The value of mindfulness in wealth management

It has also entered the business environment as we realise the real benefits of a focused mind, such as being fully aware and actively attending to our workplace, to what we are doing, to the space we’re living in, and having our mental capabilities fully available at any given moment.

Mindfulness is important for investing and wealth management.

If you’re suddenly confronted with a problem, do you want to have 50% of your mental capacity to solve that problem or the full 100%? Mindfulness facilitates calm and focus.

This mindset supports better investment, financial, and life decisions.

Some of the benefits of mindfulness:

• Less rumination

Research shows that mindfulness can reduce ruminating thoughts, which in turn can help you think more clearly and positively.

• Reduced stress.

People who practise mindfulness show fewer signs of stress. v

• Improved memory.

Working memory also seems to increase, helping you retain more information.

• Better focus.

Mindfulness helps you focus on your work, consistently throughout the day, reducing chances of getting distracted, and sharpening cognitive potential.

• Greater emotional control.

People who practise mindfulness have greater control over their emotions, and are less likely to react impulsively. This aids in making more logical investment decisions.

Aspects of mindfulness that are most relevant to making better financial decisions include:

• Rationality.

Mindfulness is about thinking clearly and being cognisant/aware of what you’re thinking about. As a result, we can make rational decisions as opposed to emotional decisions. Rational decisions are the only way to implement successful investment strategies.

• Direct Experience.

Direct experience or direct knowledge are the best ways to decide what’s true and false. From an investing perspective, an extreme interpretation of this concept would be to invest by trial and error to have “direct knowledge” of good investing principles.

• Patience.

Patience is a core principle of mindfulness, and a key quality of effective long-term investing. Patience gives us greater capacity to avoid poorly conceived or hasty financial decisions.

• Humility.

A humble attitude allows us to recognise our own competencies and limitations .

Alexander is director of Private Client Holdings

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