Financial advisors looking to incorporate principles of behavioral finance into their practice would be more effective and able to serve their clients even better if they teamed up with a psychologist like Faye Hargrove, founder of Augusta, Ga.-based Hargrove Leadership Services.
Hargrove helps people get rid of their emotional and psychological barriers – barriers, she says, which impede their ability to pursue their financial goals. In fact, these mental limitations may prevent people from even identifying their goals, let alone acting upon them, she says, and if they can be gotten rid of financial advisors will be able to work in a far more clear cut and meaningful manner.
"Once we can identify the fact that we have limitations and once we can determine where those limitations are coming from, we can reframe them and set goals from a new perspective," she says.
Hargrove believes that it is only after this "cleansing" process has been completed that the rest of the behavioral finance approach which a growing number of advisors are now employing can make sense.
"Once a client is able to look at their lives with fresh eyes, the financial advisor will have a much easier time getting through to them," she says. "Any financial advisor has to have someone to do this cleansing process for them and to do it in the right way so that their clients can have a healthy relationship with their finances."
Apexx Financial in Augusta is one firm that employs Hargrove's services. The firm sends its clients first to Hargrove so that they can work with her to get a clear sense of their values, the role that money plays in their lives and where they want to go with their finances.
Hargrove's first port of call is asking a client what his or her current challenges are. These may not necessarily be financial, but ultimately, finances and people's approaches to their finances are linked to everything else, she says.
