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December 01, 2003 at 02:00 AM
At the recent International Positive Psychology Summit, I had the opportunity to conduct an interview with leading psychologist Dr. Martin Seligman, past president of the American Psychological Association. You may wonder what positive psychology has to do with investments and financial advice. Stick with me here, because there is a definite and powerful connection.
A legendary industry leader, Dr. Seligman is the founder of the Positive Psychology Network. This exciting new field includes research on positive emotions, positive character traits, and positive institutions. Dr. Seligman has secured over $30 million in research grants and has persuaded the John Templeton Foundation to create the largest prize in the field of psychology. The Templeton Positive Psychology Prize, which recognizes outstanding research on what creates happy, functional people and healthy institutions, totals $100,000.
Dr. Seligman is a professor at the University of Pennsylvania. He has written 20 books and 170 articles on motivation and personality. His books have been bestsellers internationally, and his articles have been featured in the The New York Times, Time, Newsweek, Reader’s Digest, Fortune, and many other publications.
Dr. Seligman was highly supportive of my goal to bring the science of happiness to the financial advisory industry. My question was simple: How can financial advisors use the new science of happiness to improve client satisfaction and to grow their business? Here is the advice Dr. Seligman had for financial advisors.
I’ve been talking to financial advisors about positive psychology and “vision coaching” based on the science of happiness. What are your thoughts about putting these concepts to work in the investment community? Martin Seligman: I would say there is one equation that financial advisors need to know: Life Satisfaction equals Positive Emotion plus Engagement plus Meaning. When people invest money, I believe they need to ask themselves to what extent they value positive emotion (pleasure), engagement (flow), and meaning (serving a higher cause). It’s also important that financial advisors understand where their clients stand on this matter.
Why is this understanding so important? When you know which of these three kinds of happiness your clients care about, you can give them wise advice to maximize their satisfaction in their assets.
For example, someone who is very interested in spending their life pursuing purpose and meaning is not going to want a beach house on Maui. Rather, they will want to take on a larger goal or mission they believe in, and apply their strengths and their money in that direction. But for someone who wants pleasure, that may mean a condo on the ski slopes.
It’s one thing to give advice about making money grow. But financial advisors can add the most value for clients by counseling them on the appropriate deployment of their money and other resources for maximum happiness.
Positive Psychology is a new concept for many financial advisors. What do you say to those who are interested but unsure of this approach? I believe financial advisors can learn how to talk to clients about happiness and how to measure what kinds of happiness people want. Then they can guide them to make appropriate choices.
How can advisors determine which type of happiness their clients desire? There are measuring processes that they can use. I know people may be reluctant to use tests – it’s too much like school. But these questionnaires are valuable because they can tell you the extent to which you value pleasure, the extent to which you value meaning, and the extent to which you value engagement or flow. The science of Positive Psychology is concerned with quantifying subjective emotions, desires, and experiences.
That sounds like a language that financial advisors will understand. This means financial advisors could actually track their clients’ life satisfaction. Many of these questionnaires are on your Web site, www.authentichappiness.org, right? Yes. They’re free. A simple one to get started with is the “Approaches to Happiness” Questionnaire. It is only 18 questions and can be completed in just a few minutes. It will tell you what type of happiness is most important to your clients, pleasure, engagement, or meaning.
(Note to readers: I did this profile in about one minute and found out that I rank “Meaning” higher than “Pleasure.” I was dismayed to find that I put “Engagement” last. Now I am alerted to try to get more “flow and immersion” in my life. There is a simple registration step required to access the tests.)
So what would you say to people who believe money can buy happiness? The basic belief of economists is that the more money you have, the more choice you have–and that is a reasonable premise. But the premise “the more money, the more happiness,” is completely wrong. The problem is, people commonly make the wrong choices when pursuing happiness. That’s where a financial advisor who understands the science of happiness can add tremendous value–helping their clients define goals that will actually make them happier.
