Peoplesmith Global, Inc., an internationally recognized coaching firm specializes in applied emotional intelligence for executives, entrepreneurs and equity partners who are leader-capitalists. Through its sister organization, Peoplesmith Financial, Inc., intelligent emotion and behavioral finance coaching support personal and professional decisions for investment and business.
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"People make financial decisions for the right reason and the real reason." -- JP Morgan
Financial decisions and transitions often make rational sense, but also have to make emotional sense. Economists credit people with decisions that maximize our resources and minimize costs, calling on people to have the mind of a computer and the will power of a saint.1 If we were super-rational, we'd always chose the best, not most familiar strategy; We'd buy low and sell high. More often, we sell at the bottom, and buy at the top. And the pain of a 30% drop in our portfolios, the exit from our business, or conflicts in partnership is felt in the same location as we experience physical pain in our brain. Similar pains visit us when we step into unknown futures like retirement, transferring wealth to our children, or changing old behavior in service of a desired long term goal. Recognizing that our biology plays a part in how we navigate our future, Peoplesmith Financial acts as confidential thought partner, client advocate and financial literacy coach for the next iteration, or the next generation.
Money has neither intelligence nor emotion. People do. We can diversify our portfolios, set ambitious goals or calculate downside risk and yet, our behavior is one of the most important risks we need to manage. Emotional issues often trump logic. We sometimes rationally calculate what we need in retirement, save, invest, reduce consumptions, try never to splurge or speculate. Yet, as we venture into an uncertain future, factor in our loves, fears, relationships and legacies, we can waffle from the super-rational homo economicus to become what behavioral finance tells us is homo mistakus.2 Behavioral finance informs us how our thinking is biased our behavior is flawed under risk and uncertainty. It addresses behavior that derails sound decision-making like overconfidence, fear of loss or following the herd. Peoplesmith Financial works with intelligent emotions that supports our clients in desired financial decisions and transitions.
Using insights from psychology, economics and decision science, behavioral economics recognizes that people don't always make decisions in a rational, calculated way. We may analyze data logically, but too often our decision making is intuitive and automatic rather than deliberate and controlled. Behavioral finance accepts that emotions, perceptions and gut instinct cause us to misjudge important facts and make choices that are predictably mistaken. Preparing for the setbacks of change and transition allow Peoplesmith Financial clients to mastery the e-motion, or energy of motion to support desired outcomes.
Our biology is wired to seek pleasure and avoid pain. There is a high level of recidivism with any change initiative because the comfort of the familiar often pulls us back from untested future of the change we seek. We may have made up our minds to make the 'right' decision, but we need emotional engagement to get to the 'real' decision. Intelligent emotion creates momentum in the direction of our goals.
We invite you to call us for a complimentary consultation on how to apply emotional intelligence to your financial or investment goals. Feel free to contact us at Leaders@peoplesmithglobal.com or call us at 412-362-2622.
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1Richard Thaler; Investing for retirement, 2009.
2Jame Montier, The Little book of behavioral economics