How top firms use it in their practices

KEY POINTS

  • There’s a growing emphasis on psychology in financial planning as advisors explore ways to strengthen client relationships.
  • Top firms on CNBC’s annual FA 100 list use behavioral finance to manage clients’ investing, estate planning and other needs.

There’s a growing emphasis on psychology in financial planning — merging traditional advice with elements of behavioral finance — as advisors explore ways to strengthen client relationships. But it’s always been important, according to firms on CNBC’s annual FA 100 list. Many advisors say there’s a demand for psychology in financial planning expertise, according to the Certified Financial Planner Board’s 2021 Practice Analysis Study, prompting the Board to add the topic to its curriculum. The Financial Planning Association has also explored this area, embarking on an in-depth study on advisors and their clients, which reaffirmed the value of these skills. “The objective of understanding the psychology of financial planning is not to turn financial planners into therapists,” said CFP Board CEO Kevin Keller. “But to help professionals strengthen their listening and communication skills.”

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