Here are three quick behavioural techniques for finance professionals.
1. Know when to fold 'em
As a finance professional you encounter this behaviour all too often. It may be a client who just won't sell bad shares, a client who simply can't be convinced to move to better performing options, or a stakeholder who refuses to close down a project that has no hope of generating a return. The numbers don't lie, but rational analysis is not what's holding your customer back.
We hate to acknowledge failure. Selling shares that have tanked smacks us in the face with our bad decision so we prefer to avoid recognising the loss and instead sell good performers so we can feel like we've aced it!
As a finance professional, your task is to soften the blow by distancing ego from outcome. For instance, if the time has come to sell a bad investment, try talking about broad market forces rather than individual judgment. Gotta know when to fold 'em.
2. Why one dollar isn't the same as another dollar
When Hungry Jacks ran a $2 Groupon deal for a $6.95 meal package they received over 120,000 downloads in three hours. When ATMs started to carry a warning about a $2 fee for 'foreign' bank transactions, activity plummeted from 50% to 40%. If $2 can change behaviour, imagine what larger amounts can do!
3. Information blinkers
If you've ever found that your client or stakeholder seems only to hear information that supports their position and ignores anything that is contradictory, then you have been introduced to information biases. Known by names such as Confirmation Bias, Hindsight Bias and Clustering Illusion, we unconsciously use these filters to distort, accept or reject information so that it gels with our view of the world and alleviates anxiety about whether things make sense.
As a finance professional, know that your customer will be blinkered by their filter system. It's not that they don't understand necessarily, it's that you need to find a way of meshing your perspective with theirs. Thankfully, behavioural economics provides clues on how to do this.
There are plenty more of tips for finance professionals from behavioural science, and what I love is that human behaviour doesn't have to be a mystery anymore. Think of behavioural economics as an audit process with 'behavioural standards' in place of accounting standards and you have a ready made toolkit for influencing your customers. At last you can excel in influence as well as numbers!
Interested in finding out more? I am running a series of fast track webinars for finance professionals on topics like those mentioned. Click here for details.
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