To increase the odds of clients choosing you and the services you offer, it helps to have a working knowledge of what psychologists call cognitive selection.
How do humans make decisions? We may want to appear ever the rational decision makers, yet human instinct plays a much larger role in our decisions than we care to admit. We make many decisions based on emotion, later justifying them using logic; it pays to pay attention to these four crucial components underlying the instinctive selection process of human decision-making:
- Negativity bias.The fear of loss is, unfortunately, a more powerful motivator than the value of potential gain. The good financial advisor’s job is to ask uncomfortable questions: has there been an independent review of a portfolio? have insurance policies / cost structure of investments been reviewed? Etc.
- Confirmation bias (cognitive bias).People tend to engage in wishful thinking. When you would like something to be true, you believe it to be true without evidence. Investors assume that: they’re protected amidst volatility, their financial plan is always relevant (that there isn’t overconcentration or hidden costs), they have the right insurance coverage. None of it may actually be true. The good financial advisor’s job is to be the outside force skilled at the art of disconfirmation, i.e. proffering evidence to disprove assumptions.
- Social consensus (herd mentality).Word-of-mouth-influence is where affluent marketing resides. People talk, people listen and no one want to be left out, not least the affluent. The good financial advisor’s job is to exceed professional expectations, emotionally connect, activate conversations, and script the narrative.
- Spaced repetition (pattern recognition).Repetition is the mother of learning – and the way to impact belief systems. There’s a tendency to believe something repeated enough times. Make it easy for your affluent clients to talk you up: be part of their world, send surprise gifts that stimulate conversation. Script the narrative: provide them with a couple of simple soundbites about your services and their quality. For example, “______ knows more about medical practices than anyone I know.” “We don’t make a financial decision without getting input from ______.”
For more information, please read:
How to Capitalize on Our Instinctive Cognitive Selection Process | Wealth Management