the media, the probability bands, the long-term compounding, the robustness of the model – all of this – and what they see is a narrative of stability. A story that says across thousands of scenarios, your plan holds up and your portfolio will remain sustainable. But what the client sees is something different. They look at this and see the widening shapes, the uncertainty, the colours, the possibility of low-end outcomes, the shifting path of the future – and they see a narrative of vulnerability, a story that asks, why is there so much variance, and what if I end up in the part where things go wrong? So the point here isn’t to say that this is a bad graph and that you should avoid it. The point is that the graph only works when you understand that advisers and clients interpret it through completely different lenses.

(06:19) They are psychological lenses. And unless you bridge this gap, the story that you think you’re telling is not the story that your clients hear. So here we have this simple contrast of logic versus psychology. Logically, you think the numbers tell the story – that it’s all mathematically sound. You think rational information, and the way it’s presented, leads to rational decisions. Better models create better behaviour, and so on. But psychologically, you begin to acknowledge that a client’s history, their beliefs, their fears, and their emotions all shape how the story lands – not just the numbers on their own. You begin to recognise that it is not the numbers that create a sense of safety, but whether a client feels understood with regard to what drives their decision-making.

(07:23) So it's better connection that creates better behaviour. And I will speak about how trust, empathy, psychologically insight, et cetera, how all that drives change. Here's the first snippet of a conversation that I've had with Daniel Crosby in the podcast. This was an episode called How to Be Good With Money. Daniel is of course, a leading psychologist, behavioural psychologist over in the United States. Also Chief Behavioural Officer at Orion adviser Solutions. He has written the Behavioural Investor amongst other things, and now, more recently, the Soul of Wealth. And I asked him this question, what does it mean to be good with money? And I thought that was a beautiful framing that paved the way quite nicely for the argument that I'm about to lay out. So I play this very quick. I wanted to ask you this quite general question, I suppose, what does it, in your mind, what does it mean to be good with money?

(08:25) Well, I think we almost have to begin with a counterexample, because the way that most people think about being good with money is strictly in a technical sense. Being good with money, in most people’s minds, means knowing how to budget, knowing how to spend, save, and invest – and that is indeed a piece of it. But the whole premise of your work and my work is that there’s a world beyond the technical aspects of money. And being good with money entails using money to gain insights into your own behaviour, and then using those insights to create a life that allows you to express your gifts and live a life that only you can live – a life of meaning and purpose.

(09:18) So I really like this. This is exactly the contrast I’m speaking to – that yes, to be good with money requires a set of technical knowledge and technical skills, but it also requires a deep understanding of instincts, emotional drivers, the context you operate in, your vulnerabilities, and how all of this shapes what you do and what you want. So with regards to logic versus psychology, I wanted to begin with a deep dive into instincts. And the first instinct I wanted to bring up was FOMO. I’ll let you read the story of James yourself, but I’ll tell you something about the psychology of FOMO. The fact is that your brain is wired to notice opportunities that others are taking. That’s an ancient survival instinct. In early tribes, when you joined others who had found food or resources, that increased your chances of survival.

(10:23) And today, of course, the same instinct that fires when someone else makes money. So what happens is this FOMO creates urgency because your brain confuses financial opportunity with a threat of being left behind. And the primitive brain inside your brain that interprets exclusion as danger. And historically, as I said, if you were not part of a feast, you risked starvation. So it was productive, it was constructive. Now it simply feels like you're losing out and you're perhaps losing out financially. So, bear this in mind that people mostly, this is, this is really quite important to understand. Mostly people, they share wins, not losses, . Your friends, your colleagues, all of them, they are much more likely to tell you of wins than losses. And that's why your brain gets a distorted picture often of who's succeeding and who's getting more opportunities and so on.

