This article is the second in a series on using knowledge about the brain to help clients thrive. Visit our Your Client’ Brain home page for related coverage throughout March.
Last month in Investment Advisor’s cover story, “Double Think,” we explored the curious structure of the human brain, whose “two minds” can turn decision-making into a dilemma. If a client’s rational mind and emotional mind are divided about a decision, how can an advisor help? After all, whether you’re legally a fiduciary or not, your job is to guide clients toward making the right decisions on everything from college to retirement to estate planning.
Making good decisions is not a matter of heeding one “mind” and ignoring the other. “The brain is designed to work as a whole, integrating its analytic and emotional capacities,” said neuropsychologist Rick Hanson. “If someone is upset or rattled about money, they tend to swing too far in one direction or the other. The best approach takes a middle path in which we use both head and heart.”
In other words, when messages from the two minds are contradictory, we need to arrive at a resolution that integrates them. San Francisco psychotherapist Linda Graham noted that integration is the job of the prefrontal cortex, which receives verbal and nonverbal input from both hemispheres of the brain. Anxiety disrupts this process by prompting the amygdala to flood our brain and body with the stress hormone cortisol, putting the prefrontal cortex out of commission.
The perceived threat may be just a rude driver cutting across traffic, but we react as viscerally as if we’d stepped on a cobra. “Our judgment is temporarily impaired, reality testing is impaired, and we literally can’t think straight,” said Graham, who specializes in the integration of neuroscience, mindfulness and relational psychology, and who wrote the soon-to-be-published “Bouncing Back: Rewiring Your Brain for Maximum Resilience and Well-Being.”
With chronic stress a real problem in modern society, stress management techniques are helpful, even necessary, to ensure the prefrontal cortex functions well. Techniques like Graham’s Hand on the Heart (stay tuned to AdvisorOne.com for more on stress relief techniques) can prompt the prefrontal cortex to calm the fear-stress-threat response. “Calming and centering help head and heart work together,” as neuropsychologist Hanson, author of “Buddha’s Brain: The Practical Neuroscience of Happiness, Love and Wisdom,” put it.
In this second part of our series—and in a wealth of articles and other resources on AdvisorOne.com—we offer 13 rules to de-stress decision-making (DDM). These rules use the latest findings from neuroscience to identify ways you can work with clients and run your business more effectively.
DDM Rule 1: Avoid making decisions under stress
The Science | We tend to break this rather obvious rule because we overestimate our ability to make rational decisions. According to David Rock, the New York-based executive director of the NeuroLeadership Institute, we may have only a few hours a week of quality thinking time to make difficult financial decisions because the prefrontal cortex (the center of conscious decision-making) is surprisingly small and tires very easily.
The Recommendation | Since our conscious processes are so limited, advisors should educate their clients to consider tough decisions when they are mentally rested. The worst thing they can do is make a financial decision when they are tired or stressed at the end of a busy week.
DDM Rule 2: Embrace your clients’ goals
The Science | Many financial advisors “fail to ‘de-bias’ their clients and often reinforce biases that are in their [own] interests,” reported an undercover survey done in early 2012 for the National Bureau of Economic Research.
The Recommendation | Probe for clients’ real needs and goals; don’t just cater to their expressed wants. Rock pointed out that when you understand and share your clients’ goals, you will perceive their challenges more robustly, have natural compassion for their experiences and be more motivated to help them. When people perceive your empathy, they will become more likely to open up their real thoughts and feelings to you.
In other words, taking the time to really understand and connect with your clients’ goals will make your job easier—and probably more successful.
DDM Rule 3: Know your own limitations
The Science | “If there are contradictions and confusions in the client, sometimes the advisor’s prefrontal cortex tries to act on behalf of the client’s prefrontal cortex,” said psychotherapist Graham. “The advisor needs to be coming from an integrated perspective, not privileging ‘rational’ over ‘emotional.’”
The Recommendation | Besides not imposing your own logic on the client, it’s important to understand what’s going on in your emotional brain, commented mental health counselor and speaker Dave Jetson. “We all have our emotional history and the limitations that come from that,” he said. “If your fears are limiting your interaction with a client, it may help to have a therapist in the session with you, or another planner who doesn’t have the same emotional response to the client’s issues.”
For example, Jetson said, “Suppose an advisor has a history of being yelled at as a child. If he is still traumatized by this history, when he meets an aggressive client, he may make concessions in developing the portfolio that aren’t in his or the client’s best interest.”
In other words: Advisor, heal thyself. Don’t allow your own issues to complicate your clients’ decision-making.
DDM Rule 4: Move beyond clients’ emotional triggers to discover their deeper feelings
The Science | “Our unresolved issues create major stress in our lives,” Jetson observed. “Calming exercises may help in the present, but they don’t guarantee that a successful shift will occur. Exploring patterns associated with the emotional brain can be more helpful in creating success.”
Jetson noted that yoga, exercise, meditation, contemplation and art therapy are all good ways to lower stress levels. “But you need to work through your deeper feelings to get emotional release,” he said. That means sharing them with a family member, a spiritual advisor or someone else you trust.
Co-owner of Jetson Counseling with his wife, Liz Thorn, Jetson partners with planner Rick Kahler to provide financial therapy for clients. “While they’re looking over their portfolio in the office, I’m observing their body language, their behavior and other signs of resistance,” he explained. “I look for patterns about what helps them feel valued and successful, what they’ve done in the past that has worked or not worked.”
The Recommendation | Incorporating the client’s own emotional programming in a plan helps ensure that the client will take action and succeed.
Jetson gives Kahler information about what needs to be incorporated into the financial plan to be successful. “This collaboration helps us make sure we’re giving the best service to our clients,” he said. “For example, suppose Jane has learned that the only way she can be successful is as an entrepreneur, but she’s getting close to retirement. I might suggest we put something in her plan that recognizes she’s still going to be active, maybe starting a nonprofit organization or taking the lead in a volunteer activity.”
DDM Rule 5: Learn how to read clients’ faces
The Science | When we asked therapist Graham how a financial advisor can learn to recognize stress in a client, she suggested psychologist Paul Ekman’s F.A.C.E. (facial expression, awareness, compassion, emotions) training.
Ekman, a pioneer in the study of nonverbal communication, has identified seven emotions common across cultures: anger, disgust, fear, happiness, sadness, surprise and contempt. His online courses train people to identify these emotions in the facial expressions of others.
The Recommendation | The more accurately you can read microexpressions, the better you will know when to reassure a client, mitigate their sadness or defuse frustration or anger.
DDM Rule 6: Discuss important decisions in person
The Science | Graham noted that when we make eye contact with someone who is calm, a structure in the right hemisphere of our brain (the fusiform gyrus) recognizes this calmness in the other person’s facial expression. This in turn correlates with a calming of the fear response in our own amygdala.
What happens, we asked, if client and advisor avoid eye contact? There are other ways to communicate nonverbally, of course, but Graham noted that 55% of all emotional communication happens through facial expression, tone and rhythm of the voice; 38% through body language; and the remaining 7% through words, according to Albert Mehrabian, UCLA professor emeritus of psychology. “Without eye contact,” she concluded, “you’re losing half of this source of feedback.”
The Recommendation | Learn as much as you can about nonverbal communication. Clues from eye contact and unconscious facial signals are a good reason to invite clients to talk face-to-face, rather than leaving it to a telephone call or email.