Who Are You… Really?

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It shouldn’t surprise you that there are currently 3.5 billion results on Google for the word “Coronavirus”. It has to be the most talked about subject on the planet at the moment… for the right reasons, but also for some wrong reasons.

I won’t go into the details here on the global response to the Coronavirus, but needless to say a degree of much needed caution is being mixed with a greater degree of panic and hysteria. But it’s the behavioural aspects that interest me and how information about the Coronavirus is being pushed out into the public domain.

Note: Take these statistics, which are factually correct at the time of writing. I fully expect these to significantly increase if the UK’s predictions (and what we’ve seen in China) happen here. For now:

1. 0.00008% of the UK population have “confirmed Coronavirus”. To put that into context, there are probably more people milling around your local supermarket at the moment than the number of people with Coronavirus in the whole of the UK (53 currently).

2. The vast majority of deaths from the illness are in the elderly and those with a history of chronic illness. But even in China, when you look at the amount of people who have Coronavirus (92,262) only 4% of people have died, according to the World Health Organisation. Throughout the rest of China, the death rate is much lower, currently around 0.7%.

3. Experts suggest that the panic caused by media reporting could create a bigger strain on our health services than the actual Coronavirus. Time will tell, but one thing is for sure. Go into a High Street chemist and try and buy antibacterial hand wash and you’ll see first-hand the impact of the current public overreaction to Coronavirus.

 

FRAMING + PROBABILITY NEGLECT = PANIC

 

Think for a moment about how our news is reported. Not just in this country, but around the world. Framing and Probability Neglect are two crucial factors ‘exploited’ in the reporting of a story. Take point 1 above.

0.00008% of the UK population have been confirmed as being positively tested with Coronavirus. This is true. But it can be presented, framed, in many different ways. For example, the following two statements based on this statistic are also true.

99.99992% of the UK population DO NOT have Coronavirus.

Fifty-three people out of 66.4 million people are now confirmed with Coronavirus

But what happens? Well, we are programmed to focus on negative and salient messages, so a well-framed negative message, coupled with statistics that trigger the behavioural bias of Probability Neglect, can lead us to overly focus on the specific information presented, without looking for the other side of the story. We view information in a binary, isolated manner and this can create all sorts of issues for us frameable humans.

For example, in the last week in the UK, the number of reported cases of Coronavirus has increased from 0.00005% to 0.00008%. This again is a fact.

But these numbers are tiny and don’t have a real impact on me, so if I wanted to be sensationalistic about it, there is another way of telling the story whilst still being statistically true. I could change the headline to:

 

Reported cases of Coronavirus in the UK increase by 150% in one week.

 

This is a true statement… but see the difference? Framing, neglecting probability, and a powerful salient headline will elicit a very different, powerful behavioural response in people and make them behaviour in a manner than may seem alien to us. Which shows how important it is to know this stuff. Knowing how your clients process the information they see and how that can impact the decisions they take, is really, really important. Especially when those decisions could impact their financial plans.

 

THE KNOWN KNOWNS AND THE UNKNOWN UNKNOWNS

 So, what do we know?

We know that $6trn was wiped off the stock market last week. We know that some Financial Planners throughout the UK fielded calls from worried and anxious clients. Worried that they were going to be left impoverished by this sudden, massive market downturn.

But what we don’t know, what is truly unknown, is which underlying unconscious behaviours triggered these feelings in the first place… and which of these behaviours made some people vocal and contact their Financial Planner but caused others to sit at home and silently stew… because, trust me, this is what will be happening – irrespective of how well they have been trained “not to worry” by their Financial Planner. It’s an evolutionary impossibility not to have any degree of worry when the world we live in is in a very visible melt-down mode.

So, what makes them behave like this? What are the behavioural triggers?

Well, we’ve covered how Framing and Probability Neglect play their role in stirring emotions in people based on the news they see. Loss Aversion also plays a significant role in the widespread panic since, and understandably, people don’t want to lose any of their investment value, irrespective if this ‘loss’ won’t actually be realised. Short sighted thinking fuelled by Present Bias may also make an appearance.

But we haven’t seen yet how Confirmation Bias will play out when people come to realise that the Bull run of the last decade is over. The informational flow hasn’t reached that point yet. Nor have we seen the full impact of people’s Disposition Effect, or the impact of Mental Accounting, Endowment Effect, or even Herding. They are all there. In some people they have become very visible, in others they will be bubbling away, under the surface, creating a sense of quiet anxiety in the very people we are there to help. And yet, we don’t know who we need to reach out to, and even if we did know, we don’t know which biases are the strongest, and to what degree they are factoring into our client’s thoughts.

 

THE POWER OF BEHAVIOURAL INSIGHT

And this is where Be-IQ comes into play, because making sense of all of this, in a practical and understandable way is our bread and butter. It’s what we do. No, it’s all we do.

Measuring individual behavioural bias strengths in clients; revealing a client’s behavioural persona including multiple characteristics; providing Financial Planners with the ability to augment their planning process with behaviourally-led questions and conversation suggestions; and highlighting the emotional triggers that show when events can kick-start a behavioural reaction – allowing not only proactive financial planning, but evidence on which to behaviourally coach clients.

Knowing this enables a genuinely deeper and richer understanding of the client and their unconscious behaviours. It takes the Know Your Client approach and puts it on a different plane, delivering timely and accurate insights into your clients and their behavioural propensities.

It is during times of mass panic, widespread hysteria, or falling markets, that the true person is revealed. However, if that revelation comes to us through their actions and reactions in response to how they are processing what’s going on around them, then we’re already firmly on the back foot.

However, if it’s revealed beforehand, so we are forewarned and fully prepared, then the dynamic fundamentally shifts. Now, not only can we become wholly proactive in our engagement with our clients, but we can have a real and positive impact on their overall financial wellbeing.

There is of course a 0.0001731% chance that I’m wrong*, but this means there is a 99.999827% chance that I’m right*.

However, knowing more about your clients, in a way that can help them navigate the world in a safer, more focussed way, factoring in the very thing that makes them who they are, their behaviours, is 100% the right thing to do, 100% of the time.

 

* These figures are completely made up and do not contain an ounce of scientific validity 🙂

 

 

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