(11:21) So the logic behind this instinct of formal is that it feels logical, . It feels logical to clients because the emotional brain is applying ancient rules to modern markets. Everything, everyone is doing it. So it must be safe. They're winning. I'm losing. If I don't act now, I'll fall behind and joining in, that keeps me part of the group. That's what is what is being instinctively driven and suggested. We come back a little bit on FOMO, we'll pick this up later on, why this is relevant, for example, in times of market volatility, okay? Here's a second case study, and I, I let you read this and I give you an explanation of the instinct of herding. Again, very, very important to understand much of how we feel, think, behave around money. Herding is of course, what happens when you take financial action simply because others around you are doing them .

(12:20) And it's not because of your goals or because of your risk profile or because of your long-term plan. Again, like formal, more herding is an ancient behaviour that is rooted in survival wiring, . So staying with the group once increased your chance of living today as well. It's by and large a good instinct. It's not always one that serves you well, I mean, very, very concrete example here. Just the other day, I asked my children whether other kids at school are also not getting changed when they do PE. But the point here was that I was of the impression it was only my children who didn't change for PE. Actually, turns out they tell me, no, we all stay in our school uniform. So anyway, this is the herding instinct in practice, .

(13:14) So you’re using what others are doing as an indicator of what the right or potentially wrong behaviour is. The point is that herding is a useful instinct, but it also increases your chances of making poor decisions – particularly poor investment decisions. So, for example, when everyone else is rushing toward a particular investment or away from a falling market, the emotional brain gives a powerful signal that joining them is the safest option. And the logic is quite simple – if the group is moving, something important must be happening. Your clients will feel as though they don’t want to be left behind. So it’s a powerful instinct that can hijack the part of the mind designed for quick, survival-driven decision-making.

(14:10) And lastly, I wanted to speak to the instinct of social status and relative deprivation. So again, I’ll let you read the case study and speak to this instinct. What you see in this case study is the basic insight that people judge their progress against their immediate circle, not against objective benchmarks. So Fiona, in this example, compares herself to colleagues whose children are targeting elite universities, because the human mind is tuned to track status within the local group. And the issue is that feeling behind is an emotional reaction triggered by perceived gaps. So the emphasis here is on perceived disadvantage, not actual disadvantage. Even if she earns well and provides well, seeing others invest more in tutoring or preparation can trigger a sense of slipping down the ladder.

(15:12) And of course, underneath the educational goal is a deeper instinct to secure her child’s future – her future position in the social group. And again, the ancient drive here is to ensure that offspring stay well placed within the tribe. This is an instinct that is simply being applied to modern academic achievement. So you see, in all of this, what I was saying is that this is deeply rooted human behaviour. These instincts have been built over millennia. They are perhaps older than humans themselves, considering the evolution of humans. These instincts have a very long history, and they served us well for a long time. They are just sometimes being applied in a different context now.

(16:08) And in this context, they’re not serving us as well. So why should you care about all this? Well, here are a few reasons. Instincts drive behaviour, and behaviour determines whether the plan actually works. What I would say is that a well-engineered plan can collapse very quickly if the client panics, if they chase hype, or if they copy friends’ decisions, and so on. Perhaps you’ve observed this in your own practice, but most financial problems aren’t technical – they are behavioural reactions to fear, excitement, comparison, and so on. And I’ll come on to speak about market volatility, but it’s an often-observed finding that behaviour – not market timing – is the biggest factor separating clients who reach their goals from those who don’t. Then second, it is clients making emotional decisions, not spreadsheet decisions.

(17:08) That is so important. You don’t want to appeal just to cognition – you need to recognise that instincts and emotions are co-creators of decision-making. Clients act fast when emotions spike, and instincts like FOMO or herd behaviour can trigger panic. They overwrite rational thinking immediately. And lastly, you want to understand instincts because that is what ultimately keeps clients invested, calm, and on track – which keeps advisers trusted, valued, and retained. I speak about this elsewhere in one of the Money Mindshift webinars – I think it’s in the human-centric initial meeting session – where I say it’s so important, when meeting a client for the first time, to understand the various drivers behind their decision to seek financial advice. We’re often very quick, when asked why people seek financial advice...

