Abundance or Scarcity?

I once had a co-worker who lived in one of those neighborhoods where everyone went all-out for holidays.  One year, she invited me over to help pass out Halloween candy.  When I got there, I learned that she had bought 25 bags of candy!

When the first kids arrived, I grabbed a handful to give to each of them.  Immediately I was chastised, “One piece per kid, Adam!”  I couldn’t believe it.  We had over 450 pieces of candy. Just one?  While I was concerned that there was too much candy, she was worried that there wasn’t enough.

How do you look at life? Do you believe that riches are all around us? Do you believe that new opportunities lie on every corner and in every conversation?  If so, then you have an abundance mentality.

Or do you have a mentality of scarcity where ideal clients are few and far between and found only through extensive marketing and hours of hard work?

In either case, your beliefs can have a profound effect on your behavior.

Just like you, clients can also have an abundance mentality or a scarcity mentality.

A client who has an abundance mentality:

  • Takes losses in stride, believing that success will come again
  • Is comfortable with the idea that with risk comes reward
  • May have unrealistic return expectations based on previous boom markets
  • May lack discipline in spending habits and take excessive withdrawals in retirement

When working with a client who has an abundance mentality, it is important to match their optimism for the future but you can balance it with a “just in case…” approach.  Here’s an example: “I agree with you that emerging markets will provide the biggest growth opportunities over the next 10 years, but just in case it takes longer to get there than we think, let’s make sure we keep your allocation in line with our financial plan’s recommendations.”

A client who has a scarcity mentality:

  • May have a difficult time with losses
  • May have been influenced by habits developed during the Great Depression
  • May be very price and value conscious

Clients who have a scarcity mentality need reassurance and careful redirection: “Yes, stocks can be volatile in the short-term but your portfolio needs to include stocks so your retirement money will grow even in periods of inflation.”

Are you a believer in abundance or scarcity?  More importantly, what do your clients believe?

By the way, we ran out of candy!

 

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