Hello and welcome to behavioral alpha and investors greatest value. I'm doctor Daniel Crosby, Orion's chief behavioral officer and I am super glad to be with you here today. We're going to be talking about three things today. We're first going to talk about what it is that you do that adds the most value to your clients lives. We're going to 2nd give you a four part system for doing that thing even more. Effectively. And then finally, we're going to help you take care of yourself, which is absolutely essential to parts one and Part 2. But before we get going, I actually want to ask you a burning question. I want to ask you a question that I think has been on everyone's mind for the last year. This is something I know that you thought about. You stayed up at night puzzling about. I'm speaking, of course, about how many piano tuners are there in Chicago? So I want you to just take a moment and think. Don't pull out your phone. Don't look it up. Just think how many piano tuners you guess there are in Chicago. Got it. OK. Well, I'm going to tell you the answer in a minute. Don't worry. But before I do, I want to talk about the historical range that I've gotten and I want to have you position yourself within that historical range. This is an exercise I've done any number of Times Now over the last three or four years, and the answers have grown with time. The range has of course grown with time, and the answers have been as low as two and as high as 5000. So maybe you're a new high or a new low. Let me know. e-mail me if you if you are a new hire new low so I can update my statistics. But that's been the range, right? Not very useful when we think it could be anywhere from 2 piano tuners in Chicago to 5000 piano tuners in Chicago. So let's consider it from a new way, though. Let's take a bit of a new approach and approach it from the standpoint of a mental lattice work. So a system, a process by which we take on what is, of course, a patently ridiculous question, and I'll get to that. There's method to my madness, I promise I'll talk about that in a moment. But let's try and approach this wholly ridiculous question from a systematic perspective. So first we'll try and figure out how many people are there in the Greater Chicago land area. It's about 9 million people. How many people are there per household? Well, and the US average is somewhere around 3, give or take on people per household. What percentage of households have a piano? I don't know. Personally. You you may not know either, but you could hazard a guess. Maybe somewhere between 2 and 10% of households have a piano. How often do pianos require tuning? My my wife is a pianist. She tells me that they're supposed to be tuned every year, but I know in practice. I think it tuned quite a bit less than that, at least in in the Crosby household. How long does it take? Maybe a couple of hours and a piano tuner works 2000 hours a year, give or take. So I'm not going to do all the math here, but I want to show you what happens when I have used this framework with groups like like the group of people listening in today. The original range is anywhere from 2 to 5000, as I said. But after I've given folks these six, these six sort of questions to consider, the average guess has been 250. Now that's quite a that's quite a different thing than either 2 or 5000. And it turns out that the answer is very, very close to the actual number, at least when I looked up this statistic a few years ago, was 292, give or take for the last couple of years. But 292 piano tuners? In Chicago. Now I want to talk about why I asked this question. It is, as I've noted, a completely ridiculous question. There is, of course, no reason you should have any inkling of how many piano tuners there are in Chicago. But I ask it precisely because it is so ridiculous, and I show you that with the appropriate methodology, with this appropriate lattice work, you're actually able to get really close to what is a really difficult question. So what we're going to be talking about today is also really difficult. It's sometimes maybe even a little bit ridiculous. It's hard to anticipate. I'm Speaking of course, of your of your clients behavior. Now, I have a PhD in psychology, and even with that advanced level of training, I can tell you that very, very often, human behavior being what it is, I'm presented with behavioral situations for which I have no precedent, for which I have no book. Learning and for which I have no real answer. The same is certainly true of you. Of the type and variety of questions that your clients can present to you is as varied and as unique and diverse as those clients themselves. So we're never going to be able to tell you everything to do. We're going to be talking about client behavior today, and there's no way that I could give you the handbook for every single thing to do in every single situation. But what I can give you is a mental framework for handling client concerns. This mental framework, just like the one I just presented for the piano tuners question, will simplify things. It won't always be exactly perfect, but what it will do is get you most of the way there. With most client concerns, this will help you sell more effectively on this will help you calm your clients and keep them rational. This will help you keep them invested and just make you overall a better behavioral coach, because indeed that is what you do best. So I just today received a couple of copies of my my book the laws of wealth, which I wrote in 2016 in chapter two of the laws of wealth, which is now. Out in paperback. That's why I received the the copies in chapter two of the laws of wealth. I go through all of the research into why folks need a financial advisor, and it turns out the reason why most people need a financial advisor is not the reason they expected. When you talk to clients and ask them why they need financial advice, by and large they say the reason is because they need someone to help them pick good stocks. They need someone to help them pick the right mix of assets. And in fact, that's really quite easy to do in this day of automation, in this day of AI, there's a lot of cheap or free technologies out there that can provide a a perfectly adequate mix. Of assets to your clients, Robo Advisors and the like. Even just a little education would get them there. So the