(18:08) We're very quick to see the utilitarian, the objective reasons for why people seek financial advice, like the tax planning, the retirement planning, the inheritance planning, all this, . And that's of course, true, that's all. It's not wrong. But the fact is, there will be deeper emotional, social, and perhaps educational needs driving this decision to reach out to you. And an adviser who is trusted is one who understands this. I’m speaking here in the context of emotional drivers – why are they reaching out? Is it to overcome analysis paralysis? Is it to validate their thinking? Is it to have someone else to blame? Is it to do someone else a favour? And so on. So this is really important. And I’m picking up here on the notion of trust, and why you want to understand instincts and emotions in the context of building trust.

(19:11) Okay? I bring in another quote from one of my podcast guests. This was Catherine Morgan who joined in an episode called How to Worry About Money. And this sentence, I worry about money that can of course, come in many variations, . Like, I want to make sure we are on track financially. I don't want to make poor financial decisions. I don't know, I worry about succession or legacy. I'm conscious about capital preservation and so on, . So there's like, there's different ways to say, I worry about money. I just build a little bit on this, , what is in this potentially. And here's Catherine, what she says on the phrase, I worry about money.

(19:57) So when we say I'm worried about money. They're not really worried about money in itself. They're not worried about a physical coin or a piece of paper. They're worried about what it means to them. And for many of us, the meaning of money is deeply rooted in safety, worthiness. Oops, apologies. Did I stop this?

(20:26) Validating our place in the world, , if you think about, for many men, for example, and this is very stereotypical, but just to kind of give a bit of a landscape to this conversation, for many men money equals safety, and it equals recognition. So it is the hunter-gatherer, , I need to be the main breadwinner. And if I'm not, it almost threatens that sense of safety in community. The sense of belonging. And for many women, money represents safety and worthiness. And so it is very stereotypical to talk about those things. But when we say, I'm stressed about money, we are not necessarily stressed about money itself. We're stressed about what does that mean to have money or not have money.

(21:24) So you see what she's done here. She, she, she's highlighted that it's not about money itself. It's about what it means. And this, I paved the way for Catherine's argument here by talking about instincts. And Catherine, she speaks about meaning and slightly different, but they hang together. So let me explain this instincts, what I, what I spoke about here, the formal, the herding, social status, comparison, et cetera, that these are raw signals. So they evolve to solve survival problems and instincts. This is important to understand. They're sort of context free. They just say, pay attention to this. This is important. But meaning what Catherine is speaking about here is something that is layered on top of instinct. Through experience, through culture, through narrative. And I mean, just to pick on her examples here, meaning could be safety.

(22:24) And the origin of this could be where money equals safety – that might come from early experiences of scarcity or unpredictability around money. Or when money equals freedom, the origin could be exposure to certain parental experiences, job situations, debt, and so on. So you can see what’s happening here – money becomes a symbolic container. It no longer just buys things, but promises something else. It might promise relief from specific fears or longings. So the way this all hangs together is that instincts drive attention, meaning gives direction, and behaviour reinforces both of these. So when you take FOMO as an example, the instinct says, “Others are gaining – I don’t want to be left behind.” Then the meaning becomes, “Money proves I’m successful, I’m relevant.”Provide your feedback on BizChat

(23:27) And the behaviour might be risky investing, perhaps overworking, or lifestyle inflation. Or take loss aversion. The instinct is to avoid losses at all costs. I speak to this a little in the context of markets. The meaning becomes, “Money keeps me safe.” I’ll speak more about projections later, but the sense of security doesn’t come from within – it comes from money. And what this results in is things like hoarding, holding cash, under-investing, and avoidance of change. So what do we do with this? Again, linking back to what I said before, you want to assume that clients are primarily emotional and situational – they are not consistently rational.

(24:21) So good decisions in calm conditions do not necessarily predict good behaviour in market extremes. So rationality is conditional, not stable. From that, you can draw some conclusions about attitude-to-risk questionnaires. I would say they do a job, but you might want to build a more rounded psychographic profile when you engage with clients. So what are their emotional triggers? Is it things like regret or fear? Do you see this in the way they present themselves? What about their social orientation – are they status-seeking, conformist, or more independent and individualistic? And what are their narrative preferences? Do they respond more to numbers, or do they prefer stories?

