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Daniel Kahneman’s Legacy: The Myth of Reason

All of us who have served affluent clients know something they don’t know. All humans are Predictably Irrational (a great book by psychologist Dan Ariely, that everyone serving affluent clients would benefit from).

The problem is, the more successful and the more affluent the client, the more they resist this notion. They feel they make all decisions based on reason and logic. Their evidence for this is the ample wealth and success they’ve achieved. In my experience, the reality is that the more successful and affluent the client, the more irrational the decision-making process. Chief among the many reasons for this is that the stakes are higher and so is the fear of making a mistake.

So all people, including the affluent, are predictably irrational. How, then, do we help them? The first step is getting them to acknowledge this reality, when the stakes are low.

Helping affluent clients see their emotion-based “rationale” regarding small decisions, will help them accept this is happening when you need to help them make big decisions. If you can show them, in a patient gentle and kind way, that they’re human, and make decisions based-on emotion like everyone else, then they’re much likelier to trust your counsel during an emotional crisis.

By reminding your clients, early and often, that they’re predictably irrational just like everyone else, then you’ll earn the right to help them navigate complex major decisions.

This is the business you’re really in. If you’re able to help them avoid emotional mistakes, in the middle of a crisis, then you’ll also be helping them avoid blowing-up the thoughtful solid strategy they hired you to create for them.

It all starts with you understanding that people don’t operate on the level of facts. People operate on the level of feelings, and helping them see that reality, when their instincts and feelings are telling them to do something emotional and rash, could literally save them from themselves. This requires courage and skill on your part, as their Trusted Advisor.

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About Mark McKenna Little

Mark Little is the ‘regular guy’ Financial Advisor whose unconventional approach to financial services acquired 1,242 clients.

Then in just 34 months he rebuilt his business from the ground up, shattering international records and boosting revenue by 412%

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