As the industry has shifted from managing money to managing emotions, Tatiana Enhorning has found new application for her psychology degree
As much as advisors ostensibly help clients manage their money, it often feels like they spend as much time helping clients manage their emotions. The discipline of behavioural finance has been integrated into this industry, and the emotional turmoil brought about market volatility and news headlines has become more well understood. Advisors are now being tasked with helping to manage their clients’ psychology as it pertains to investing under the umbrella of providing holistic service. All these changes have moved the industry deeper into Tatiana Enhorning’s wheelhouse.
Enhorning is an Investment Advisor with the Wronski Cann Team of Richardson Wealth. Before embarking on her career as an advisor, however, she obtained a bachelor’s degree in psychology. That understanding of psychological methods and principles has helped her better serve clients as an advisor and help manage both the emotional and financial side of this profession.
“There's so many times in all of our lives where we are talking to someone and we don't quite understand where a very strong opinion is coming from. And psychology helps explain a lot of that, how someone’s experiences has wired their brain differently from our own,” Enhorning says. “I find myself asking clients questions like ‘what do you mean by that’ or ‘tell me more about that,’ because I might not understand where they’re coming from at first, or I might have assumed something about them that I need to correct.”
Enhorning applies psychological principles to herself as much as she does to her clients. She’s aware of her own natural biases and assumptions and checks herself against them frequently, just as she nudges clients to ensure they aren’t being governed by their illogical brains. When her career began in financial services, Enhorning says she was drinking from the fire hose, learning all she could about finance, economics, and investing. She didn’t think those psych principles would apply to this work until she started serving clients on her own.
Clients didn’t just come with questions about registered accounts and capital gains tax, they were asking Enhorning about how they can best support their child with a disability, or what they could do to achieve their dream retirement. She saw them starting to tear at the investment plan when volatility hit the market, unable to bear the emotional weight of a down market. She saw that an undercurrent of psychology was essential to providing clients with the kind of personalized service they have come to expect from their advisors.
Though she is careful to stay in her lane and not to act as a psychologist, one psychological framework that Enhorning can apply to her work is the idea of the four behavioural investor types. These types, she notes, can be helpful as a simple tool for understanding client behaviours by further unpacking their innate desires, motivations, risk tolerances, and biases. While she uses these personality types as helpful tools, Enhorning stresses that she doesn’t try to put any individual client into a particular box. Instead, this offers a way of analyzing behaviour that can then help her offer course corrections for clients.
The first of the investor types, Enhorning explains, is the ‘preserver’ who, as the name suggests, is primarily concerned with safety and wealth preservation. Those are the clients who might insist on staying in GICs no matter the market conditions or interest rate environment. Those who obsessively check their accounts, and feel panicked with each small drop in the market. They often fall into the cognitive biases of loss aversion, status quo bias, and endowment bias, Enhorning says. These investors over-emphasize short-term returns, which can be problematic for long-term plans.
The second investor type is called the ‘follower,’ and typically lacks either the knowledge about financial markets or the confidence to make investment and financial decisions themselves. These investors may often be a bit passive, requiring additional coaching and education from their advisors. If guided by the right sources, these individuals can be successful, but Enhorning notes that ‘followers’ tend to take advice from various sources, and may end up losing sight of a meaningful financial plan. She notes they can tend towards recency bias, hindsight bias, and regret aversion.
The third type is called the ‘accumulator.’ These individuals tend to prioritize growth over everything, and will rarely be satisfied with any rate of return. These investors can suffer from overconfidence and will often have a more fraught and confrontational relationship with their advisor. They usually want to be in the driver’s seat, and can often struggle with biases around self-control, affinity, outcome, and overconfidence. This approach often results in more frequent trading, which tends to have worse outcomes overall.
The final personality type is called the ‘independent,’ and it’s a category that Enhorning says many advisors fall into. These individuals are very hands on and analytical, and tend to be logical in their decision making. They are informed and enjoy understanding investing, which can often mean they become DIY investors. They can also come with their own strong, unconventional views on the market. Collaboration with an advisor, for these individuals, often relies on just how much control they are willing to eventually give up. They often suffer from cognitive conservatism, availability bias, confirmation bias, representativeness, and self-attribution. They can sometimes be overconfident, to their detriment.
“These categories are general,” she says, “And we can’t change who someone is.” But she argues that this can still be a useful tool that advisors can leverage to better get inside the mind of different clients’, understand their biases, and help them stay on track when stress arises. This can help serve among the many psychological tools that a modern advisor needs to guide clients through the world of investing in 2025.
“Advisors can work to build the most perfect portfolio from our perspective and have it neatly nestled into the most perfect financial plan. But if there's information that we've not asked the clients’ or not dug deep enough to make sure that we understand them, their family and the psychological risks to the plan, then the plans may be abandoned. The most durable plans are those grounded in a clear understanding of a clients’ psychology, acknowledging the biases and emotional responses that could shape decisions relating to growth, life’s uncertainties, and the inevitable swings of the market. If we exclude these factors it will be much harder for them to follow the plan and reach their stated goals.” Enhorning says. “Psychological principles add an additional layer to both protect the advisor and the client long term.”