(25:16) Are they more optimistic by nature, or more sceptical? What’s their locus of control? Do they convey a sense of agency, or do they suggest they want to delegate everything away? So you can map how these traits tend to show up in different scenarios. Just in the interest of time, I’ll focus on not over-inferencing from attitude-to-risk questionnaires. I think they do serve a purpose, so I’m not suggesting they should be discarded completely. But what we should acknowledge is that they are a snapshot under artificial conditions. They are a cognitive expression of preference, not a behavioural prediction. So you should expect the results of attitude-to-risk questionnaires to be less reliable when social pressure increases, when losses become salient, and when novel situations appear in the client’s life.

(26:40) Cool. Let me just briefly see if any questions have come through. I will use these transition points to just bring them up. Okay, I hope it is just David who has the sorry, Tony, who has the sound issues. And it is resolved for others. Keep your questions coming. I'll be looking at them at these at these transition points. So let's look at the psychology of a market cycle. And by the way, you can perhaps when you look at this, you can ask yourself, where are we at the moment? So are we experiencing euphoria? Is there perhaps complacency? Is there perhaps panic? Is there hope? Is there...what is there? . And I just pick on I just pick on euphoria to begin with, .

(27:48) So this is when instincts tell us we’re all going to be rich. And what advisers need to understand in this situation is that when clients reach this stage, they become overconfident. They underestimate risk and believe the good times will continue. This is the point when clients may want to take on more risk than their plan allows, which is dangerous. Euphoria is dangerous because it feels rational to the client. The herd is euphoric, so following it feels safe. But understanding this moment helps you protect your clients from stretching beyond their true risk tolerance, committing to decisions they will regret when the cycle turns, and so on. Then, at the other end of the cycle, we have panic. And panic tells us, “Everyone is selling – I need to get out.”

(28:45) And again, why do you need to understand this? Because panic is the emotional low point. It’s where clients want to convert temporary volatility into permanent loss. It’s dangerous. Again, there’s herd behaviour here – when the group runs, the emotional brain insists you must run as well. This is when clients phone advisers in distress, desperate to exit markets to feel safe. And I observe that advisers who recognise panic as an instinct, not a rational thought, and bring it up in conversation, are able to intervene, slow thinking down, and prevent bad outcomes such as selling at the bottom. And perhaps I’ll briefly touch on complacency, because I’ve heard a few advisers say this is where we are in the market.

(29:45) And complacency is an instinct and an emotion where you feel we just need to cool off before the next rally. That typically appears after strong gains, when clients mistake recent market strength for personal skill or a timeless truth. That leads to underreacting to risk, ignoring rebalancing, and drifting away from disciplined planning. And it’s psychologically tricky, because complacency feels calm and reasonable, unlike panic or euphoria. But as an adviser, you can spot this by re-anchoring clients to their long-term goals, ensuring diversification isn’t neglected, and that protective actions aren’t delayed. So on the note of complacency, when markets fall, there is a range of behavioural biases that have been observed, and that behavioural scientists speak about frequently.

(30:59) There’s loss aversion. And loss aversion speaks to our tendency to feel losses much more than we feel similar amounts of gain. Just the other day, I got a parking ticket and had to pay £70. That felt like a loss of £70. On the same day, if I had received a refund of £70, I wouldn’t have felt equally good. The £70 I’ve lost and the £70 I’ve gained don’t balance out, because we feel losses more strongly than gains. Then there’s present bias. And present bias is very important to understand as a financial adviser – probably one of the main reasons why relatively few people seek financial advice in the first place.

(31:53) Because the hopes, fears, goals, and problems of the present always weigh much more than those of the abstract future. Then action bias is really important to understand in the context of market volatility, because what action bias does is give you a sense of control. It makes you feel as though you’re managing the situation, even though it may be completely outside your control, by doing something. So you act – you sell, perhaps you buy something more adventurous – whatever it is, you do something. That’s action bias, because it creates the feeling that you are in control. There’s a useful paper from Vanguard, the asset manager, which shows that behavioural coaching is one of the most valuable contributions an adviser can make.

