A financial psychology lab will help future financial advisors understand clients’ motivations and how to communicate with them
Money. Pink Floyd, ABBA, Cardi B and many other artists have written songs about it—what it feels like to not have enough or what you’d do with loads of it.
Everyone wants money. But how to invest, save and spend it is a personal decision often fraught with emotions, family baggage and unfocused dreams for the future. A new lab at K-State will go beyond the numbers of investing to delve into the psychology behind financial decision making.
Understanding financial psychology
Kansas State University’s Personal Financial Planning (PFP) program — ranked in the top five nationally — prepares future financial advisors to not only know how to invest money but also how to communicate with clients about their needs, fears and financial goals. On top of their retirement, investment, tax, insurance and estate planning classes, PFP students take financial counseling and family relationship courses to learn how to understand and help people.
In the future, the K-State’s PFP program in the College of Health and Human Sciences will also have the Lipari Family Financial Psychology Lab thanks to a planned estate gift from Jim and Mimi Lipari of Lee’s Summit, Missouri.
“It’s human nature for all of us to make decisions based on past experiences, fears, optimisms, and the influences of others. As a result, people too often make poor financial decisions that significantly impact their lives,” said Jim, a certified financial planner with UBS. “If financial advisors were better equipped to guide people through those decisions, which are more often emotional and psychological than financial, then we as an industry would be able to significantly serve them better.”
The financial psychology lab adds a new dimension: equipping financial planners to handle the complex emotions, thoughts and relational issues that influence their clients. It will also increase research and training to help advisors understand client behavior, communicate during sessions, and foster trust in their clients.
The connection to well-being
“There has been a lot of research showing the connection between money and overall well-being,” said Megan McCoy, director of the personal financial planning master’s degree program. “Financial well-being is linked to physical and mental health and relationship well-being.”
And it goes the other way, too — physical health, mental health and relationship well-being also affect financial well-being.
“This bi-directional relationship is an understudied area of research that the financial psychology lab will fill,” McCoy said.
K-State’s PFP program is consistently ranked among the top five programs in the country. This gift from the Liparis demonstrates the support the PFP program has from alumni and industry leaders to continue to research and innovate for the future.
Mimi Lipari hopes the lab will help students learn how to help others the way Jim helped her.
“As Jim and I were starting our careers, he told me I need to put money into a 401K. I said, ‘You’re kidding me — that’s a pair of boots!’,” Mimi said. “Jim convinced me I needed to invest in my retirement fund, and he instilled this in our kids, too. Hopefully by educating young people in financial literacy and the emotions around finance, it will help them educate future generations so that everybody ends up, not with a bunch of boots, but with a retirement fund.”