thing that they think they need and the thing that they actually need are very different because what I found in the research for that chapter is what clients need more than anything. And there's about five different studies, three of which we'll talk about today. What clients need more than anything is they need their hands held. They don't always recognize this. They don't always realize the power of. Behavioral coaching. But the research is unequivocal and we're going to talk about much of it here today, that the reason why clients of financial advisors tend to outperform is down to behavioral reasons. So let's talk about three of my favorite studies that prove this or suggest this here. The 1st is a study done by Aon Hewitt. It was a 10 year study either compared those who got financial guidance to those who got no form of financial guidance, DIY investors. And what's cool about this study is that it actually encompassed the great financial crisis, right. So we had a very sort of rich and interesting data set because these ten years encompassed the financial crisis. And So what they found was the following. They found two things first of all. They found that the value of financial advice is lumpy. There were some years where financial advisors did not add a whole, whole lot of value and there were other years where they added enormous value. And the thing that was most predictive of of a high value or a low value year, you will surprise no one. Listening to this perhaps is the level of volatility. So in aggregate they found that those who, those who worked with the financial professional did. On average, 1.86% better net of fees, so closer to 3% all in, but 1.86% better net of fees than those DIY investors. But what's fascinating is they found that in the worst years that they actually did 2.92% better net of fees. So again, closer to 4% better per year all in if they were working with a financial professional if they were. Getting that guidance, the 2nd and probably the most famous study that looked into the the value of financial advice was the the advisors alpha study done by Vanguard. This famously took the the various jobs of an advisor, the various things that that an advisor does in in her day and broke it out and and ascribed an added value to each of those pieces. Now we go everywhere from things that that. They say added very little value. In the case of Vanguard, they suggested that that asset allocation out of little value all the way to the thing that added the most value, fully 150 basis points of the 300 in basis, 300 basis points of outperformance for those who worked with an advisor was attributable to hand holding, to behavioral coaching, to decisional guidance, to understanding and applying behavioral finance in real time. And then finally we have a really fascinating study done by Morningstar, which again looked at the value of of advice. They called this gamma, alpha, beta and now gamma is the name of the research there. But Morningstar again found about a 2% net of fee outperformance to those who worked with the financial professional. So a couple of things we see here. First of all, you all have incredibly important jobs. You are adding real dollars and cents value at a lot more beyond that in ways that we'll talk about here in a minute. But it's in ways that clients don't always appreciate. So we're going to talk about telling a new story and helping clients appreciate the ways in which we do add value. So I want to take these numbers, which admittedly don't sound huge to your clients who who don't understand. How wealth compounds. And so you say, you know, look, you, you work with me, you're on the whole going to do 2 to 3% better. That may not sound like a whole lot to a client who doesn't understand how that 2 to 3% can compound over time. So let's look at it. Let's look at it with some real numbers, right? So let's look at it with some real numbers. We know from the DALBAR study that over the last 30 years, the market has returned about 10% per year and that the average equity investor has kept only about 1/3 of that. 3.66% per year pretty incredible to consider. The DALBAR study is a little controversial. We know that estimates of the behavior gap vary, but in all cases it's usually somewhere from 2 to 4 to 5% per year. Underperformance for for investors if they're DIY investors. So let's take those numbers and use a real simulation. Let's say you have a a client with a A starting wealth of $100,000, a small client $100,000 and over the next 30 years they're going to invest $10,000 per year with you. Now one client is going to do it, do it themselves, right. So they're going to start with that 100,000, add 10 grand a year and they're going to compound it at the 4% on that. We know that the average investor compounds it at at the end of that 30 year split, they're going to have 907. $1000 Now what about an investor in a second scenario, who gets that extra 3% bump? That extra 3% bump that we know is attributable to good financial advice, good behavioral coaching? Well, it might surprise you to know that they are going to have nearly double the wealth of $1.77 million. They're going to have nearly double the wealth of their no advice peer. Now this is a hypothetical. Right. This is sort of a hypothetical. What's cool though, is we don't have to speak in hypotheticals. We can actually look to the data. And the data out of Canada tells a story that if anything that this 2 to 3% a year that we assume accrues to those who get good behavioral coaching on May. If anything be conservative. Because in Canada what they did in the Canadian value of advice study is they actually looked at those who who did it themselves versus those who worked with an advisor. And what they found is frankly kind of staggering. They found that those who had a short term relationship with an advisor so call it a a four to six year relationship. How about 1 1/2 times the wealth of their no advice peers. Pretty good short term relationship, immediate, immediate benefit. Those who had, you know, we'll call it a 7 to 14 year relationship, A10 Ish year relationship. They had had on average nearly two times the wealth. 