(32:53) I have the reference in the footnote, and in the research they’ve done, they found a potential uplift of up to 200 basis points – up to 2% per year – depending, of course, on client behaviour. So again, what they would say is that the biggest threat to a client’s return isn’t the market, it’s the client’s instinct. What you do – the most important thing you do as an adviser – isn’t asset allocation, rebalancing, or product selection, but helping people stay focused on long-term goals. And again, in the context of the Money Mindshift podcast, I spoke to Greg Davies – a name many of you may know. Greg is a behavioural researcher who does a lot of work on training the right kind of behaviour in times of market volatility, and what advisers can do to redirect attention to what matters over the long term.

(33:57) And I had Greg on the show for an episode called How to Win at Shopping, in the context of Black Friday – the last Friday of November, when retailers offer all sorts of offers, both online and in-store. We spoke about why it is often so hard to resist these offers. And Greg made the point that this is a bit like theatre. You have all these mechanisms very cleverly appealing to our instincts and emotions, and they make you do things without really thinking about them. But he made the point that this is actually quite similar to what happens in the markets. So I’ll let him explain this very quickly in this snippet from the episode How to Win at Shopping with Greg Davies.

(34:50) The parallel to this – and Black Friday is almost every day in the investing markets – is that markets are a bit like Black Friday. You see things go up and down, turn red and green, and there’s this constant sense of excitement: “Should I buy now, because the price will be different in five minutes?” So that theatre extends to the investing world, and what it means is that our emotional time horizons are much shorter than our financial time horizons. And sometimes this leads us to buy too impulsively. FOMO is a real problem in investing – “Look how well my friends have done from investing in whatever it is over the last three months. If I don’t get in now, I’ll miss out.” That’s generally a poor reason to invest, but we often make decisions to avoid emotional discomfort.

(35:43) And if sitting at the dinner party table on Saturday night and hearing all your friends talk about how well they've done it in, in the investing markets, and you're the one who's been sitting on the side, that's a pretty miserable experience. So to overcome the, that's why people buy high. They buy at the top of the markets when everything is going well, but it has probably more detrimental effects at the bottom. So when markets are in spiral and are in panic, and there's red numbers, and the newspapers are full of bad news stories, this is when people run out of emotional liquidity. We, we no longer have the emotional resilience to watch our portfolio drop. So we sell in a panic.

(36:25) Yeah. Very, very nice choice of words there. We often make financial decisions to avoid emotional discomfort. Was one phrase, and you could perhaps see me like write this down. People run out of emotional liquidity. So again, what to do with this insight and what I would suggest as perhaps main takeaways is that you want to anchor plans to feelings, not just market events, . So you want to land and you want to educate that emotions are the real trigger, . And you want to help them recognise when they may occur and what they may result them to do to prevent impulsive action, . So you could say something like, well, when this happens, you won't react to a percentage you'll react to how it feels. You could, you could work with pre-commitments, something like, let's agree that if it feels like X, if it feels like panic, if it feels like hope, if it feels like whatever, yeah.

(37:37) Then we do Y – we stay calm, we keep going. So you want to reframe volatility from market risk to behavioural risk. This speaks very much to what Vanguard said. The core message to land with clients is that markets are survivable, but behavioural mistakes are not. So phrases you might use are things like: volatility doesn’t destroy wealth – reactions to volatility do. And the real risk right now isn’t what the market does, it’s what it tempts you to do. So really educate clients on what’s happening on an emotional level. You don’t just want to give information – you want to give emotional reassurance to stabilise behaviour. That is more effective than any purely intellectual or rational explanation of what’s happening.

