Advisors, now’s the time to build clients’ NON-financial emergency funds
Financial advisors, encourage your clients to set up a non-financial emergency fund, says Kol Birke, financial behavior specialist at Commonwealth Financial Network. The fund will help them to make better financial decisions. Plus, it’ll strengthen their bond with you.
A non-financial emergency fund consists of family, friends, and activities such as volunteering and exercise. These relationships and activities are resources your clients can draw on in difficult times that will help focus their minds on positives, so they aren’t as easily rattled by market downturns or other stresses.
In fact, psychologist Barbara Frederickson has shown that positive emotions widen individuals’ receptiveness to a broader range of options, so they can choose the best one. If you can help your clients feel more positive emotions, they’re less likely to react to a market downturn by saying “Sell, sell, sell.” That kind of single-minded “Sell” response served humans well when they were fleeing wild animal attacks. It’s less appropriate in today’s complex world.
Advisors can help clients build their funds by asking what activities are soothing, nourishing or enriching. In other words, what they do to blow off steam, and what do they do that provides most meaning in life.
Now is a great time to raise this topic with clients. They’re past the shock of the market decline. Yet the decline is fresh enough in their minds that they’re receptive to new techniques to make them more resilient emotionally.
A nice side effect of creating positive emotions through your clients’ non-financial emergency funds is that it makes them feel more connected to you. That will serve you both well.
To learn more about this topic, contact Kol Birke at firstname.lastname@example.org or 781.663.9663.