1.99 X the wealth of their no advice peers. And what about those who had held on for the long run? Those who had chosen advisor and had stuck with that advisor? They had 2.7 three times the wealth. Of their no advice peers. Pretty staggering to think that you could be adding, nearly tripling someone's wealth by virtue of giving them good advice. And yet, we know from the research, we know from the hypotheticals, we know from the from the data we know that this is true. And yet we know that that our value doesn't stop there. We know that we provide so much more than dollars and cents value. We actually add, add psychological value, we add happiness, we add well-being. So the same study looked at those the sort of indicators of well-being among those who had an advisor versus those who did not. They found that those who had an advisor were dramatically, dramatically. Better off from a global well-being standpoint, even greater Peace of Mind, and they were nearly three times as likely to rate themselves as prepared for retirement. So by way of quick review, you're doubling and tripling your clients wealth, you're making them much happier, you're making them much more prepared. So you would think that we as an industry are are well loved. And yet surveys show that's not the case in general financial advisors. A recent Forbes study found that financial advisors are esteemed somewhere between used car sales people and Congress. Members of Congress. Which is, you know, no, nowhere. We want to be from a trust perspective. Because I think for a very long time we've we've told the wrong story. We've emphasized, we've emphasized returns, we've emphasized product over people. And a part of this is that we've emphasized the wrong things. Clients have gotten the wrong message and they've been sold a bill of goods. So we need to start to tell a new story. We do a world of good, we do a world of good. But the way that we do that good is through behavioral coaching through hand holding. And not necessarily through picking great product. So we have a problem though. We know now what we ought to do. We know that we add value in a major way that we can quantify that value. It's enormous. We know that we're doing good in the world, but our ability to do good in the world is there's a ceiling on that ability and that ceiling is influence because in order for this advice to to take effect, it has to stick. It has to be implemented by our clients. They can't just hear this advice and ignore it and and very, very often that's the case. This cuts across context, right? We're sitting here in March. How many of you have given up on your best laid plans for the New Years, right. How many of you have given up on your your New Year's fitness resolutions? I know I'm certainly guilty of that. How many of us get advice from a doctor and then don't follow it? We know that medical non compliance is one of the leading causes of death in this country, one of the leading causes of death in this country. These people going to the doctor, the doctor telling them what to do, how to take the medicine, how to exercise, and then people not doing it. We know the same is true of financial advice. We know that about we know that about 40% of Americans get some sort of financial advice. But we also know that less than half of those people take that advice as it is given. And so your best advice is only as good as it is persuasive. So how can we be more persuasive? The great value that we add is behavioral coaching. How can we have conversations in a way that sticks? Well, here's where we introduced that lattice work. This is going to be our four part lattice work, that the intellectual scaffolding that's going to be the the frame against which you structure future conversations. And all of this is based on a deep dive into the psychological research and shows into why people do the things that they do. So there's a sequence here, then I'll talk you through each of these in some depth, but by way of quick introduction here there's there's four P's. The first PP is for purpose. When we begin this conversation, we want to Orient this client on why we want to recenter them, on their vision, their values, and their plan. We want to remind them why they took this scary financial journey in the 1st place, and doing so can be enormously powerful. As I'll speak to in just a moment. The second thing that we want to do is we want to give them proof. We've told them, now we've. Reminded them why they began this journey, but now they need some proof. They want to know that they're working with an expert, and they want to know that what you are recommending to them is based in evidence, is based in science, and is structurally sound. Third, we're going to exploit a form of sort of righteous peer pressure here. We're going to talk about the people. We're going to talk about the people who agree with you. We know that we are a herding species. You have only to have watch some of the things unfold in the market over the past few years to understand that this is the case. But that tendency to herd can be used like many human behaviors. It can be used for good or it can be used for ill. So what we can do? Is place ourself in the same camp as other smart people, ideas and institutions, and understand that in so doing our clients will be more likely to take our best advice. And then finally we're going to start the process. Education is only as good as its application and so we're going to start the process of helping them to implement these things and understand how they live in this individuals life. So let's dig into all four keys in greater detail, so once you to look at the screen here and hopefully really hopefully, you are seeing some silly faces. Because if you're not, we need to talk after this. Send me a send me a note and I'll I'll get you checked out. Because if you're not seeing some silly faces here, there's something wrong with the way that your brain is processing. Because even we though we know this is coffee and a dryer and A and a sink and all of this, we still see these silly faces in it. This is something that's known as paradolia. This is this tendency for us to make meaning as we move through the world. It's why we see shapes in clouds. It's why we it's why we might mistake a stick in the grass for a snake in the grass. We are always moving through the world in a way that is trying to give form and shape and purpose to the things that we encounter now that, of course, has a ton of upside, and that's upside that we