We make decisions everyday that are relatively inconsequential: medium latte or large cappuccino? Take the tunnel or the bridge? Run out for lunch or eat at the desk? But other decisions we make carry more weight, and few are as important as deciding who we trust to manage our money and our financial future. The process a potential new client goes through in identifying, evaluating and selecting a wealth advisor requires multiple decisions, and that’s why we think it is valuable for an advisor to become familiar with current thinking about the science of decision-making.
Right brain – Left brain
While it is anatomically a bit simplistic, the right brain/left brain concept is a convenient device to help visualize the rational and emotional thought processes that take place simultaneously in all humans. The important take away is that the two sides react to input differently.
The left brain is detail oriented and evaluates in a businesslike manner. It gathers information, breaks it into pieces and looks for facts and details. The left brain takes input literally and processes it methodically. You could say it behaves like a classic “quant”, to use an investing term.
The right brain seeks to understand things from a broader, more human perspective. It responds to stories and humor, observes tone and body language and looks for context relevant to individual experience. The right brain is forward looking and evaluates intuitively.
It’s noisy over there on the left side
It’s tempting to assume that the left brain is heavily favored in the process of selecting a financial advisor. After all, there are plenty of facts and figures a prospect can use to evaluate an advisor. And it’s little wonder that advisors often default to presenting empirical data, because that’s the world in which they live during much of their day to day work.
But there is growing evidence that the right brain plays a crucial role in all decisions. Dr. Antonio Damasio, a neuroscientist and professor at USC and the Salk Institute, is highly regarded for his pioneering research in this area. His findings include a noteworthy factor: emotion and feeling act as the bridge between rational and non-rational processes.
We believe this reality should be taken into account in all prospect communications.
Additionally, there appears to be a correlation between the quality of the decisions we make and the quantity of information we’re required to process. Too much information (TMI) has been found in studies by Sheena Iyengar, a professor at Columbia Business School, to lead to poor decisions that are regretted down the road. Advisors often sell into an information-overloaded prospect who has been conducting on-line research, watching MSNBC and reading headlines. Prospects have a hard time properly weighing these inputs, further contributing to a lack of confidence in their decision-making.
Edge over to the right
An important truth that advisors should take to heart: you can’t appeal to a prospect’s right brain by presenting facts and figures. That’s their left brain’s job, and it’s already suffering from ‘TMI’.
By appealing to the right brain, an advisor is communicating to a more open, less cluttered area of a prospect’s mind.
Furthermore, presenting an emotionally accessible story that appeals to the right brain tilts the field in favor of the advisor. When the new client’s right brain feels that a decision was made with confidence, it stands to reason the client is more committed to the relationship.