Why do so many financial planning websites include sailboats and sunsets? The idea behind this is, of course, that sailboats and sunsets may equate to a satisfied retirement or contentment in life (at least, to the target market of those firms). We want to believe that the plans we provide lead to positive financial outcomes, and in most cases, we can see objectively how those plans work out. The value of achieving financial goals (for most) is the freedom and satisfaction that comes with achieving financial success, not the dollars and cents themselves. If client satisfaction, wellness, or contentment are purportedly the goals of financial advisors, are these outcomes being measured in accurate and meaningful ways?
Satisfaction Questionnaires
It is easy enough to ask a satisfaction question (think: Net Promoter Score) in some form or fashion. The trick with subjective wellbeing is how it is measured (or “operationalized,” as we say in the psychology business). Below are a few commonly used wellness scales, along with links to the inventories where available.
PERMA Profiler
The PERMA Profiler is an inventory designed to assess an individual’s wellbeing in five key areas (positive mention, engagement, relationships, meaning, and accomplishment) along with a measure of health-related wellness and overall negative feelings/mood. The inventory is based on the work of Dr. Maritn Seligman and is related to the field of positive psychology. The model behind the questionnaire differentiates wellbeing across multiple dimensions, thus acknowledging the importance of specific areas of life in the assessment of overall satisfaction.
An example item from this scale is: In general, how would you say your health is?
The inventory, along with other related measures of wellbeing, are available on the University of Pennsylvania website.
Satisfaction With Life Scale
The Satisfaction with Life Scale (SWLS) is a 5-item scale that asks respondents to agree or disagree with statements related to their views about life, life satisfaction, goal attainment, and a review of past experiences. The scale does not break up different aspects of an individual’s life (e.g., separating ratings of relationships from ratings of achieving goals), but instead provides an overall score related to general life satisfaction. Adequate evidence of reliability has been found. An example question from the scale is: So far, I have gotten the important things I want in life.
The assessment’s scoring places individuals into one of six satisfaction categories, ranging from “extremely dissatisfied” to “highly satisfied.” Information about the scoring of the assessment may be found here.
Flourishing Scale (or “Psychological Wellbeing”)
The Flourishing Scale focuses on measuring overall wellbeing in terms of reported psychological strengths (e.g., being competent) and resources (e.g., being respected by others). Similar to the SWLS scale, an overall score is created across the eight items.
An example statement from the scale is: I actively contribute to the happiness and wellbeing of others.
The Flourishing Scale may be found here.
Single-Item Measures of Satisfaction
In pediatric healthcare, a smiley-face scale is often used to assess patient pain. Likewise, a similar type of measure has been used to measure job satisfaction (and has been shown to be adequate in measuring this complex area).
The same holds for single-item measures of satisfaction. For example, in a study with three large samples from the United States and Germany, researchers found that single-item satisfaction scales demonstrated adequate validity to the SWLS scale. The authors conclude that, at the very least, social scientists could get the same results using a question or single-question measure of life satisfaction.
Measuring Financial Planning Client Wellness
Tracking wellness is critical to demonstrating to clients the value of working with you. This can be accomplished by measuring qualitative data (e.g., reviews and open-ended questions) and qualitatively through questionnaires like the ones mentioned above. By demonstrating improvements in wellness over time, particularly in financial wellness, you can point to non-financial outcomes related to the value you provide. However, we believe a multi-dimensional approach is best to do this. Clients may have ups and downs in different parts of their lives. It would be inaccurate (and, potentially detrimental from a client retention perspective) to ask simple overall satisfaction questions. A single-item (“single-question”) measure of satisfaction doesn’t tease apart why the client feels the way he does. A single-item measure also lacks a breadth of ways to help the client improve.
Tracking Wellness Over Time
To meet the unique needs of financial planning clients, we created a new measure of client wellness, the Wellness Inventory. The questionnaire helps financial services professionals understand specific areas of client satisfaction, including those directly tied to a financial or investment plan and areas that may only be somewhat related (e.g., relationships). You can take the Wellness Inventory here.
Wellness Inventory Insights
- Overall Wellness – This composite score includes the following components (not including “Advice & Advisory Services”):
- Purpose – This set of questions asks about feelings related to the meaning and purpose of one’s life.
- Efficacy – Does your client feel “effective” in terms of being able to manage responsibilities?
- Interests – This section asks questions about activities or hobbies in which the client becomes completely immersed (akin to the concept of “flow” from positive psychology)
- Community & Relationships – Having relationships with others is a critical component of wellness.
- Health – Any measure of wellness has to include a component examining how a client feels about physical health.
- Emotion – This is the mood or feelings component of wellness.
- Financial Satisfaction—Money worries can impact wellness, and we measure this component separately to ensure it can be examined over time independently from the others.
- Advice & Advisory Services—This factor measures satisfaction with the advice and services the client receives from the firm. We keep this factor separate from overall (“life”) wellness, as this is more akin to a consumer sentiment measure than a questionnaire regarding subjective wellbeing or overall life satisfaction.
Implementation: Tracking Over Time
The wellness inventory’s nature lends itself to measuring client wellness over time. In other words, because the inventory is designed to measure a client’s more temporal “states,” it would make sense that these states could change more quickly than a stable personality characteristic. We recommend asking clients to complete the Wellness Inventory every six months and reviewing results at least once yearly.
Does the advice and guidance you provide to clients impact their life satisfaction? Have you created financial plans and investment strategies that positively affect client well-being? Can you show improvement in financial wellness over time? How about other areas? A wellness measure should address these questions. If you need a way to measure and track wellness, consider our Wellness Inventory, which will soon be added to the DataPoints library of behavioral assessments.
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Resources
Butler, J., & Kern, M. L. (2016). The PERMA-Profiler: A brief multidimensional measure of flourishing. International Journal of Wellbeing, 6 (3), 1-48.
Cheung, F., & Lucas, R. E. (2014). Assessing the validity of single-item life satisfaction measures: Results from three large samples. Quality of Life Research, 23, 2809-2818.
Cooke, P. J., Melchert, T. P., & Connor, K. (2016). Measuring wellbeing: A review of instruments. The Counseling Psychologist, 44(5), 730-757.
Diener, E., Emmons, R. A., Larsen, R. J., & Griffin, S. (1985). The Satisfaction with Life Scale. Journal of Personality Assessment, 49, 71-75.
Diener, E., Wirtz, D., Tov, W., Kim-Prieto, C., Choi, D., Oishi, S., & Biswas-Diener, R. (2009). New measures of wellbeing: Flourishing and positive and negative feelings. Social Indicators Research, 39, 247-266.