can understand and that we can use to our own advantage. So I want to talk with you about one of my favorite studies that that talks about the about the power of purpose. And to do this, I want to give the example. To do this, I'm going to give the example of standing in line at a copying machine. Now, it's probably been a minute since you had to stand in line at your office to make copies. In fact, you may be so young that you never had to do this at all. Bless you. If that's the case, you're very lucky. But imagine standing in line for whatever and put yourself in that headspace. And I'm going to talk you through these these three scenarios. The first scenario, there's someone standing in line. There's a few people ahead of you and you say, you know, excuse me, excuse me, can I cut, right, excuse me, can I cut? Would you think about this for a minute? Would you or would you not allow that person to cut in front of you in line? OK, think about it. Would you or would you not allow that person to cut in front of you in line? OK, you can be honest. You're just at home watching this by yourself, right? OK, so just over half of people let the person cut, 60% say Yep, go ahead, you can cut 40% of people say, Nope, stay where you are. Civilizations have rules. We're not doing this. OK, now second scenario here. Someone taps you on the shoulder, you're in line. This person says, excuse me, I'm in a huge rush. Can I use the Xerox machine? Because I have to go to my kids soccer game. OK, I'm I'm rushing to make my daughter soccer game. It would really be huge if you would let me cut. OK, so compliance of course shoots up. Are you going to let them cut now? I I hope you're going to let them cut now because if not, again we need to talk be nice. So 94% of people let them cut, just 6% say. Civilization to have rules get to the back of the line. But here's where it gets interesting. There's a third scenario where people introduced a purpose that was a non sensical purpose. OK, so in this, in this third scenario they say, excuse me, can I cut the line because I have to make some copies? So the difference between the first time and the third time is that in the third instance, they gave a reason. Excuse me, can I cut? Because I have to make some copies. Now, I want you to think about this right nobody's standing in this line for any other reason than that they have to make copies. That's why everyone's there. No one's there for fun. No one's there for their health. Everyone is there because they have to make copies. And yet just saying a reason why, just saying or reason why led to a level of compliance that was identical to a legitimate reason. So the soccer game, you know, making my kids soccer game, and I have to make some copies, we're viewed as identical reasons. The truth here is this. People don't care if the the reason is good or bad. They just want to know that there is a reason. Now, of course, I'm not telling you to give your clients bogus reasons. I want you to tie your conversation back to their why. Are they saving for that second home? Are they saving to send their kids to their alma mater? Are they saving to leave a charitable bequest? Whatever it is, tie it back to their why we're here today. We're having this conversation because of something that's valuable to you, and we know from the research that compliance is going to increase 50%. If you just remind them why this is something you want, this is going to help you get there. So don't forget this. Simple thing to always, always begin with purpose. Now let's talk about proof. Now let's talk about proof. So proof is again showing yourself to be an authority. Now the most famous study in psychology on these and decision making. I was actually a study that was done by someone named Stanley Milgram. And what Milgram did was he set people in a room. He recruited psychologically healthy people. He tested them to make sure that they were not, you know, sadistic or anything. Before he engaged in this study on punishment, he recruited psychologically healthy people and he brought them in. And said you're going to do the following. You're going to be speaking to someone on the other side of this wall. You're going to be teaching them word problems, math problems, and if they get them correct, you go on to the next question in the sequence until you've completed, and if they get it incorrect, you're going to push a little button that's going to give them an electric shock. You're going to ZAP them with this little button. And each time they miss. With each subsequent miss, you're going to go up the pegboard and shock them with greater intensity than the time before, with sort of the ostensible purpose being that you're going to measure the relationship between punishment and learning. We're going to, we're going to be measuring here whether or not there's a relationship between punishment and learning. Now, in the room with this person explaining all this to them is someone, not Milgram himself, but someone dressed in the trappings of a doctor, right? So someone who has a Gray lab coat on with with their name on it and a clipboard, and they're looking very authoritative. They're looking very official. And so you can probably guess what happens next. Or maybe you read about this in your psych 100 course and in college. But what happens is, of course, there is no one on the other side of the wall, right? No one was harmed in conducting this experiment. But what is on the other side of the wall is tape recorded screams, and of course it's very rigged so that you know the person in question, the person on the other side of the wall is missing question after question, and the person in the hot seat is sort of forced to shock this person again and again with greater intensity. Now, I should mention that at the outset of this, the people are told by the quote, UN quote Dr. that the person on the other side of the wall can be seriously injured or perhaps even die if they receive enough electric shock. You know, they say, look, if this person has a heart condition or if they're very overweight, like they can be injured by what you're going to do here today. So again, put yourself in the position of this person, you. You're teaching these lessons. The person on the other side of the wall is not getting it. You're shocking them with greater and greater