Leveraging positive psychology in the hunt for value

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Leveraging positive psychology in the hunt for
value

• Bain Co.s consumer research, featured in the
  Harvard Business Review, underscores the value
  proposition offered by impact investing
  strategies. By Lisette Cooplisette-cooper_220x190e
  r, PhD, Founder and CEO of Athena Capital
  Advisors. The September cover story of Harvard
  Business Review highlighted the challenges faced
  by corporate America when it comes to
  understanding and pinpointing what consumers
  really desire in their ongoing and evolving hunt
  for value. Building off of Abraham Maslows
  Hierarchy of Needs, the authors from Bain Co.
  identified 30 different fundamental attributes of
  value in their most essential and discrete
  forms.They proposed that these elements, when
  channeled effectively, can translate into a
  distinct competitive advantage for those
  companies able to address the right combination
  of needs that together offer the highest and most
  rewarding payoff for consumers.
• The fundamental sources of value as identified by
  Bain Co. can be categorized as either
  functional in nature, emotional, life changing,
  or as having a social impact. Each category
  effectively represents a progression as consumers
  ascend upon the hierarchy of Bain Co.s
  identified need states (see graphicThe Elements
  ofValue Pyramid).

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While the most perceived value may lie in the
highest-order elements of value, such as those
residing in the life changing or social
impact categories, the authors note that
companies seeking to address these demands cant
do so without first meeting consumers more basic
functional needs.
While the most perceived value may lie in the
highest-order elements of value, such as those
residing in t While the most perceived value may
lie in the highest-order elements of value, such
as those residing in the life changing or
social impact categories, the authors note that
companies seeking to address these demands cant
do so without first meeting consumers more basic
functional needs. he life changing or social
impact categories, the authors note that
companies seeking to address these demands cant
do so without first meeting consumers more basic
functional needs.
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This resonated with me because it speaks to how
we have defined our own value proposition here at
Athena. In wealth management, clients rightly
demand market- beating risk-adjusted returns.They
demand strategies that enable capital
preservation and an ability to successfully
manage risk. A high-touch service offering in
which advisors continually stay ahead of client
needs is also a prerequisite. While
differentiation can and does occur in this
functional level, the recognition of an RIAs
value proposition is often far more pronounced in
the elements that exist higher on Bains
Elements ofValue pyramid. Access, for instance,
can be a critical characteristic in wealth
management, particularly among high-net-worth
clients seeking investments in hedge funds,
private equity or venture capital. And in the
life changing category, RIAs can provide
heirloom value through helping clients manage
assets across generations. Going one step
further, advisors can enable self- actualization
through freeing clients to immerse themselves in
those activities that bring the most joy and
fulfillment.  The holy grail, however, as it
relates to fulfilling the self transcendence
need that Bain identified at the very top of its
value pyramid, is in helping clients achieve a
social impact. This is the category that channels
the power of positive psychology to drive the
most value, yet it is also perhaps the hardest to
quantify for both consumers and companies alike.
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This is an area where weve also dedicated
considerable time and resources because our
clients increasingly recognize impact investing
as one of the most valuable ways to generate a
return on their capital, from both an investment
and social perspective. Our own research,
Social Finance and the Post-Modern Portfolio
Theory Practice, was published this spring in
the Journal of Wealth Management. Through the
paper, we sought to introduce metrics of social
return in the construction of portfolios that can
accommodate the unique and specific goals of
investors seeking values-based investment
strategies. Similar to the Bain research, at the
heart of our findings was the effect of positive
psychology. This helped us formulate a new
contemporary lens through which we redefined the
meaning of utility as it relates to a more
comprehensive and holistic vision around our
clients investment goals. Of course, value is
in the eye of the beholder. For many, our mandate
remains the pursuit of the highest possible
risk-adjusted returns.
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For others, a growing segment of our client base,
our mandate increasingly requires us to find the
right balance in meeting their functional needs
around risk and returns, while facilitating a
desire for self-transcendence that only comes
through making a social impact. Used with
permission from Bain Co. Article Resource
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