Diversification of Wellbeing

Any good financial advisor will tell of the importance of diversifying your portfolio.  Putting all of our money into one investment leaves us vulnerable to risk.  To protect ourselves, we diversify, investing some of our holdings in riskier investments and some in more stable investments.  This is the safest way to see our assets grow in a relatively safe way.

Kol Birke is a friend of mine and fellow graduate of the Applied Positive Psychology program at UPenn.  His job (he is a “financial behavior specialist” for the Commonwealth Financial Network,) is to advise financial advisors, and he teaches them all about diversification.  But he doesn’t teach them about financial diversification (they already know all about that.)  He teaches them about diversification of well-being.  It is hard to help a client boost their financial status, without seeing how their well-being is spread across the other areas of their life.

Kol has developed a free tool (available for download here) that he and some of his advisors use to get their clients thinking “beyond just their finances.”  When clients talk to a financial advisor they might find themselves giving too much importance to their financial wellbeing without considering how it relates to other goals.  But Kol wants to see his clients diversify their wellbeing, especially when they are planning ahead.  “It’s like having multiple legs on your chair,” he says, “so if one gets kicked out due to life circumstances, you still have other legs to stand on.”

Almost none of Kol’s conversations are about finances, but the financial aspect is present in everything.  He prefers to help clients with goal attainment.  To achieve their goals they need clear vision, willpower, and “waypower.”  The client needs to have a clear vision about what they want and the willpower to do what needs to be done to get there.  The advisor will help with the waypower – the “how” to achieve those goals.

I recently wrote about the Gallup organization’s new book, “Wellbeing: The Five Essential Elements,” (see my article here) to help consumers develop a diversified portfolio of well-being.  Rather than focusing on wealth development, they identified five elements of well-being, each of which is important for overall health and happiness: career wellbeing, social wellbeing, financial wellbeing, physical wellbeing and community wellbeing.  They also provide (included with each new copy of the book) their own online survey tool to help you measure your wellbeing across all categories (just like the charts that would accompany a brokerage account statement to show how diversified the investments are.)

For each domain of wellbeing, the book devotes a section to providing tips and suggestions for how to increase wellbeing in that area.  Increase community wellbeing by spending six hours a day with friends and family in enjoyable social activities.  Increase career wellbeing by using your strengths at work, etc.  The only problem is, while the book has a section on how we spend our time, it doesn’t provide practical advice to help you budget your time across all of the areas of wellbeing.   When you can’t do it all, should you spend an hour to go to the gym, or spend an hour socializing with friends?  How do you prioritize?

I spoke with author Tom Rath about this issue, (he is a fellow Master of Applied Positive Psychology alumnus, the head of the workplace consulting business with Gallup, and is also the author of “How Full Is Your Bucket? Positive Strategies for Work and Life”, “StrengthsFinder 2.0”, and “Strengths-Based Leadership.”  From his experience, the people who are really flourishing are those who have high scores across all areas, not just one or two.  So it’s important to work on all of them and not let one falter for the sake of another.  I also suspect that working on any area of wellbeing will give a boost across all of the others (eg. Going to the gym will not only help your physicial wellbeing but your social life and your career as well.)

For a more detailed and comprehensive look at wellbeing diversification, I would suggest reading “Happiness: Unlocking the Mysteries of Psychological Wealth” by the father-son team of positive psychologists, Ed Diener and Robert Biswas-Diener.  Their book gives a more comprehensive look at the research on the subject, although it doesn’t provide the nifty online tool for measuring and tracking your own wellbeing portfolio.

Regardless of which book you read or which tool you use, diversification of wellbeing is important.  But wellbeing investment is like economic investment in another way:  even more important than diversifying is simply starting to contribute to your investments to let them grow.  Sometimes we waste too much time trying to decide the right investment to make rather than just taking a next step, however small that might be, towards living a better life.

References and recommended reading:

Rath, T. & Harter, J. K. (2010).  Wellbeing: The Five Essential Elements.  Gallup Press.

Diener, D. & Biswas-Diener, R. (2008).  Happiness: Unlocking the Mysteries of Psychological Wealth.  Wiley-Blackwell.

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14 Responses to Diversification of Wellbeing

  1. Jessica Durivage November 30, 2010 at 11:56 am #

    This is a great post. My intention in 2011 is to really focus on balance. I feel that now that I have experienced many of these areas out of balance – I have a real perspective based on my own experience of what balance or diversifying these areas means to ME (not my partner, boss, friends, family, etc).
    I am definitely going to check out your article and the book. Thanks Jeremy!

  2. Marie-Josee Shaar November 30, 2010 at 12:52 pm #

    A comment on one area bringing about benefits on others (like your example above, going to the gym helps your social life and your career): this is absolutely true, Jeremy! Health, happiness and productivity are not only related, but also mutually reinforcing. The more you have of one, the easier it is to get the others. I gathered a lot of data over time on this, and I’m glad to see that your conclusions agree with mine!
    Very best,
    MarieJ

  3. Lisa Sansom November 30, 2010 at 1:14 pm #

    Fantastic! And just in case people should get overwhelmed, all it takes is one baby step at a time. 🙂

  4. Dan Bowling December 3, 2010 at 12:07 pm #

    First, great to hear what the brilliant applied positive psychologist Kol Birke is doing these days. Thanks for featuring him here. There are literally tens of thousands of financial advisors in the US alone, but I know of virtually none focusing on this very important approach. The best understand it, on a gut level, but having persons like Kol apply science and discipline to the analysis is needed. Second, like Marie-Josee I was struck by your comment that focusing on one area of well-being probably helps in all areas, and I tend to agree with Tom in this regard as well (I was lucky enough to read a draft copy of his book some time ago, through my friends at Gallup). However, as you know, Marty is taking his theories in a different direction, that well-being in any one of four domains is in and of itself satisfactory for some people (an oversimplification, to be sure). Somewhat controversial in our community, and it will be interesting to see the reaction to his new book this spring.

