Buyology author gives insights

I had the chance to attend the Buyology symposium earlier this week. There were many clever ideas, but I thought these were blog worthy:

• 96% of young people say they are trying to save money, but they are nearly all taking taxi's to the cheaper stores
• 23% of all people say that Starbucks taste better-with the cardboard sleeve around the cup (talk about ritual experience affecting our taste buds)
• 13% more people die on the 4th of each month. Guess what is the unluckiest number in Chinese? Yup, 4.

We are irrational people. Being able to admit this, and then work with the irrationality can prove to be useful in financial planning. On the face of it, there seems to be a logical process to start work with a new client--we do discovery to understand their current financial situation, learn about their goals in life, construct a portfolio within their risk band to deliver the goals, and then regularly monitor their accounts. But we've found out that's not really it-particularly with the very wealthy.

From this week's Economist:

"So there is now fairly widespread dissatisfaction with the industry. “The old wealth-management universe is not just broken, it’s been broken and tossed away,” says Russ Prince of Prince & Associates, a market-research firm. “Nobody believes anything anybody is saying any more.” A survey by his company showed that 15% of the wealthy had left their main adviser last year and a further 70% had pulled some of their money away.

How can you appeal to the irrational?

1. Celebrate old values-we view the past in a more positive light, and are afraid of the future. Instill values of the past into your process for the future.
   
2. Focus on the practical-justifying your fees through demonstration of how wealth planning can directly affect their lives today, int he near future, and down the road.
3. Create rituals (see previous post)
4. Keep your message clear (don't dilute it with words/ideas that are confusing-does a client really know what "correlation" or "beta" really mean?
5. Take out the fear. Hyundai, and now GM and Chrysler are all giving customers a chance to sell back their cars if they lose their jobs. Is there some guarantee you can give your client if the same thing happens?