Money is emotional

Q:   I work with my wife. I am a psychologist, financial analyst and family business consultant. She is a financial planner. I have been struck by the need for emotional intelligence regarding money and finance, but have not seen any writings specifically directed at that area. Any resources or ideas that you would recommend as helpful?

A: If there’s any topic that arouses the amygdala – the brain’s center for hope and fear – it’s money.  The connection between emotions and thinking about financial decisions is the focus of the relatively new field of neuroeconomics. These brain scans typically show how irrational we really are while making what we think are rational decisions – especially about money.

In Working With Emotional Intelligence I wrote about research done at a branch of American Express that helped people invest their retirement savings.  In work led by Doug Lennick, financial advisors were given some training in basic EI skills like self-awareness and empathy. These advisors were then better able to raise difficult questions with clients, and so help them make more sound decisions about how best to invest. They could sense their own anxiety, and the uneasiness of their clients, and bring it up rather than try to ignore it.