Are you getting no action from the client? Have you effectively addressed the issue of risk aversion? Here are some tools to help address the issues that everyone faces when making choices and decisions.
The decision-making process
Let us review the decision process virtually everyone goes through when making choices and evaluating risk:
- All choices and decisions are filtered by our personal beliefs - no matter the validity of those beliefs.
- All choices require some type of reference point for comparison. The more recent the comparison, the more relevant. What is a good deal if I have nothing to compare it to?
- All choices are influenced by our emotional state at any given time. If we are highly emotionally engaged towards a yes decision, we will move faster. Highly emotionally fearful of potential risk, we will most likely say no, or drag our feet.
- The logic of the choice. This will vary in importance depending upon the behaviour profile of the person. Detail-oriented people require more input, whereas ideas based people tend to require less logic input.
We need to be aware of all four aspects and how to discover and influence these when working with our clients in making choices.
So how might we influence these choices positively to move their decision-making process along? Some recent information can give us insight ...
Priming
Priming in psychological terms, is "starting or placing an idea or thought into the communication or persuasion prior to the actual communication or choice". This priming then influences or affects the final choice.
The priming influence can be a positive or negative force. It can assist in overcoming risk aversion or amplify the risk aversion when making a decision.
Let's look at an example of priming:
You hear about someone being mugged in a parking lot the night before, just before you leave some friends to go home. As you walk through the dark parking lot, you hear a noise and react with thoughts of a mugger. If you had not heard the story of the mugger, you might have thought the noise was simply alley cats.
The mugger story has primed your thinking - and thus your reaction.
The same happens to risk aversion. A test by Dr. Doran Klinger put accountants and financial advisors to the test. The short version is this:
Two groups of professional financial people were given stories. One was of a high risk-taker that was successful and achieved high rewards. The other of a person who refused to take great risk, and thus avoided large losses. The participants were unaware of the priming, as the stories were given in the context of a memory testing exercise.
Next, both groups were given the exact same financial information about an unnamed investment to evaluate. The results showed the group primed with the high-risk success story rated the stock higher, while the group with the risk adverse story rated it lower.
The test indicated the financial advisors could be influenced, and thus their evaluation and choices could be altered by priming with a risk success or risk aversion story.
So how does this work for you in getting that client to say 'yes', and to take action?
Here are some quick tips:
- Always use examples or stories that show risk-taker's winning - be it other clients or people in similar situations as your client. This primes them to winning because of risk taking.
- Avoid examples or stories of risk aversion and minimising loss, as this reinforces and primes them to avoid risk-taking at any level.
- Watch your body language and words. If the client is communicating a negative situation, it is easy to find yourself nodding yes or agreeing, thus reinforcing the risk aversion through our body language without knowing it. Always take a neutral, yet listening, stance in such situations. This way you are not reinforcing the risk adversity, yet you are still attentive to the client.
- Use positive, winning language such as, winning, being on top, success, positive outcome or achieve. These prime the client with positive outcomes from risk.
- Ask open questions about times when the client has won from taking risks. Once more, this primes them with positive images and emotions from risk.
- Ask what they use, or could use, as comparisons for this choice or decision. Without comparisons of some type, risk becomes bigger and decisions are delayed. How does your solution fit into the good, better or best comparison? Better you create this now, as the client will without you once you are gone.
The challenge is that every choice or decision has some level of risk aversion involved in it. We all naturally avoid risk and move away from potential loss. It is reducing the risk aversion as quickly and early as one can that will aid in moving the decision-making process along.