intensity. For for all you know, and this person is screaming and crying and begging you to stop. Now. Almost every person involved in this study asked to stop to, to humankind's credit, you know, almost every person in the study said, look Doc, I can't do this. This is terrible. Listen to them and you know no more. And yet the doctor was told to say just one simple phrase. The authority figure was told to say just one simple phrase. Please proceed with the experiment. The doctor could not cajole them. He could not, you know, force them. Couldn't shake them. All he said was please proceed with the experiment. I want you to think what percentage of people actually went through with this when authority figure told them to shock a stranger to the point of physical harm because they missed some word problems like think would. Would you do this? Right. Well, the answer is you probably would because there's different variants of this experiment. There were different sort of variables that were introduced, but in all of them, the numbers range from anywhere from about 66% to 94%, so 66% and sort of the purest iteration of this and actually up to the mid 90s percent when the doctor denigrated the character of the person on the other side of the wall. So there was a condition. Where they the authority figure said, hey, look, the person you're going to be testing today, did you see them out in the hall? They were acting like an animal and so they had sort of a low opinion of the person they would be testing. In these cases 94% of the time they shocked them all the way up the pegboard. So heavy stuff, not what you signed up for in a finance webinar. So what's the point here? The point is this, we listen to authority. This is a dark example of that. But the but the the light example is true too. Your clients have entrusted you with their hard earned money. Once you've recentered them on that, why? They want to know that you know what you're talking about. They want to know that you have a plan and that you are authoritative and knowledgeable in what you're doing with that money. So I want to give some concrete examples of how I counseled our advisors to use this earlier this year when the news of Corona first broke. You know, they said, look, we need some, we need some ammunition, we need some facts, we need something to give our clients. And so I dug in, looking for this proof. Is there proof to suggest that there's some sort of precedent for what's happened? Well, we know that we've fought disease before and we've won. In only the last 20 years, we've had any number of pandemics. We had SARS in 2003, swine flu and O 9 MERS in in 2012 and Ebola in 2014. And what's fascinating is when you look at the market, the average return of the markets, we know over long periods of time somewhere around 10%. But if you look at market returns in years when there was a pandemic, the market actually has on average. Done very, very well. Much better than historical averages. And again, that proved to be true in 2020, although I think few would have suggested that had they not looked at the historical precedent had they not looked at the proof, right. So there's one form of proof. Another message that we were getting from our advisors are that the clients just felt like capitulating. They felt like they couldn't take it anymore. And again, we know psychologically that time flies when you're having fun and that time really, really slows down when things are not going your way. And so we know now with 2020 hindsight that that was the quickest, quickest bear market of all time, the quickest bear market of all time. We were fast to to reach that bear market low and then we were fast on the rebound. And again this is a second piece of proof that we were sharing with our clients and our advisors then. That we don't know, of course, exactly how long the bad times are going to last. But we do know that the good times far, far outweigh the bad. So if you can hang on, if you can hang on. During this moment of fear and uncertainty, good things have tended to happen and they've tended to happen. And a lot more than than the bad things. The final piece of proof we shared with them is perhaps my favorite. This was research that was done. In in 19 different countries that looked at how often people made changes to their portfolios. Because of course in February and March of 2020 on many clients were clamoring to do just that. They were contacting their advisors scared and wanting to make a change. And so we wanted to look for proof again, entering with no presuppositions. We wanted to look for proof about how this has served clients historically. And what we found is that in 19 different countries where we looked that that clients who have made frequent changes have underperformed those who've made infrequent changes. And that that is what we call monotonic, right, that it's a step. Wise relationship. The people who made the made the most changes did worse than the people who made a few changes, who did worse than the people who had made no changes, right? It was a stepwise progression that showed that the more you tended to mess with your portfolio, the worse you tended to do. So again what we did was we provided proof. The word of the year in 2020 was uncertain. People were so uncertain they didn't know what was going to happen. And again, we really didn't know what was going to happen. It's it's easy as we sit here now with the vaccine, with some certainty about what the future is going to look like to forget that. But, you know, cast your mind back to the moment when you couldn't get toilet paper and things were pretty dicey there. But even in that dicey moment, even in that moment of great uncertainty. There was proof, there was something authoritative that we could say to our clients that we could give to them to say this message that we're sending you to stay the course, to be long term. This isn't just something that I'm doing for my benefit. In fact, there's considerable historical precedent to suggest that this is a good idea. That's a much more powerful message than just, you know, do this because I said so. Right. So the third piece that we're going to talk about is akin to the second. So we've given them this proof. But again, we want to add this extra layer. We want to talk about this extra layer, and that extra layer is smart