Mindful investing and wealth management

08 August 2019 Private Client Holdings

Mindfulness is growing in popularity as people see, and feel, the benefits to their health and emotional well-being. It has also entered the business environment as we realise the real benefits of a focused mind, ie being fully aware and actively attending to our workplace, to what we are doing, to the space we are living in, and having our mental capabilities fully available at any given moment.

Modern lifestyles leave us fatigued and stressed, as a result we do not commit our minds fully to our circumstances. We are often only half-present in a situation and make distracted decisions.

The importance of mindfulness for investing and wealth management.
“If you are suddenly confronted with a problem, do you want to have 50% of your mental capacity to solve that problem or the full 100%? Similarly, if you are going to manage clients’ money and successfully invest for the future, do you want to make and execute those plans in a cloud of mental distraction and emotional turmoil?” asks Grant Alexander, Director of Private Client Holdings, a full-spectrum wealth management company that has incorporated mindfulness into the culture of the organisation and is using it to underpin the company ethos of “nurturing wealth”.

“Mindfulness facilitates calm and focus. This mindset supports better investment, financial, and life decisions.”

Some of the benefits of mindfulness:

• Less rumination. Research shows that mindfulness can reduce ruminating thoughts, which in turn can help you think more clearly and positively.
• Reduced stress. People who practice mindfulness show fewer signs of stress. This makes meditation even more important for those in prominent and decision-making roles, such as Wealth Managers.
• Improved memory. Working memory also seems to increase, helping you retain more information.
• Better focus. Mindfulness helps you focus on your work, consistently throughout the day, reducing chances of getting distracted, and sharpening cognitive potential.
• Greater emotional control. People who practice mindfulness have greater control over their emotions, and are less likely to react impulsively. This aids in making more logical investment decisions.

According to Alexander, aspects of mindfulness that are most relevant to making better financial decisions include:

• Rationality
• Direct experience (Focused engagement)
• Patience
• Humility

Rationality – “Mindfulness is about thinking clearly and being cognisant / aware of what you are thinking about. As a result, we can make rational decisions as opposed to emotional decisions. Rational decisions are truly the only way to implement successful investment strategies.”

Direct Experience (focused engagement) – “Direct experience or direct knowledge are the best ways to decide what is true and false,” says Alexander. “From an investing perspective, an extreme interpretation of this concept would be to invest by trial and error to have “direct knowledge” of good investing principles. However, for our purposes, direct knowledge includes focused engagement with the results of investments.”

Patience – “Patience is a core principle of mindfulness, and patience is also a key quality of effective long-term investing. Patience gives us greater capacity to avoid poorly conceived or hasty financial decisions.”

Humility – Alexander advises that a humble attitude allows us to recognize our own competencies and limitations - supporting a more objective perspective. “Humility provides a sound viewpoint from which to identify potentially damaging decisions.”

Better decisions and behavioural finance
“Focusing on one decision at a time, and avoiding panic, or frustrated and negative decision making is essential for nurturing wealth,” says Alexander. “It may sound like a bit of an “out there” concept but in terms of decision-making, the evidence is mounting to show that mindfulness has a powerful, positive impact on the process, leading to better decisions. This once esoteric idea is now becoming more mainstream, and Private Client Holdings’ decision to introduce mindfulness practices puts us in the company of corporations worldwide such as Apple, Google, Nike, General Mills, Proctor & Gamble and more, and the trend is only expected to continue.”


Quick Polls


Do you believe the FIA awards help product providers to understand the service expectations of the intermediary?


A E fanews magazine
FAnews August 2019 Get the latest issue of FAnews

This month's headlines

Create designer policies through AI
Are advisers in a precarious position?
A claim, COIDA and a dog bite
Non-disclosure never an innocent fraud
Prescribed assets: The threat to pensions
Cannabis and the issue of trust
Getting the most from disability claims
Subscribe now