(38:49) Yeah, I’m looking at the time and I want to come on to the psychology of future thinking. I promised to look at that. I also see a question from Mohamad – yes, the slides will be shared afterwards. The reason this is so important is that everything we’ve discussed – volatility and instincts – matters because what you do for clients is build a long-term financial plan. So for them to stay invested over the long term is important. But the challenge is that for humans, for the human brain, thinking long term is really difficult. And that’s not because we are irrational or not capable.

(39:48) It’s actually because we are wired to give much more attention to things that happen in the here and now. There’s some interesting neuroscience research, for example, that shows that when you’re asked to think about your future self, you activate a part of the brain that processes information about other people – not strangers, but still others. If that’s of interest, we could go deeper into it, but I’d point you to the conversation I had with Hal Hershfield on the podcast. I’ll show a short snippet of that in a moment. But there’s something positive in this, because it suggests you can build empathy with that “other” person – your future self – and that’s a really important component in helping people begin planning for their future selves.

(40:45) So what you want to do is acknowledge that it’s emotionally hard for people to connect with a version of themselves in the future. But what you want to do is ask questions, or invite reflections, that create an emotional image of what life and retirement might look like. I’m using retirement as an example, but it’s not just about retirement. You help them appreciate that it isn’t one single phase, but a series of phases – the go-go years, the slow-go years, and the no-go years. So help them picture what life might look like in each of these phases. What that does is help them visualise more concretely, rather than abstractly, what that future might look like.

(41:42) And what typically follows is a type of financial behaviour that actually takes care of that future version of yourself. So here, don’t say things like, “You need these certain products,” or “This is why…” What this is really about is helping them – as I said before – cultivate that connection. And then you see what typically happens – they start to do the very things that, up until that point, they weren’t doing. They begin to see the reason, they begin to lean into it – and that’s the key word...

(42:39) They're becoming intrinsically motivated to save for retirement, to take out critical illness, to have those planning conversations that are typically harder to pave the way for. So here's that snippet of a conversation with Hal Hirschfield, who over in Los Angeles has done a lot of work on this particular subject of helping people connect or build an intrinsically vivid connection to the future self. And he's given, he's actually the researcher who did the work behind the digitally aged faces where you look at like a digitally aged version of yourself. Perhaps you've seen this. So he's the originator of this, but he's giving a very low tech idea of how you can help people connect with their future selves in this snippet of conversation.

(43:31) Actually, what research finds to be the better predictor of actually creating a connection with your future self is writing a letter, or an email, or a message, whatever you wanna call it, to your future self. But don't stop there. Then you actually try to write a letter back from your future self. In other words, step into their shoes, . And say, okay, , it's the year 2045, and here's what I'm writing about. Here's what's happening. 'cause the difference is if I just write a letter to my future self, I end up just talking about right now. And it's not bad because it, it still forces me to think about them a little bit more than I normally do. But if I really want to go to the extra step, it's to write back now. I think that's one technique.

(44:22) Another one I really like is to just ask yourself, what can I expect to be true in five years, 10 years about my future self? Just that question alone constrains the world's of possibility. Like if you said to me, think about the future in 10 years at this particular moment in time, I'm baffled because AI is taking off and the world, , politically and socially is like a little unstable and or not a little <laugh>. And, I, oh my God, I'll throw up my hands. But if you said to me, hold on, what do you think will be true in 10 years? I could tell you I could rattle off five or 10 things right now, and that'll help me think about, okay, well, what could the future look like? ? And so that's another thing.

(45:07) And then the final thing I'll say is just to have a conversation with your future self. In your mind's eye, in your mind, rather in the way that we sometimes have conversations in our minds with our spouses <laugh> With loved ones who have passed with even with friends, where I'm trying to say, what would they say if I said this and go back and forth? This idea of having a mental conversation with our future selves is not totally outlandish, because there are other cases where we do this sort of thing. All of these techniques are ones that will help create or help further along that secret that you talked about. Creating the connection to our future selves.

