Financial advisers need to determine the emotional drivers of wealth creation in order to provide more relevant and better quality of advice, according to Ipac executive chairman Arun Abey.
"The next evolution of the industry is actually understanding what the money means for the investor," he said.
In order to achieve this, financial planners need to change their information and fact finding processes to incorporate more emotional factors, according to Abey.
At present there is too much focus on achieving a pure dollar result that marginalises the value of the financial plan, he said.
"When that magic number comes through we start to do the allocation in our head, this is in equities, this is in international equities, this is bonds, etc and the tax numbers," Abey said.
"So we end up doing a plan for the money and it might be a perfectly competent plan but it may have absolutely nothing to do with that person's life."
A key ingredient Abey identified to adopting greater emotional engagement was to gain a better understanding of what causes anxiety for investors and how to communicate to them in a manner that can alleviate this anxiety.
One factor that has been identified as being important to investors is loss aversion where investors feel more pain from losing money that they do from earning it.
Changing the presentation of reports would be a good starting point to improve the communication process as the first numbers presented usually represent the shortest time horizon which is also most susceptible to loss scenarios, Abey said.
