Last year, I had the opportunity to
listen to Dr. Jason Mitchell from Harvard University while at the AFA
Conference on the Gold Coast. For those not in the know, he is the Principal
Investigator at the Harvard Cognitive and Affective Neuroscience Lab, and
therefore, is much more interesting than I can ever hope to be (no...seriously,
this guy has the most amazing job).
I am a firm believer that there
is always room for improvement, whether personally or professionally, and two
things that Dr. Mitchell spoke about really resonated with me. I would like to
share this with you, because it will help us understand how our brains work,
and therefore be able to assist ourselves, and our client's to overcome
behaviour that may not be in our best interests.
The first concept is that your
brain doesn't "see" your future self as an extension of you. It sees
the future you as a third person, which is why many of us struggle to feel
urgency about preparing for the future, and/or, controlling your instant
gratification impulse. There is a disconnect between doing something positive,
such as saving for retirement, and the end result, because according to your
brain, that end result is happening to someone else. I know that this is
probably an "Ah ha!" moment to many financial planners, especially
when it comes to the push back with insurance. I know that I have had clients
who acknowledge the benefits of personal insurance cover, but in the same
breath say "just not for me". When quizzed further, these clients
invariably say that it's not for them because they just don't see themselves
ever needing it - it happens to other people.
The second interesting thing that
Dr Mitchell brought up is that we, as a species, like to have consistent
behaviour. We think of our past, and future selves as a third person, but we
"like to keep consistent what we think, say and do, and will change to
ensure this is so" (Mitchell, 2017). When you start to reflect, you will
probably find dozens of examples where you have changed what you were going to
say, or do, in order to display behaviour consistent with your audience's
expectations. This is a problem when you are trying to break bad habits. An
easy example is a spouse who hesitates over a purchase, knowing that things are
tight, but might overspend on an item because the other spouse would be
"disappointed" if they didn't.
So, how to we go about changing
this? The first point is the way the brain is wired. So, in order to work with
biology, we must bring our future self to our present self. In my opinion, the
ability to do this is what separates a really good Financial Planner from the
rest of the pack. Turn your empathy towards yourself, and imagine if your
future self was your right now? What would you do, right now, if you had been
diagnosed with cancer? What would you do, right now, if you had to retire? What
would you do, right now, if that school fee bill turned up in the mail?
Bringing the future problem to the present moment will hopefully create the
feeling of urgency (and light up the right areas of the brain) so that changes
can be made.
Now that we acknowledge that the
change needs to be made, we need to have a solution to the problem of
overcoming our need for consistent behaviour. The solution seems to be all
about incremental change. Rather than trying to make a big change, you make
seemingly small, and inconsequential changes. Then you build on that change.
For example, rather than buying that coffee on your morning commute, you put
the money in a tin. Such a small thing, but if a coffee is $5, then at the end
of the week you have $25, by the end of the month, you are on a roll, have
saved an extra 20 minutes per day, and have an extra $100 put aside. From that
20 minute time saving, you could possibly make your lunch in the morning. This
might save you a further $10 per day. So now, you are saving $300 per month,
which is $3,600 a year. All of this from such a little change.
Of course, in order for this to
be of any value, you need to actually do it. Dr. Mitchell suggested changing
your mindset by using your brain's idiosyncrasies to benefit your future self.
You can cut the tie by acknowledging that your "third person" past
self is a different person to your present self, and therefore your present
self can have different behaviours than this past self stranger.
Wordy, I know, but so very, very
interesting. If you ever get a chance to see Dr. Mitchell speak, or come across
his work, then jump at it. It really is an experience.
Find Erin* at Achieveit
Financial Planning, or call for an appointment on 07 4638 5011.
*Authorised Representative of
Securitor Financial Group Ltd ABN 48 009 189 495 AFSL 240687
This is general information only
and does not consider your personal circumstances. You should not act on any
recommendation without obtaining professional advice specific to your
circumstances. We recommend you speak to a financial adviser before acting on
any of the information you read on this website.
Mitchell, J. (2017) 'Building
consumer trust through higher professional standards' [PowerPoint
Presentation]. (Accessed 12 October 2017).
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