people agree with me. So to understand the power of the herd. We really need to understand how the human brain works. Your brain accounts for 2 to 3% of your body weight, but it accounts for about 1/4 of your metabolic expenditure in a given day. So it's very hungry. It's it's hungrier than it is big. It's very sort of wasteful. And so because of this imbalance between how big the brain is and how energy inefficient it is, we're always looking for ways to think less. This is just human nature. It doesn't sound, doesn't sound positive, but it's something that we all do. We're all looking for ways to offload our thinking to someone else. And one of the ways that we do this is by relying on other people. So when you're watching a toothpaste commercial and it says. Nine out of 10 dentists choose Crest, you say? Absolutely fine, crested his. If it's good enough for the 9:00 dentist, it's good enough for me. Or when you see an athlete advertising, you know, beer or razors or whatever it may be, we say, well, if it's good enough for Tom Brady, it's good enough for me. This is the way that we look to other people and we say if the decisions have worked for these people. They're likely to work for me. So how can we bring this in when we're having a conversation with our clients and trying to entice them to do the right thing? Right? There's a couple of ways we can do this. First of all, we can rely on stats, right? The research says this, right? Again, show them those statistics. This isn't just the gospel according to me. This is the statistics. Show it. I've looked into it. The evidence, the weight of the evidence says this. The other thing we can do is we can bring in other experts. Now you are an authority in your client's minds, but it doesn't hurt to bring in, you know, a Warren Buffett quote or a piece of research from a Daniel Kahneman's Nobel Prize winning work on behavioral finance or whatever it is right to show that other smart people agree with what I'm asking of you. The third thing that we can do? Has helped them understand that this has worked for people like them, of course. Compliance without violating any privacy or other considerations. We're here, of course, in the in the era of zoom, we're here in my home in Atlanta. And the reason why I bought this home in Atlanta has to do with this social consensus that we're talking about. My wife and I were moving from Alabama to Atlanta five years ago when we bought this home. And frankly, I think we were driving my realtor a little crazy, right? Our realtor was going crazy because she was showing us how suffer house nothing was quite, you know, to our specifications. And I think she wanted that Commission and and wanted to be rid of us. And So what she did when she took us to this home was actually quite brilliant. I didn't, I didn't understand it as such. At the time, but, she said, you know, Doctor Crosby, sort of appealing to my vanity. Good job, Doctor Crosby, I I want to show you a home in this neighborhood, because this neighborhood is the premier school system in all of Atlanta, and it's where all of the young professionals live who want the very best for their children, right? So effectively, she said. Look, man, you went to a lot of school. A lot of your neighbors went to a lot of school. You want good things for your children. They want good things for their children. If it if it's good enough for them, it should be good enough for you. And what's fascinating is she effectively put me in a box. She effectively put me in a box that I was in no hurry to escape. You know, she put me in the box of well educated folks who are concerned about their children's welfare and that's a box that I want to be in all day long. And so she said, look, this has worked for people like you. It may work for you as well. It's it's a powerful form of social proof. And then finally you can say. Just via testimonial again, as appropriate, as compliant, you know, think back to a March of 2020. How powerful it is to say to your clients, look, I'm. I'm feeling the same fear that you are. I'm scared like, this is scary. It's a health crisis, it's an economic crisis, it's a market crisis. And I don't know what's going to happen, but I'm going to tell you what I'm doing. I'm going to tell you what I'm doing with my money and what I'm doing for my family. I'm staying the course. That's a powerful form of social proof. So bringing the research, bringing the experts, bring in the social comparisons. And bring in your own testimonial and know that even if there's no one else in the room, it can be just you and that client or you and that the the couple. There can be two people in the room, 3 people in the room, and you can have mountains of social proof if you bring in the ghosts of this research, the ghosts of these other people, and this this social consensus even when there may not be anyone else in the room. The final thing we're going to do is what it's called guided simplicity. So human beings are funny creatures, right? Or funny creatures? Because on the one hand, we really, really hate being told what to do. There's actually some really fascinating research from what that that proves what every parent already knows. I'm the parent of three young children. And the more I hate a toy, the more my kids are going to love it. And there's actually research to to suggest that that's the case. My kids aren't old enough to date. But there's also research that shows the less the less apparent approves of of a dating partner for a for an adolescent kid, the more the kid invests in that dating partner. And so we have this really strange human impulse that if someone commands us, what to do. We push back on that, right? We push back on that. We push back. We say no, no, no, no. I'll show you who's in charge. I'll show you who has the authority and the autonomy here, right? You're not going to tell me what to do. I do what I want. So I think our clients have a real reaction to being commanded, to being lectured, to being scolded when they want to do something. That's that's misguided. But on the other hand, your clients don't pay you good money for you to ask them what to do. I think we've all had the experience of going to a doctor and having that doctor say, like, oh, you know, I don't know, you, you, you could have the surgery or or not. And you go, look, just tell