Behavioural economics has helped us to understand that we’re not actually the “rational” beings that we like to think we are. We now recognise that we make decisions and behave in a way that is anything but rational – we’re biased in how we see the world and a whole bunch more emotional than we give credit for. In the investment space, we’ve made up a whole new language to describe how un-rational we actually are – loss aversion, anchoring bias,  hindsight bias, familiarity bias, etc, etc. We teach this to our clients, manage their behaviour and watch our own responses in managing our clients’ money. BUT, are we conscious of how engrossing these insights are for EVERYTHING that we do for clients?

If only we could recognise that we’re actually emotional, irrational people all the time, not only while we’re investing. We’re also not rational while we’re making coffee, shopping, watching TV, going to the dentist and EVEN when visiting our financial planners. So if we’re having an experience that’s meant for the “rational man,” we can’t connect.

As financial planners, we come from a space that is inherently “rational.” There’s lots of regulation, lots of numbers, calcs, risk, efficiencies, and, of course, money. It seems understandable then that introducing feelings and some “irrational” into this space is a bit like squeezing a square peg through a round hole. But unless we give careful attention to every moment we subject our clients to, we’ll never get them to truly connect.

Think of the typical engagement process an individual goes through to become a client. Invariably there’s a “disclosure document” somewhere at the start, a consequence of regulation saying that we need to disclose a whole bunch of stuff to the client. Regulation didn’t say stick a two page fine-print document in front of the client though. The document is rather built for the rational, compliance manager – not the client. The unfortunate outcome is that the client experience turns to rubbish but compliance is happy. I’d sooner try make the client happy.

We do this kind of thing right the way through the process. We speak in words clients don’t understand; present documents they don’t care about; graphs they don’t like; instruct them to do things they’re not committed to; and in general go about doing a whole bunch of stuff because that’s the way it’s been done for the last twenty years. On behalf of clients, we desperately need to recreate our client engagement processes, starting from the client’s perspective first. Once that’s clear, we can work outward to figure out how to make compliance, regulators and planners happy as well.

What do clients care about? It’s profoundly simple but we keep missing it. Clients don’t care about the rational stuff that rational people should care about. We care about how the experience makes us feel. We care about meaning. We care about significance. We care about whether the experience made us FEEL GOOD ABOUT OURSELVES!

As Financial Planners, we need to bring about a new way of assessing the extent to which we’re doing a good job for clients. It’s no longer about how compliant we are, how detailed our calcs are, how clinical our data collection process is, how efficient our back-offices are. We need to start figuring out how good we’re making clients feel about themselves. We have to re-evaluate every moment in our service offering to understand the extent to which they feel good about themselves or not. Or risk the rest of the world leaving us behind.


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