The coronavirus rules, and deep uncertainty prevails. To reduce clients’ uncertainty and communicate that you’re the right financial advisor to give them the right advice at the right time, Robert Cialdini, Ph.D., aka the “Godfather of Influence,” prescribes, in an interview with ThinkAdvisor, five essential tactics to put into play now.
The popular keynote speaker — now providing such talks virtually — and Regents Professor Emeritus of Psychology and Marketing at Arizona State University is president and CEO of the consultancy Influence at Work, training company trainers in how to apply his famed principles of influence. Clients include Charles Schwab, Google, Merrill Lynch, Microsoft, Morgan Stanley and the U.S. Department of Justice.
Cialdini literally wrote the book on the science of getting what you ask for. In his classic bestseller, “Influence: The Psychology of Persuasion” (2006), he discloses six “weapons of influence” to ethically direct clients, or others, on the road to say yes.
The professor’s most recent book is “Pre-Suasion” (2016), which shows how to guide a person’s mindset to be receptive to one’s core message.
In the interview, he argues that financial advisors should prepare now for mushrooming opportunities once the coronavirus pandemic abates.
Cialdini is his own best example of making critical preparations early: He is converting the majority of his firm’s training programs from in-person to virtual, with a pilot test already completed. As he explained in the interview:
“We started preparing as soon as we saw what the pandemic was doing and how it was causing everyone to be uncertain and nervous. We overcame that by providing [clients] with something that reduces their uncertainty about being in an enclosed space with 150 other people.”
Further, the authority on adroit persuasion offers a prescription for making virtual meetings less “bloodless” by leveraging “the hottest thing” in marketing.
ThinkAdvisor recently interviewed Cialdini, who was speaking by phone from Phoenix, where his company is based. In exploring the “weapons of influence” as revealed in his seminal book, he spoke of a letter he received some 20 years ago with which was enclosed a share of Berkshire Hathaway Class A stock. “Your book has made us so much money through your principle of ‘Reciprocation’ that in return, we’re sending you a share of our stock,” wrote Charlie Munger, Warren Buffett’s vice chair and longtime partner.
Back then, the stock was worth around $70,000. Today? $285,520.
Here are highlights of our interview:
THINKADVISOR: Uncertainty abounds. How can financial advisors reduce clients’ uncertainty and prepare themselves for opportunities?
ROBERT CIALDINI: Psychologists have found that when people are in a state of uncertainty, two things happen to their decision-making. First, they’re reluctant to change — they sit on the fence because they’re unsure of what to do. That’s the biggest mistake in the face of true opportunity. And they stay there until the uncertainty is reduced.
What’s the second thing?
People will prefer choices that protect against losses versus those that obtain gains. That’s loss aversion, which exists anyway: We’re more motivated to avoid loss than to obtain gain of the same unit of value. But that becomes magnified under uncertainty.
Amid the uncertainty, does this era of so-called “fake news,” made-up “facts” and social media dust-ups make it harder to persuade people in a business setting?
Yes, it’s much more difficult now because people are so unsure — they’re at sea. Norms and conventions — everything — have become unsettled in their lives. There’s this high rumble of uncertainty.
How should financial advisors prepare?
They should be stockpiling evidence of their suitability to provide advice to clients along five optimal dimensions that will reduce uncertainty and [communicate] that they’re the right person to partner with, that it’s the right time to [take their advice] and that the advice they’ll provide fits clients’ circumstances.
What are the five dimensions?
The first is expertise. Advisors should start marshaling evidence of that as reflected in their background, experience and credentials relating to the issues they’ll be talking about with clients.
How do they demonstrate expertise before recommending an investment to them?
You can’t be a braggart! So you shouldn’t provide it face-to-face [either in-person or virtually]. That goes against all the rules of social interaction. If you say, “Let me tell you how great I am!” it’s really off-putting.
What should you do, then?
If you’re having a virtual meeting, someone else should introduce you. If it’s an in-person meeting, you can send a letter of introduction by regular mail or email. Say, “I’m very much looking forward to our meeting on [day] about [topic]. My background and experience relating to this is as follows:” And then you present it.
What else will support the advisor’s expertise?
Provide it from outside your office from a set of authorities — not just one person. A consensus of authorities recommending the most desirable [quality] about you reduces [clients’] uncertainty.
What’s the second dimension?
Trustworthiness. I know it may sound crazy — but early in your presentation, mention a mistake you’ve made and have learned from concerning the particular topic or a related one you’ll be discussing in the meeting. Companies do this in their shareholder reports: They mention an error, take responsibility for it and then tell how they changed to make sure it never happens again.
Warren Buffett does that in his shareholder letters, correct?