Here’s a recent piece of research that has direct application to how you work with clients. Harvard psychology professor Daniel Gilbert and two colleagues conducted a study of 19,000 people ranging in age from 18 to 68 and discovered this: People of every age seriously underestimate how much they will change over the next 10 years. Put another way, people of all ages suffer from what Gilbert et al., call the “end of history illusion.” That is, we all think we won’t change much in our 10-year future, even though we also report we’ve changed significantly in our 10-year past.
The obvious ramification for advisors is that people—their priorities, their worries, their hopes—change throughout life, so even if the markets and the economy were static for a long period of time, what your clients want in life will change significantly, at every age.
This research supports my belief that we stand at the threshold of a major change in what we know about the human brain, and our cover story in this issue by Olivia Mellan explores some of the latest findings in brain research. I’ll let the words of Mellan and her collaborator Sherry Christie speak for themselves in the article that begins on page 22.
I would also argue that a deep understanding of human behavior will differentiate you in a marketplace in which most advisory firms appear pretty similar to each other.
In his column in the January issue of Investment Advisor, Mark Tibergien of Pershing Advisor Solutions laid out the differentiation issue for advisors: “The lack of clarity in financial services business models and the profusion of practitioners plying their trade using virtually the same branding has created a saturated market. How do the great companies succeed in this environment?”
For the answer to that question, Tibergien quoted British “serial entrepreneur” Mike Harris, who told attendees at a recent Pershing European Client Conference in London that “to compete in a saturated market, you have to stand out in glorious Technicolor. And you have to make your competitors look dull and boring.”
If you’re smart, you’ll pay as much attention to what piques Tibergien as to what pleases him. “Our industry suffers from the tyranny of best practices. We mimic the strategies of others, seeking out what worked best for competitors and attempting to apply similar tactics to our own businesses.”
For Tibergien, success for advisors is all about finding talented people for your firm and allowing them to thrive. He cited Harris on “how dull and boring businesses can become and how that stagnant attitude eventually rubs off on the people who work for them.” Then Tibergien brought it all back home. “As entrepreneurs, many advisors find their lives anything but boring, but check to see if employees share your exuberance and if the marketplace sees your firm as something special. Ultimately, the question regarding both clients and employees should be: ‘What will attract them to my firm, and why would they stay?’”