(45:53) Okay? As I said, this was from the conversation I've had on the Money Mindshift podcast with Hal Hershfield on the episode, how to connect with your future self. Now, what to do with this insight. So, and I hope I made this clear earlier. So what you want to do is you want to help them articulate in very vivid concrete and meaningful terms what the future may be, . So, this is important because that helps them become emotionally bought in and intrinsically motivated to pursue a financial plan that, that you're building with them. If they said something like, once I retire, I just want to have peace of mind, okay? That's a very vague scenario of what's gonna happen in retirement. If they said, once I retire, I wanna live in the outskirts, in the Scottish borders with easy train into Edinburgh.

(46:50) So I can enjoy fringe shows in the summer, and perhaps concerts at the Usher Hall throughout the rest of the year. So that becomes quite concrete. So you want to help them be more concrete. And there were some helpful prompts that Hal shared in that snippet. What you want to do is start with simple things that are relatively certain. So, in five years’ time, how old will you be? How old will your partner be? How old will your children be? And then in 10 years’ time, the same questions. Then where will you be? Will you still be where you are now, or might you be somewhere else? What will you be doing day to day? Will you still have a dog? Questions like these really help people to connect, at an emotional level, with a version of their future self.

(47:45) And that’s what you want – for them to get buy-in and to engage with the financial plan you’ve built. We’re nearing the end, and you can begin to think about questions. I’m keeping an eye on any that are coming in – there aren’t any at the moment – but I wanted to give you some ideas on how to get started. And here’s the part I said earlier might be a bit controversial – or something you may not like. The reason is there’s an instinct to say that instincts, emotions, meaning, beliefs, attitudes, vulnerabilities, context – all the things I’ve talked about – are things that clients have, not things that we have. And the point is, I hear this sometimes when I’m asked, “Where do I start? What’s the most important thing?”

(48:45) And what do you see even good advisers get wrong when they start getting into this? What I see is that they’re not asking themselves these questions. So what I believe is important, as a starting point, is to understand your own psychology – your own beliefs, your own attitudes, your own emotional reactions – all of these things, so that you’re better equipped to help your clients. So, personal projections – what meaning do you attach to money? Perhaps industry narratives play a role as well. I’ll share a brief anecdote. I sometimes hear financial advisers say they are puzzled by clients not spending money in retirement. They say, “They’ve accumulated all this money throughout their working lives, and now they’re retired, they’re just not drawing down on it.”

(49:50) “How irrational.” Perhaps it is. There may be some truth in that. But perhaps what’s really happening is that you have an understanding that money buys freedom, or that money is there to enjoy life, and as a result, you think clients should spend it – on experiences, on things, and so on. When actually that isn’t necessarily the case. For them, money may simply be a tool to support the life they want to live – and they may not need to spend it. They may just want to have it, and for them, that is enough. So what I’m saying is that there may be an element of your own projection, or your own internalised industry narrative about what money is for.

(50:45) And I think that’s really important as a starting point – to help your clients become better with money and to become better planners. So what I’m suggesting is that I’ll give you four prompts you can use with an AI model of your choice – Claude, Copilot, ChatGPT, Gemini, or similar. You can ask questions like this to better understand instincts. For example: “Help me understand my instinctive patterns around money. Guide me through identifying instincts like FOMO, herd behaviour, loss aversion, overconfidence, and scarcity-driven thinking. Use a few focused questions and invite me to share real-life examples to show how these instincts appear in my spending, saving, and investing decisions. The goal is self-awareness, not advice or optimisation.” So what you’re doing here is building self-knowledge.

(51:43) Similar here with meaning “Help me explore the meaning money carries for me emotionally and psychologically. Guide me in identifying what money represents in my life, such as safety, freedom, control, and so on. Use focused questions and real-life examples to uncover how these meanings influence my financial decisions and reactions.” Again, the goal is self-awareness – it’s not about changing behaviour. Then, with regards to emotional reactions at different stages of the market cycle: “Guide me through common phases like euphoria, optimism, and anxiety – the ones we saw earlier. Ask a few focused questions and use concrete market scenarios to help me connect these phases to my real experiences and decisions.” Again, this isn’t about improving outcomes – it’s about building self-awareness. And lastly, with regards to your time horizon: “Help me understand whether I naturally think short term or long term, or both.”