what you're you're the expert. Tell me what I ought to do. But there is actually a middle ground, and it's quite effective that allows us to balance this need for guidance with this need for maintaining autonomy. And that's to present 2 equally attractive alternatives to them. You know, you could do this or you could do that, and this allows two things to happen. First of all, you've narrowed down the the the myriad possible paths to just two. So you have added value, you have provided support, you have given them that that decisional support. But what you haven't done is you haven't scolded them, you haven't chastised them, you haven't commanded them to do something which is going to elicit that natural pushback. So this is how we get our clients going. We know that they need. We know that they need to apply these principles in their own lives. We know that they need to start to apply these things, and so we can get them started on this process by giving them two equally attractive alternatives and allowing them to choose. One could be reading A blog post, it could be listening to a podcast, it could be making a small tweak to their allocation, it could be 100 things. But whatever it is that you've talked about, you don't want to leave it in the. Either you don't want to leave it in the realm of of speculation and education, and you don't want to leave it in that conceptual realm. You want to bring it down to Earth and let it live in a real way in their life. So there's something in psychology called replacement behaviors. And this is this idea that instead of making an enormous mistake, maybe we'll make a small tweak instead that scratches that behavioral itch without succumbing to your worst impulses. So again, think back to February or March and the things that people wanted to do, they wanted to hide under their beds. They wanted to go all to cash. They were. They wanted to, you know, just run far away from any level of risk. And we know now that that, of course, would have served them very poorly. So what are some things that we can suggest instead that again meet the need for that client to take an action because there is a profound action bias in a time of panic? We know that clients want to do something, even though the research says to just chill out, to do nothing, to stay the course. That can feel very, very dismissive coming from you to a client at a time when they are very fearful. So instead we can offer these replacement behaviors, right. We can have them rebalance the portfolio in a small way, get our risk metrics back where they need to be. We can put in crash bits if the markets crashing. What are some, you know, high mote quality blue chip? Type stocks that you wouldn't mind owning for a lifetime, but that are a little too expensive right now. Let's put in a crash bid and see if they passed that limit. Maybe we engage in some tax loss harvesting. Nobody likes paying taxes. That's another great thing to do. Maybe it's education, right? Maybe you don't make any tweaks to the portfolio, but you instead give them something to read or something to listen to or something to think about. Maybe it's none of the above. You know, a lot of what was happening during during the early days of of COVID was just fear. Like, not market fear, just good old-fashioned psychological fear. So maybe what we need to do is encourage them to spend more time outside or to, you know, reconnect with with loved ones. Or something that's going to bring about greater Wellness in them. But all of these things have the advantage of starting that process that how the thing that you've talked about you've you've really started to apply that how? So I'm going to give you just a few seconds to memorize the things on this pad, and then I'm going to click away. Go fruits, ink, pen, butter, pencil box, keyboard, ice cream. OK, times up. I want you to take just a moment and try and recite that list to me. And again, you're in the comfort of your own home. You're you're all by yourself. Nobody's looking and so see what you can do. All right. How would you do so? Most people, if you're like most people, you said something like fruits ice cream or maybe fruits inkpin ice cream. And the reason why you did this is because of something in psychology known as primacy and recency. The thing is, we have the best memory for the first things that happen in interaction and the things that happen last in interaction. The book ends of a conversation are the most memorable, the opening connection and the closing shot. These are the most memorable parts of any conversation, and So what I'd ask you to do here is to begin and end every conversation with why you open with, why you remind them of why they're here, why they're taking this journey. And what they value that this is going to help them meet you, then give them that proof. You tell them the people that agree with you and you get the process rolling for them to apply that in their life, but before they leave your office or your zoom call in many cases now. I want you to close by thanking them and reminding them of that purpose. This is going to meet the needs of that primacy and recency bias, which says that they're going to remember the first thing you said in the last thing you said, and you want to make sure that that conversation is nicely bookended by reminding them of their purpose. So now I promised a third part. We've talked about what it is you do best. That's behavioral coaching. We've talked about a four part system for doing that better. That's the purpose proof people process. 