David Lee Roth once said, “Money can't buy you happiness, but it can buy you a yacht big enough to pull up right alongside it.”  Over the past year a number of studies have been released that may prove the former Van Halen front man just might - up to a point - be right.

Most noteworthy is a study released last year from Princeton University’s Woodrow Wilson School which claims that up to a point, increased income can indeed make an individual happier.  The authors of the Princeton study analyzed the responses of 450,000 Americans polled by Gallup and Healthways in 2008 - 2009 and concluded that for individuals with incomes of less than $75,000 per year, an increase in income did lead to improved day-to-day happiness. Above $75,000 however, the correlation between increased income and improved daily happiness went away.

The study doesn’t say why $75,000 is the benchmark, but the authors say it’s “plausible” that this is the number at which most people’s basic needs are met and money for day-to-day expenses is no longer an issue.  At that point, other factors such as family and social relationships, engaging in a meaningful purpose or gathering fulfilling life experiences may have more impact.

A survey of affluent clients by Merrill Lynch early last year seems to support that finding.  In January, 2010, 51% of Merrill’s affluent retired clients responded that they wished they had spent more time focusing on their life goals, not just their financial goals, when preparing for retirement.

For financial advisors targeting affluent clients, this can be a key insight that dictates the direction of your conversations and relationship with clients.  While $75,000 is by no means a hard and fast number, the idea that there is some number that represents a comfort zone to each of your clients will dictate the topic of future conversations.  If their income, whether it be earned income from work or passive income from their portfolio, is below their comfort zone, then most of your conversations will be around how to increase that number.  It may be a conversation about how to increase their financial assets by saving more or investing better, or it may be a conversation on how to improve their human capital to get a job that pays more so they have more to save.  Just as psychologist Abraham Maslow’s hierarchy of human development is built on fulfilling our basic needs, your conversations will be focused on building and creating this foundational income.

For affluent clients who have assets that can produce incomes above that comfort zone however, the focus changes away from investments and income planning.  Undoubtedly these things are still important and the client will want to know they are taken care of at that level, but once that assurance is received, the client’s attention will turn toward finding happiness and fulfillment in life’s other key arenas.  What are their most heartfelt dreams and true life goals?  What is it that will provide them a sense of passion and purpose?  Now, you as an advisor have the opportunity to move beyond being a just a trusted financial advisor, to becoming your client’s trusted personal advisor, able to assist with all areas of their life.  The question is, Are you able to engage your client in that conversation?

Keith J. Weber, CFP, CPRC, is a speaker, author and founder of Weber Consulting Group, LLC, a financial advisor training, coaching and practice management consulting firm focused on life planning.  Through the website Retirement2020.com, Keith provides tools to advisors and clients to help build stronger client relationships and prepare for the latest “new retirement.”   Keith maintains the CFP® designation and is also a Certified Professional Retirement Coach.  His latest book, Rethinking Retirement, was released in July, 2010.

Keith has been in the financial services industry for over 20 years as a nationally recognized financial advisor as well as in financial institution investment program management and broker-dealer executive management.

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