(52:44) “And how strongly do I relate to my future self versus my present self? Guide me through identifying how much weight I give to immediate comfort, desires, and fears compared with long-term goals, values, and outcomes. Use focused questions and everyday examples – decisions around money, effort, and trade-offs – to surface my default time horizon.” Again, this isn’t about changing behaviour, but about gaining self-awareness and understanding how I experience time and future consequences. And the reason this is so powerful is that it sets up another idea I’ll be discussing with James Woodfall later in Money Mindshift Week. James makes the point that you need to be aware of certain biases you bring into client meetings. One of these is the “me theory” – where you think, “If I were them, I would do this or that.”

(53:40) So you can only detect and work with this if you understand your own thinking. Transference is another one, where you assume that because a previous client reacted or said something in a particular way, the same applies to the client now in front of you. Then there’s projection – as I mentioned – where you transfer your own fears, frustrations, and preferences onto them. And then stereotyping. So these are important biases to be mindful of when you’re dealing with your clients. And these prompts are useful in helping you begin to detect this. Much of the work we’ve discussed – and we’re coming to the end here – builds on that awareness.

(54:35) Now, much of the work we’ve done has been heavily influenced by the Second 50 research, which suggests that to live a good, long life, money is important, but so are other components. We speak about these different components specifically in the client review meeting for long-term clients, where all of this comes together quite nicely. The suggestion is to use this thinking to approach those meetings slightly differently – to rejuvenate a plan, help clients reconnect with their future goals, and, crucially, to use a framework informed by the Second 50 work. So we’re coming to the end. Don’t miss the other sessions during Money Mindshift Week. I mentioned James Woodfall at 10 o’clock on Thursday.

(55:36) James is really interesting. He is an ex financial planner who now does emotional intelligence training for financial advisers. So we go into this, and then tomorrow at 10 we speak with I speak with Dan Haylett who has tremendous success recently on the back of his book, the Retirement You Didn't See Coming, he's of course the podcaster behind humans versus retirement, who is thinking about retirement much more holistically than many financial planners would typically do it. And we speak about that. I hope this was of interest to you, go to the adviser facing pages of the Money Mindshift campaign to see the webinars that I mentioned. By all means, connect with me on LinkedIn if you are wanting to keep up to date with the stuff I'm working on but for the time being, I will stop here.

(56:30) And we have perhaps time for a couple of questions. Apologies. Sorry, James. I see this only now. What are some of the ways you have found useful to navigate the emotional elements of the business cycle you presented? I think as a rule of thumb, I would just educate that emotions play a big role in in any decision making. So it is a bit of a limited understanding of decision making in general, that we think we weigh up options A, B, and C. And when they're explained to us in grammatically and objectively correct ways, that we then make the right decision. But actually what is the case is that the cognitive part of the brain, the instinctive, the emotional, different parts of the brain, they work together like team players, . So we kind of like bounce back, well, completely different example, a job offer.

(57:36) You get a job offer and you think through things like the salary, the commute time, and what’s on offer. But you also weigh that against what it will feel like to take on those responsibilities, what it will feel like to do the longer commute, and what the trade-offs are when considering everything else that matters to you. The point is that it isn’t just cognition that drives the decision – it’s cognition, emotion, instinct, and so on, all working together. And I think this is something you want to be mindful of for yourself, but also something you want to educate clients on whenever you have the opportunity – to say, “One thing is what is objectively true…”

(58:26) But the other is like what it feels like. And to just train convey this message, train that this is an important finding to consider. And then, and then hopefully, , open up the client, whoever you're working with to invite that sort of feedback right on what it feels like, what the instinct is telling you to then use that as an information to work with when, when building a plan. I hope that's a useful answer, and at that point I think we can stop. Thank you so much for listening. Thank you for dialling in from, from all over Europe, I hear which is, which is great. I hope you found this useful. Connect with with me, connect with Money Mindshift for more of the same, if that's of interest. Thank you so much. Bye-Bye.