In a year marked by new volatility and changing economic expectations, even the best-known investment principles are worth revisiting. While behavioral finance concepts such as loss aversion and goal framing may seem fundamental, they remain essential tools for understanding how clients actually behave, especially under stress.
Financial Advisors recognize that “knowing the client” is more than a regulatory requirement. It means understanding not only the vision of time, but also the emotional story behind the numbers. Two clients may share the same purpose – for example, you will retire at 60, but will respond very differently when the market changes. One sees the opportunity, the other sees the risk. The difference is in why They are investing.
That “why” is important. Investment goals are often treated as planning inputs, but also reveal deeper psychological patterns. How risk does your client take, how do you interpret uncertainty, and what emotional outcomes do you want to avoid? Tapping that context will help advisers provide better guidance, especially when market conditions test client discipline.
This is where strong distinctions work. This is the difference between a builder and an evader.
Builders and evaders
Most clients’ goals fall into one of two broad categories, each reflecting a clear emotional orientation and behavioral tendencies.
Builder (ambitious, goal-oriented)
These clients are focused on opportunities and growth.
The general goals are:
- “I want to retire early.”
- “I want to create a passive income stream.”
- “I want to grow capital, so I have freedom in how I work.”
Typical behavioral traits of builders:
- Continue investing during market volatility
- Reconstructing the recession as a purchase opportunity
- Shows the risks needed to achieve your goals
Evaders (fear-driven, loss-oriented)
These clients focus on minimizing risk and avoiding the worst-case scenario.
The general goals are:
- “I don’t want to run out of money when I retire.”
- “I want to avoid being caught by surprise.”
- “I don’t want to rely on state pensions.”
Typical behavioral traits:
- There is a tendency to panic sales
- Often, they invest too much conservatively.
- Early success can reduce contributions
Restructuring goals for long-term discipline
Advisors can go beyond surface-level planning by exploring the emotional context behind clients’ goals. Even small set folds can cause oversized stress responses if your goal is rooted in fear. However, when goals are restructured around positive aspirations, clients are more likely to maintain their course.
For example, it helps you move your goal from “I don’t want to live longer than my money” to “I want to live independently and with dignity.”
How advisors apply this insight
There are three questions to ask when assessing a client’s goals.
- Why is this goal important to clients?
- Are motives based on fear or desire?
- How does this affect decisions during stress periods?
By identifying client emotional orientation, the advisor is:
- Provides more personalized risk guidance.
- Strengthen communication and trust.
- Encourage more consistent investment behaviour.
Conclusion
Investment goals are more than technical input. It’s an emotional sign. Whether shaped by fear or desire, these goals affect the way clients experience risk, respond to market stress, and define success. For advisors, the real opportunity lies in understanding why, not just what the client wants.
Consider two clients. Sarah, a 45-year-old executive, a financial independence-focused executive, and Tom, a 52-year-old contractor, are worried about their lack of money. Both describe moderate risk tolerances and choose similar portfolios. However, when the market drops, Sarah keeps the course and Tom wants to pull out. The difference is not their asset allocation. That’s their motivation. The first is to build towards your goals. The other is trying to avoid fear.
By identifying clients as builders or assigning them and adjusting their communication and planning approaches accordingly, you can help them navigate uncertainties with a clearer and more confident way. This is because numbers aren’t the only way successful in investing. It’s about adjusting the stories and strategies people believe in about their future.
