Have you ever been in the midst of a presentation to a potential client when they stopped you and told you there was no need to continue–he/she liked what you were saying and wanted to move forward with your service? If so, congratulations–you lit up your new client’s pleasure pathway.
In his article, “Playing it Safer,” in the June issue of Wealth Manager, Andrew McElwee discusses from an insurance perspective how wealthy boomer clients seek diversion in the form of high-risk activities, and the opportunity that provides the advisor. McElwee opens a topic I have wanted to address for some time, but haven’t known how to approach.
What McElwee’s observations reveal is that risk-taking gets riskier with age. While no one over age 45 will argue about the physical truth of that assertion, what isn’t being talked about is that risk-taking behavior is driven by the continual quest for dopamine, the neurotransmitter that activates the pleasure centers of the brain. The same need that previously fueled the drive to achieve or attain their wealthy status is now causing high-net-worth individuals to seek new stimuli in order to supply the dopamine. Once the risk-taker’s struggle to attain wealth is over and a level of non-sensational security is reached, new challenges must be created to fill the dopamine gap. If you wonder why you can’t hold the wealthy risk-taker’s attention as you talk about security, insurance, or moderating risk, it’s probably because you are recommending the opposite of what that client craves most. He wants to be out on a limb.
What is dopamine? Dopamine does two things: it allows you to focus in a linear fashion, and it’s the pleasure chemical. Dopamine is the chemical that turns your brain on. Technically, it’s a neurotransmitter that aids concentration and provides feelings of pleasure or well-being. You know that sense of well-being generated by a full stomach on Thanksgiving afternoon. That feeling of well-being is triggered by enhanced dopamine levels.
How does it work? Imagine your own brain. The largest part of the brain is the cortex–sort of the brain’s command center. There is a continuous stream of sensory information moving in and out of your cortex through the thalamus.
Picture the brain’s thalamus as a water faucet with a spigot. When the spigot is open, your thought process is activated. When the spigot is closed, your thinking is dulled. That spigot is controlled by dopamine.
What also creates dopamine? Physical activity and movement are one way. Anxiety also creates dopamine.
Why is dopamine important? People with genetically high levels of dopamine tend to be more passive and demonstrate less sensation- or novelty-seeking behavior; whereas, those whose dopamine levels are genetically low seek out greater stimulation. The current theory is that about 15% of the population is born with fewer dopamine receptor sites, and these people spend their entire lives unconsciously trying to create the brain chemical.
This article will attempt to explain the connection between dopamine and your client’s attitudes towards physical risk-taking or risk avoiding.
“They think differently,” says Jim Dobbs, president of Dobbs Wealth, LLC, in Golden, Colorado. Dobbs has noticed that he has difficulty working with creative wealthy, entrepreneurial type of individual who enjoyed taking big risk–one who, for instance, builds a successful business, then impulsively sells it for $50 million. “It’s as if we don’t speak the same language.” Not surprising, really, since Dobbs’ responsibility is to control risk.
Instead, Dobbs tends to attract a certain kind of wealthy client–the highly analytical doctor, pathologist, or technical specialist (non-risk-takers)–who won’t make a decision unless they’ve been given an abundance of information. Dobbs did admit that he’d like to know if there was anything he could do that would attract this other type of personality that seems to fit with the wealthy entrepreneur.
People who exhibit the above characteristics are most often found in the following professions: financial advisors, managers, university professors, coaches, politicians, civil litigators, judges, CPAs, writers, economists, teachers, and software analysts.
They need to analyze and comprehend the logic in each step before proceeding to the next. Of course, the majority of the population is located somewhere in the middle, having some traits found in each box.