When it comes to advising clients, advisors often rely on demographic information to formulate a retirement plan. But demographics don’t provide a complete picture — especially for female clients. For many, adding psychographics to demographic information and traditional financial planning can be a much smarter way to come up with a personalized retirement strategy.
Psychographics rely on a deeper level of questioning to better understand the client’s aspirations, interests, personality and values, says Karen McIntyre, managing director and senior financial advisor at Wescott Financial Advisory Group.
“An advisor could ask about what the client does with their take-home pay or what they did on their last vacation,” she adds. It’s less about leading the client than it is about truly listening to them.
The advisor might find out, for instance, that the client has a visceral reaction to pharmaceutical stocks, which might lead the advisor to recommend a more socially responsible investment approach for the client. An advisor could also ask how the client gifts money or how they imagine or picture themselves during retirement. Psychographics, in other words, provide a more qualitative approach to financial planning.
Getting a better picture
While advisors might believe they have a full understanding of the client from their age, income level, marital status and gender, psychographics can fill in the gaps and offer a much more comprehensive picture of the person.
Its roots date to the early 1900s, though the term itself likely came into use in the 1960s. Today, savvy advisors are concept the technique to transcend the superficial details of a client’s life. A person’s attitudes, opinions, behaviors, habits and lifestyle choices directly affect their financial choices — for better or worse — and advisors can dig deeper into psychographics to more effectively help the client.
“We need to understand why people do what they do to better meet the client where they are,” says McIntyre.