  5. Marie-Josee Shaar December 3, 2010 at 2:01 pm #

    Dan, I don’t think there is a contradiction between my/Tom’s point of view and Marty’s. Tom and I believe that more well-being in one area will increase well-being in others. Marty believes that well-being in one area is sufficient for some people… Well, I’d like to argue that well-being in one area can be sufficient EXACTLY BECAUSE it will have a spill-over effect on others.

    For example, someone may focus only on their physical well-being. They may think that this is all they work on and care about. But because they are physically well, they have more self-confidence. Because they exercise, they have lower levels of stress hormones. Because they sleep enough, they are better able to self-regulate, etc. All of these helps them better perform at work, so it helps their career. All of these also helps their relationships, so their social well-being also increases. So all in all, even if all they focus on is the physical part, the spill over helps in other areas, and so they are better off over all.

    To me, that reconciles Marty’s point of view with ours. No?
    Very best,
    MarieJ

  6. Lisa Sansom December 3, 2010 at 2:18 pm #

    I wonder – random thought here – if people with well-being across different domains are more resilient? Because if some life event happens, and all of your well-being eggs are in the basket that gets hit, it may be harder to recover… As I said, random thought…

    And I completely agree with Marie-Josee about the spill-over effect. The model may not be designed that way, but I believe human beings are…

    All the best,
    Lisa

  7. Marie-Josee Shaar December 3, 2010 at 2:39 pm #

    Your resilience question makes a ton of sense, Lisa!

    My whole model revolves around sleep, food, mood and exercise, and for sure better sleep, mood and exercise habits are known to boost resilience. Not as sure about food, but I’m pretty sure it does. So within my model, if one area was hit, the others could contribute to a better recovery, which supports your hypothesis.

    I’m not an expert at the Gallup model, but my understanding of it leads me to believe that the same logic would apply.

    That’s very good food for thought, Lisa!
    MarieJ

  8. Jeremy McCarthy December 3, 2010 at 11:44 pm #

    Great discussion everyone. I want to clarify one point. Tom did not actually say that working on one wellbeing domain would have a spillover effect into other domains. In fact, his point was almost the opposite. His research showed that people who are really doing well in life have high wellbeing across all areas, so his recommendation, and the gist of his book, is that you really do need to spend time working in all areas.

    In some ways, this is my biggest criticism of his book. It’s easy to say, “want a better life? Simply work on improving every aspect of it! The secret to happiness is to work hard at your career, socialize with friends, volunteer in your community, exercise every day, and spend quality time with your family.” With this kind of plan, you could easily run yourself ragged trying to find wellbeing.

    My theory was that people don’t necessarily need to stress out about trying to do everything because just doing small things in one area might have an overflow effect into the other domains. I think MarieJosee described how it might work perfectly.

    I wasn’t sure what the four domains are that Dan referenced from Marty. It could be that Marty’s domains are different pathways to happiness–any one of which could work for any given individual, and not different aspects of one life, where Rath’s research shows you have to get them all humming along to truly be in a good place.

  9. Jeremy McCarthy December 3, 2010 at 11:49 pm #

    Lisa’s comment echoes the way Kol looks at wellbeing with his clients. If the clients of his financial advisors are only focused on their financial wellbeing then they aren’t really well prepared if they were to suddenly take an economic hit and had “all their eggs in one basket” as you described. Kol agreed that this is the reason to help people focus on developing their wellbeing across different aspects of their life so if their health or economic circumstances were to change suddenly, they would have other aspects of their life from which to draw their wellbeing. Good thoughts everyone. Thanks for your ideas on this.

  10. Dan Bowling December 4, 2010 at 7:48 am #

    Good discussion. I tend to agree with your and MJ, for the most part, that there is some interrelationship, or spillover, among the elements of well-being. I mispoke earlier when i referenced Marty’s 4 domains, meaning instead his 4 elements of well-being, which you all know are positive emotion, relationships, meaning, and accomplishment (PERMA). His argument (overly simplified here, and more theoretical than practical in design) is that each can stand alone. But they certainly not need to. Indeed, an operating thesis of positive psychology is that increasing one’s well-being in one area (i.e,.learning optimism through changing thinking processes) can improve one’s life in many tangible and different ways.

  11. Lisa Sansom December 4, 2010 at 10:45 am #

    Quick comment – word going through the MAPPosphere is that PERMA now stands for Positive emotions, Engagement, positive Relationships, Meaning, Accomplishment – five elements. Can anyone confirm or deny?
    Thanks!

  12. Jeremy McCarthy December 4, 2010 at 1:29 pm #

    Thanks Dan, I agree with you. These are two sets of domains that are matrixed so PERMA could be applied across any of Rath’s domains of life and vice versa. Lisa, that was my understanding as well. I think Dan forgot Engagement! Thanks, J

  13. Dan Bowling December 4, 2010 at 3:23 pm #

    Yes, Dan did misspeak, again (which I do frequently), and left out engagement. Lisa correctly identified the 5 elements of Marty’s latest theoretical framework, PERMA.

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