INDIANAPOLIS – Advisors and clients spend an awful lot of time working, thinking and strategizing about the pursuit of money. But do they spend enough time on how that money will make clients happier?
For many, probably not, and Elizabeth Dunn, co-author of “Happy Money: The Science of Smarter Spending,” told advisors at the NAPFA Fall Conference about the importance of making the pursuit of happiness – rather than client net worth – a higher priority.
“People who think money can't buy happiness might not be spending it right,” said Dunn, a psychology professor at the University of British Columbia. A study she and her university colleagues conducted this year of more than 2,000 millionaires found that those with $5 million in assets were not any happier than those who had between $1 million and $2 million, Dunn said, although at $10 million, people managed to be a little bit happier.
Just what clients spend their money on can also be a big determinant of their level of happiness. People report “more happiness from experiences than material objects,” Dunn said. “Experiences make better stories. Experiences connect us with other people. They tend to be social and shared … bringing up together with people we care about.” Indeed, people like to use money to build their "Experiential CV," Dunn added.
Of course, before clients can spend much time on memorable, happiness-generating experiences, they typically need to focus on getting the money in the first place, and then building it with an advisor. No surprise, then, that wealthier people tend to spend more time working, commuting and shopping, Dunn said.
In addition to enjoying experiences, Dunn said money spent on not having to endure certain experiences is another leading source of happiness. “People who use their money to buy time are significantly happier when they outsource unpleasant tasks,” she said, adding: “Money can buy happier time.”
She offered one more money-related source of deep-seated happiness: investing in others. “The capacity to extract joy from giving to others may be baked-in to being a human being,” Dunn said. “If you hear someone say money can’t buy happiness, tell them to try giving some away.”
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