4 levels there, but now let's talk about you. Because we as an industry are not doing that great. Personally, I think so. If we look back to the great financial crisis, our research by Brad Clontz and colleagues found that 93% of financial professionals showed clinical levels of PTSD, anxiety and depression. In a very real sense we are the buffer between our clients and a life altering bad decision and part of that means that over the last year and perhaps over the the year to come, we have had to absorb. Pain, anger, anxiety and stress from our clients and we've had to sit with that to prevent them from hurting themselves financially or otherwise. And all of that takes a toll. Everything I've asked of you today to be a behavioral coach, to remind them of their purpose, to have these deep conversations, these next level conversations. Everything I've spoken to today means that you have to have something to give. You have to have something, a personal reservoir from which you can pull empathy and kindness and attention and care. And if we're stressed out, if we're anxious, if we're sad. We don't have these things, so I want to spend a moment here just checking in on you and making sure that you are taking care of yourself and that the people on your staff are well taken care of as well. I want to introduce you here A5 part model that I think maybe one of the most powerful things that we'll talk about in this presentation. Hope you'll screenshot it. I hope you'll write it down. I hope you'll read up. This is a five part model that was introduced by Martin Seligman, who was a psychologist who had a really simple but profound epiphany. You know, the early psychologists, Freud and the gang studied what made people broken, what made people sad, what made people flawed, what made people a criminal, right? Seligman took a different tack. He said, I'm going to study what makes people great, what makes people loving, what makes people whole, what makes people happy. And he found these five things. Perma, positive emotion, engagement, relationships, meaning and advancement. So this is a checklist for your life. This is a checklist for your life and your Wellness because your Wellness is an essential first step to to making sure that your clients are well. So let's go through each of these and I want you to just sort of give yourself a score, perhaps zero to 20 on each of these. Add them up and you'll get 100 and see where you're at and let me know. The P is for positive emotion. This is just having fun. Positive emotion is dance party in the kitchen with your family. Positive emotion is, you know, eating an ice cream cone, going to Disney World, going on a walk, whatever that looks like for you. Positive emotion is just a big smile on your face, a good time. The E and Perma is for engagement. Engagement is deep, meaningful work. This is deep, meaningful work. That is the kind of work that causes you to lose track of time. It's so engrossing. It's so engaging, so immersive that you forget you're even doing it because you're so wrapped up in it, OK. Oftentimes what we do at work is put out fires, move from meeting to meeting and do busy work, right. That's that's how it is. Sometimes. But are we doing enough engaging, deep, meaningful work that our lives are benefited as a result of this? For folks who are retired, engagement can very much be a hobby, right? Engagement can look like building model planes, golfing, volunteering at a hospital. It can look like a million things, right? Playing an instrument. But engagement is this deep, engrossing work, whatever that looks like. The third, the the R in chroma is for relationships. Relationships are just what it sounds like. And relationships are the foundational building block of happiness and Wellness, and they've frankly been rocked by the coronavirus. There has never been a time where we have been so disconnected from the people that we love, and so it's natural that relationships may have taken a hit. But within the bounds of safety and appropriate protocol, it's important for us to do everything we can to maintain strong relationships. The fourth thing is meaning. Meaning is going to look different to different people. For religious people, that might be religion. For spiritual people, that might be spirituality or prayer or meditation or yoga. It could be philanthropy. It could be charitable giving, it could be service in your community, whatever it looks like, it's about getting outside of yourself, getting outside of your ego, getting outside of solipsism, and getting out there and helping other people in a way that's bigger than you. And and bigger than making money. And the A in in Perma is for advancement. Advancement means we are better today than we were yesterday. We're making progress. So it is at time felt to me like my wheels were spinning in the mud over the past year as many of my best laid plans did not come to fruition. You know, my ability to travel, my ability to go on vacations, my ability to do work in person, all of these things were limited. And yet, a lot of things turned around for me when I was able to to begin to measure my progress and measure my success in new ways. So my challenge here to you is this. If you're part of this 93%, if you're one of these people who has been losing sleep, who has been sadder than usual, who's been worried or anxious or just worn out from the rigors of your work, I did encourage you to seek professional help if that's if it's arisen to that level. I'd encourage you to reach out to people you love. And I'd encourage you to look at this perma model to to score yourself 0 through 20 on each of these five facets and to pick the one where you're lowest. And really give some concerted effort to that, because it is only as you put your own house in order that you'll be able to most effectively serve your clients. In closing, I just want to say thank you right. This is a non traditional, this is a non traditional format for having a conversation. This is a non traditional thing that we focused on today. It asks more of you, it asks you to dig deeper, it asks you to be empathic. It asks you to be self sacrificing and to really look at yourself and your own behavior and your own biases. I know it's not easy, but I also know that it's powerful and closing, let me just say this, we. While everyone on this call, all the advisors on this call, you have an enormous gift. You have a power to impact change in your clients lives in ways that that that ripple through the generations. But your ability to do so is predicated on two things. It's first predicated on your ability to execute on this four part model that we talked about so you can give advice that sticks. And 2nd, it's predicated on your your ability to take care of yourself to make sure that you are whole. To make sure that you are well and to make sure that you have something to give. So I hope in every respect that this has been a meaningful webinar and that it's giving you positive new directions in which to head again. I'm doctor Daniel Crosby and thank you for joining us and everyone here at Orion for this webinar. _1713912980301