Earlier this year, the financial market volatility got us thinking.
As we were also speaking with several financial professionals, business owners, and individuals about that time, our financial team decided to brush up on behavioral biases and how they affect our thinking and decisions.
We know this is a big topic in the industry, and we’ve helped our clients with programs and communications over the years. But we wanted to get a fresh perspective and deepen our understanding.
How Biases Shape Client Financial Decision-Making
As we researched how these biases shape our mindsets, we also reflected on the kinds of biases financial advisors might see in their clients at any given time.
- Some may be more consumed with short-term losses rather than longer-term performance gains.
- Some may be leaning into an early perception about a particular investment or sector and be unwilling to accept information that contradicts those perceptions.
- Those who are confident in their knowledge and investment decisions may not heed important advice (or review key information and research), and may hold onto holdings longer than they should.
We know there are several biases that can affect investment decisions and financial professionals may face these biases regularly.
These biases can have significant effects.
Studies have discussed the reality that not only can biases affect individual outcomes, but they can also affect the trust between a financial professional and client.
Facing Financial Biases Head-On with a Communications Suite
Advisors must be able to understand and identify the range of biases their clients may lean into.
Additionally, they need regular reinforcement of relevant methods and strategies to help clients recognize and address these biases. This enables advisors to effectively balance their roles as both financial professionals and pseudo-psychologists. Ultimately, then you’re providing the best solutions for each client.
Here are a range of communication methods to help:
- A variety of modern touchpoints, such as conversation enhancers, social reminders, and digital references, can help keep advisors prepared.
- Including brief suggestions about the occurrence of these biases in your communication touchpoints may help strengthen the relationships between you, your audiences, and their audiences.
- Providing relevant, targeted content can also enhance engagement with your audiences.
Reach out if you’d like help identifying how you can incorporate some messaging around these biases into your communications.
