16 June 2023

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Habits and financial advice

Luigi Campopiano

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Over 40% of the actions performed by people every day are not the result of decisions taken, but of lived habits. Habits are the choices that we all make deliberately and which we then stop thinking about. But we continue to do these things. 

Habits represent the transition from a thoughtful action to an automatic action in a routine or the comfort zone. Habits occur naturally, because our brain is constantly looking for energy savings and this leads to a drop in creativity and innovation if diversionary actions are not implemented.

The cycle of habits is simple and begins with a signal, the need that gives rise to the routine and therefore to the mental automatism that leads to gratification corresponding to the satisfaction of the need. But what's missing? Creativity: Habits are always the enemy of creativity and innovation, a critical factor for success and differentiation.

Fortunately, even if it is difficult and tiring, habits can be changed by creating new needs that give rise to a different routine and which will allow us to achieve new gratification. By taking control of the cycle of habits, we may push negative trends into the background.

As financial advisors, we can change our clients' habits thanks to the skills that underlie neuromarketing, behavioral finance and the technical skills typical of our sector. Savers and investors need wealth planning to be able to start a planned investment journey gradually and which, statistically, will produce a more satisfying return over a few years.

In conclusion, leaving the comfort zone can guarantee better management of one's finances and more satisfactory long-term results.