Financial planners and coaches assess client money scripts® with the KMSI-R (Klontz Money Scripts Inventory-Revised) test. Why? There is a continued and increased focus on financial psychology in the financial services world. The CFP Board has recently updated its knowledge topics to include the psychology of financial planning, covering everything from client attitudes to critical life experiences that could shape a financial plan. Financial planners recognize that money personality is a key component impacting …
Last month a war (of sorts) was declared, pitting various risk tolerance companies against each other concerning their methodologies relating to portfolio risk assessment and analysis. The dispute appeared to be outside the realm of measuring a client’s appetite for risk. However, there is a very real and clear line of demarcation in the world of risk-tolerance assessment “advisortech” with respect to the method employed in assessing the investor’s so-called “risk tolerance,” particularly the …
On March 30th, the CFP Board announced changes to their Principal Knowledge Topics for educational programs for those seeking or with the Certified Financial Planner (CFP) designation. This change includes a new section representing 7% of the educational component, entitled “The Psychology of Financial Planning.” For those of us at DataPoints who have been writing about financial psychology and the psychology of building wealth for quite some time, we are delighted to hear that …
Financial psychology is the study and application of psychological theories, methods, and practices to the areas of personal finance and financial services. The field takes into account two areas. First, financial psychology includes how each of us relates to and makes decisions about money. In other words, financial psychology includes what psychologists refer to as “individual differences” in money-related behaviors and decisions. Second, financial psychology covers the client-advisor relationship, that is, the application of psychology …
If you have ever taken a quiz entitled “How to tell if your boyfriend is cheating on you” or “Answer these five questions to learn to see if you’re a good friend,” then you’ve probably taken something akin to what we call a “Cosmo test.” Your answers to just a few questions will result in a detailed analysis of your personality, along with a lengthy set of advice on improving your life (or a …