While it might be tempting to assume that having more money makes a person happier because it opens up spending opportunities that are unavailable to those with lower incomes, experienced advisers believe that To provide a more holistic view, the researchers investigated whether increased income leads to greater well-being. We sought to assess it in two dimensions: emotional well-being (how the individual feels today) and evaluative well-being (how the individual feels about his or her life as a whole).
An oft-cited 2010 study by Daniel Kahneman and Angus Deaton found that overall life ratings were positively correlated with income (even at levels above $120,000), and that emotional health was associated with $75,000 of income. It was found that it only increased up to 100% and plateaued after that. This suggests that an increase in income does not necessarily increase an individual’s daily well-being after a certain point. But a 2021 study by Matthew Killingsworth using a more detailed measurement scale found that daily health continues to improve. under Income levels above $75,000 (we also know that higher incomes lead to better overall life ratings).
Specifically for financial advisors, Kitces Research found a similar positive correlation between income and happiness. For example, in our study, not only was advisor’s take-home income positively correlated with overall life satisfaction, but similar to Killingsworth’s findings, their income was positively correlated with positive emotions and We found a negative correlation with negative emotions. $75,000.
Importantly, there are other factors that mediate the relationship between income and happiness. This may explain why higher incomes do not always lead to greater happiness. For example, Killingsworth found that respondents increasingly reported not having enough time to get things done as their income increased. This “time poverty” concept seems to apply to her financial advisors as well. Kitces Research found that the number of hours advisors worked in a given week was inversely correlated with their happiness.
These findings suggest that advisors who choose to pursue increased income in order to pursue more experienced well-being are more successful if they intentionally preserve the time available for other responsibilities and interests. Some of the ways advisors can help do this include adding staff when the company reaches a certain revenue “pain point” and helping the company grow. This includes allocating more “hard dollars” to pay external vendors for marketing services as they grow. , frees up company owners to spend time on more rewarding and enjoyable activities.
The final point is that as an advisor’s income increases, so can their well-being potentially, both in terms of day-to-day well-being and overall life evaluation. , when higher incomes come with increased demands on the advisor’s time, experienced “time poverty” has a negative impact on advisors, especially if they come to feel that they do not have time to complete all that is required. may give. Counselor happiness. After all, time is the ultimate scarce resource, and it’s important that advisors use it wisely, especially as their income increases!