Note: This article appears on the ETFtrends.com Strategist Channel
By Patty Quinn McAuley
Our Two Primary Motivators Are Not Equal
Psychologists assert that all human motivation can be divided into two categories: gain and pain. Anytime we actually do something, we do it because we want to avoid pain or achieve gain.
I attended a presentation last week hosted by Steve McClatchy, leadership coach and author of The New York Times bestseller Decide. According to McClatchy, “Actions driven by gain produce far more significant positive results in your life and your business than tasks that you do to prevent pain.”1
“Prevent pain” activities are the have-to-dos — paying bills, taking out the trash, responding to a negative email from a client, etc. If we don’t do them, there will be negative consequences.
Related: Collaboration — the New Model for High-Net-Worth Investors?
Gain activities don’t have to be done, but if they are, they can improve our overall health, wealth and happiness. If we don’t focus on gain activities, such as building strong relationships with family and clients or investing time in things we truly care about, we may never achieve our life goals.
But it’s not that simple. Pain-driven activities typically get our attention first — they are the nagging, annoying tasks we simply can’t avoid. Time and time again we sideline gain activities in favor of preventing pain.
Helping Clients Overcome Loss Aversion
As financial professionals, it is our job to help ensure that our clients prioritize gain ahead of pain while also obtaining some level of comfort with pain. In our industry, we’re all familiar with the idea that investors are driven by fear and greed. But let’s put aside the negative connotations of greed for a moment and stay focused on the concepts of pain and gain.