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Many advisors were motivated to enter our profession by a desire to help others. This is a worthy goal, but what does it entail?

The need is there

There’s no doubt that investors need your help. A recent RAND Corporation working paper concluded that most Americans do not know enough about investing to deal responsibly with “the burden of post-retirement.” It reported that, in 2004, only half of people surveyed (of retirement age or older) could correctly answer two basic questions about compounded interest and inflation. Only one-third correctly answered those questions and a third question about diversification of risk.

What makes us more kind?

A genuine desire to help others assumes a certain level of benevolence. A recent study sought to determine why some people are more kind than others. The study differentiated “genuine kindness” from kindness motivated by self-interest (like expecting something in return or maximizing gain).

The study found participants with more positive attitudes were likely to be more genuinely kind to others than those with predominately negative emotions. It’s difficult to be genuinely kind when you are feeling out of sorts.

In addition, higher intelligence makes us more genuinely kind. Participants who scored higher on tests designed to determine intelligence were found to exhibit traits associated with genuine kindness. Contrary to what some might assume, higher intelligence was not correlated with the use of kindness to achieve an ulterior goal.

Age also affects our propensity to be genuinely kind, and not in a positive way. The study found we get less genuinely kind as we age.

Another counterintuitive finding involved the effect of increased income on genuine kindness. You would think more wealth would predispose those so fortunate to be more kind to those less privileged. Not so. The study found genuine kindness decreased as income rose.

This troublesome finding is consistent with other studies (summarized here) that found the following negative effects of attaining higher social status: impaired key social and emotional skills, less interest in connecting with others, less attunement to other people’s emotions, less compassion and less generosity.

The study also found parents exhibited lower genuine kindness than non-parents.

The benefit of being genuinely kind

A pair of studies (summarized here) found a link between kindness and happiness. One study found people reported feeling happier when they were asked to remember spending money on someone else than when they recalled a purchase made for themselves.

The study also found evidence of a “positive feedback loop.” Those who felt happy about prior acts of genuine kindness were more likely to engage in similar altruistic conduct in the future.