What we can learn from brain science

We have all heard variations of the new shoe salesman story. The young salesman was frustrated because he wasn’t selling very many pairs of shoes.

“I don’t know what I am doing wrong”, he lamented to an older colleague after a particularly frustrating day. “I must have served fifty different people today who all looked like they wanted to buy shoes but I sold two just two pairs!”

The young salesman just didn’t understand where he was going wrong. In the company training class, he knew more about how shoes were assembled than anyone else. In fact, he could tell you more about the various kinds of leather and shoe dyes that most manufacturers.

“I made sure that the shoes the customers tried on fit properly and had them walk around the store just to make sure and they still didn’t buy”, he continued.

“Let me ask you, what are your customers buying when they buy shoes?” said the older salesmen.

Seeing his young friend’s puzzled expression, he continued. “They are actually buying beauty and self-esteem. They are buying a sense of feeling good. It is not the shoes that are important. It is how the shoes make them feel that matters.”

Theoretically, shoe shoppers should buy shoes because they fit properly and are made of quality material. By the same token, investment buyers should buy because an advisor has a twelve-step stock selection process that identifies the best stock picks.

That is seldom the case though.

Clients don’t always behave rationally because human beings don’t always behave rationally. Most advisors believe that their clients will respond to things that are logical simply because clients are intelligent and care about their state of affairs.

The reason for the misconception is that many believe that our brains act in the same way as a computer: data is entered and then processed. The advisor simply has to tell an intelligent client the information and the client will run it through their personal computer and make a decision.

In fact, that isn’t what happens at all. We process information based on what we already know and base our decisions on how we see ourselves. For example, in a portfolio review, it is not the numbers themselves that make us feel good but what those numbers mean to our sense of well being.

Our brains take in data from our senses and then digitize the information and send it to the sensory cortex. It then gets broken down, analyzed and compared to similar patterns of information that are already stored in memory.

At the same time, the area of the brain responsible for our feelings, hopes, dreams and emotions provides input into the analysis. Brain science tells us that we have no external view of the world, just the one that is already in our head by which we process all other information.

The bottom line is that we don’t make decisions in our left-brain, we make them in our right-brain based on how we feel about the information that we are presented. We are engaged either because we have similar information stored in our memory or we have an emotional connection.

Some will say, I have a lot of accountants as clients. Don’t they make decisions in their left brains? Actually they do but that doesn’t mean that those decisions are not ruled by emotion also.

Ironically, the left-brain is only logical in an illogical way. There is a direct connection between the emotional brain and the pre-frontal cortex that causes the left-brain to create logic to justify things that are clearly illogical. The left-brain takes its instruction from the right brain. That may explain why we sometimes justify decisions using “fuzzy math” or go against the facts.

No Hook—No Connection

How does this apply to how financial advisors should present information to clients? Your client is going to take the information that you provide and then decide whether there is anything in his or her storehouse that it can be attached to. No previous information—no hook.

At the same time, your client’s emotional drivers are looking for hooks that they can attach to so that the brain can make sense out of what you just said. That is why telling a story or using a metaphor works so well because it gives the brain that hook.

This is also the rationale for that old adage in our business, “It is not what money IS that is important. It is what money DOES”.

Consider when an advisor talks to a client about the benefit of an investment strategy to the long-term retirement nest egg. The client is thinking about the retirement life, not about the investment strategy. The advisor would be better off positioning any discussion on the strategy in terms of what it would mean to the client’s life rather than simply talking about the investment strategy in a vacuum and hoping that the client is connecting the dots.

It is time to rewrite the brochure

If the information you provide has to either have an emotional connection to the client or they have to have previous experience with it to form an attachment, then it is a good exercise to review everything that you have written about your practice to assess whether it would resonate or not.

Here are some examples of “non-resonators” using these criteria:

• Your client brochure written in left-brain language for most (if not all clients, prospects and centers of influence).
• Your weekly market update sent to those clients who don’t ask for it or who are not following the market (Where is the hook that they could hang this information on?).
• Your newsletter focusing on investment management for those clients who aren’t engaged in your usual conversations about markets, stocks or the economy.
• Your seminars with a fund manager for those same clients.
• Your web site designed to attract people you do not know that assumes that everyone is interested in your economic forecast rather than on what you could do for them.

Yet, there is still a certain degree of “snobbery” that exists in our business – particularly at the “high end” where advisors believe that plain language and an emotional connection is far too pedestrian for sophisticated clientele.

For advisors who work with clients of all types, it is more important to ‘connect’ than to posture. Connection means providing a hook that gives clients, prospects and COIs a framework on which they can place the information that you present to them.

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Barry LaValley is president, The LifeFirst Approach. He works with advisors and their firms to help them understand the key communications principles that will make them resonate more effectively with an aging clientele. His programs can be accessed through his website at www.lifefirstapproach.com or through the Canadian Securities Institutes Ch.P Strategic Wealth program.

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Barry LaValley