AB Advisor Institute Podcast

The Surprising Reason Why Newly Wealthy Clients Become So Controlling

18 September 2023
32 min listen

Summary

Many retail financial advisors work with clients who create wealth by owning and growing a thriving business or by managing a successful career. In most cases, these clients labored for years to become financially secure, but many achieve significant wealth because of a particular event. When this happens, advisors are often surprised that the client suddenly becomes less trusting and more controlling. 

Scott and Ken explore the psychological factors that influence an investor who experiences a sudden windfall of wealth that transforms her life. Specifically, the concept of a locus of control is considered. When a business owner runs her business, she experiences having personal control over the success of that business. But when she sells the business, the locus of control over her financial security shifts from herself to the advisor who must now manage the wealth. The podcast explores how this shift from an internal to external locus of control affects the investor and practical ways that advisors can respond creatively to this experience.

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