When markets behave irrationally (as they always have), and portfolio values fluctuate, it’s natural to feel triggered by fears about the future. At these moments, it becomes essential to look beyond traditional financial metrics to find deeper understanding in our investment strategy. Intrinsic motivation—what truly drives us from within—can transform how we approach wealth management, financial decision-making and stability during life changes.
Research Insights: What Really Drives Financial Behavior
Dan Ariely’s groundbreaking work on human capital and cultural motivation offers valuable insights into what truly drives human behavior. Through his company, Irrational Capital, he has spent years studying organizations that understand and value human motivation, revealing fascinating patterns about what really matters for their most valuable asset: people. Large mutual fund companies collaborating with Ariely believe that understanding these human factors leads to better investment choices.
The Science Behind Motivation and Financial Decision-Making
Two compelling studies illuminate the surprising relationship between motivation and performance in financial settings. In the first, Ariely worked with a hotel chain’s call center where the company provided weekly performance bonuses. He discovered that the same people consistently received these bonuses, indicating no change in behavior or motivation. When he experimented with randomly distributing bonuses over six months, an interesting pattern emerged: while high performers showed little change, low performers demonstrated significant improvement. The key insight? When people who never believed they could reach a bonus started receiving them, their motivation fundamentally shifted.
The second study, conducted at a production facility, compared different types of rewards: money, pizza, compliments via text, or nothing at all. While promised bonuses initially increased performance, the following days saw a significant drop. Surprisingly, pizza created slightly better results than money. But the most powerful and sustainable impact came from something simpler: paying compliments and appreciating people’s work.
Understanding Motivation Types in Wealth Management
From these studies emerge two fundamental types of motivation that significantly impact financial decision-making:
Extrinsic Motivation in Finance
External rewards like bonuses and monetary incentives can drive short-term behavior but often fail to create lasting change. This type of motivation isn’t forward-looking and can’t sustain long-term engagement with financial planning and wealth management.
Intrinsic Motivation in Financial Planning
The goodwill and energy that lives within us creates lasting change and genuine engagement with our financial decisions. This internal drive leads to more sustainable financial behaviors and better long-term outcomes.
The Colman Knight Approach to Motivation and Wealth
At Colman Knight, we recognize that sustainable financial well-being requires engaging both external and internal motivations. Our holistic financial planning approach considers both the technical aspects of wealth management and the human elements that drive financial decision-making.
Supporting Sustainable Financial Behavior
When markets fluctuate and fear escalates, we encourage focusing on three key areas:
- Managing your spending mindfully
- Maintaining a long-term strategy and view
- Engaging in daily joys that support financial well-being
One way we support this approach is by providing curiosity and generous reflection in our connections with clients. We believe that understanding your intrinsic motivation is crucial for long-term financial success and satisfaction.
Reflection Questions for Your Financial Journey
Take a moment to consider these questions about your relationship with wealth:
- What reliably brings you joy in your financial life? And what prevents joy?
- What are your intrinsic motivations?
- How do your intrinsic motivations show up in your financial decisions and behavior?
- How do you feel when making financial decisions that align with your internal values?
Moving Forward: Aligning Wealth with Motivation
Our holistic approach to financial planning helps you develop a sustainable, internally motivated relationship with wealth that can weather market volatility and support your long-term well-being. Through curiosity-driven conversations, generous reflection opportunities, and regular check-ins, we help ensure your financial strategies remain aligned with what truly motivates and fulfills you.
Ready to explore how understanding your intrinsic motivation can transform your relationship with wealth? Contact us to begin the conversation about holistic financial planning that honors both your financial goals and internal drivers.
