On February 15, 2014 in an Atlantic City casino elevator, a 210 lb. NFL running back named Ray Rice punched his fiancé in the head, knocking her unconscious.
Often incidents of violence are clouded in mystery or by competing versions of events.
Not this one.
We had video of Rice dragging his fiancé’s slumped body out of the elevator.
There was a police report detailing the incident.
Both parties freely admitted what happened and Ray Rice was charged with aggravated assault.
Everybody “knew” what occurred, and agreed; it was despicable.
**Then the world saw what it “knew”.**
And everything changed in an instant.
Here was his coach, John Harbaugh's statement upon seeing the footage of the incident: _“**It changed things, of course**. **It made things a little bit different**.”_
That is an understatement. Ray Rice, a man who received two standing ovations during the preseason was indefinitely suspended by the league, cut by his team and turned from a sports hero into a pariah overnight.
_“But why?_’ many reasonable people ask, _“It makes no sense. We already knew.”
**Here’s why: Knowing in your head is absolutely nothing compared to feeling in your gut.**
(There is also the matter of what social pressure's effect on decision-making – but that’s for another time.)
Investors who fail to appreciate this truth will find themselves in a vicious cycle of **inaction, inaction, inaction – INTENSE REACTION.**
Investors – your clients – “know” many things about the market as we speak.
They know that school loans are out of control, that social security is unsustainable, that our enemies will “hit us” again.
On a more personal level clients “know” that putting off saving will cause grave problems, that refusing to take on risk will mean wealth accumulation falls far short of their goals, that timing the market is a bad idea.
Yet they do these things. What can we as financial professionals do catalyze change?
Educate our clients? No.
That’s a worthy goal, but it doesn’t help here.
Education teaches what you didn’t know. It does not make you act on what you already know.
The key to behavior change with clients is getting them to “see the video”.
Clients must literally visualize the results of the consequences of their decision, engage the limbic system and viscerally experience just what it will look and feel like in their lives.
If you want to maximize your impact with clients, remember not to confuse “knowing” with motivation or preparedness.
Dig deeper, personalize it, visualize it, act upon it.
(MarketPsych has a number of tools that help FAs and Wealth Managers do precisely that. Please inquire about our Slide Show Strategy © and Crisis Plan Kit ©. The Slide Show Strategy © works on an personal level, the Crisis Plan Kit© works on a market level).
It’s practically become a truism that “decisions are made from the gut”. People throw the expression around all the time.
Rarely do we see it crystalized in such a clear and unforgettable example.
That's the power of going from the head to the gut, the power of visualization.
MarketPsych will help you do that with your clients at your request.
Is this new? No. I know you “knew”. But now you know.
Half the battle, my arse.
And hey… let’s be careful out there.
Frank Murtha, Ph.D.
Co-founder of MarketPsych