BLUECHIPCLIENT
BLUECHIPCLIENT ENGAGEMENT | Behavioural FinanceIf you really want to influencea client’s behaviour, appealto interest not to reasonGiving technical information and advice to clients is one thing. Getting them to take appropriateaction is another.During the recent market turmoil, a financialplanner shared with me how they hada client who insisted on moving all theirinvestments to cash, despite the financialplanner’s attempts to dissuade the client from doingthis. The financial planner told me they had askedthe client to sign a “disclaimer”. This is not unusual.I often hear financial planners say that they get aclient to sign a disclaimer when the client doesn’ttake their advice. But this is not good for either party.The client is likely to be worse off, and the planner’sposition as a professional advisor is compromised.Benjamin Franklin wrote in Poor Richard’s Almanack(1735),“If you would persuade, appeal to interest notto reason.”44 www.bluechipdigital.co.za
CLIENT ENGAGEMENT | Behavioural FinanceBLUECHIPThe power of this approach struck me recently in readingthe book Supercommunicators, by Charles Duhigg, in whichhe relates the story of a urologist, Dr Behfar Ebdaie, whospecialises in treating prostate cancer at Memorial SloanKettering Cancer Center in New York City. The story is close tohome because my father had prostate cancer, and treating itis slightly complicated. The most certain way to prevent thecancer spreading is to have surgery or radiation treatment,but the risk of this treatment is potential incontinence andimpotence, often long term. Yet prostate cancer is often slowgrowing,so for most people with prostate tumours, doctorsadvise against surgery or any other form of treatment. Lowriskpatients are counselled to adopt an approach of “activesurveillance”, which usually involves periodic blood tests andpossibly biopsies.Dr Ebdaie’s patients would frequently face the dilemmaof whether to have surgery or to keep monitoring and onlyact if the cancer grows. Dr Ebdaie would use thorough dataand evidence from studies to show that in most cases itwas best to adopt the surveillance approach. Yet when headvised patients that they would be better off adopting thesurveillance approach and didn’t need surgery, many insistedthey wanted surgery. This was bewildering to Dr Ebdaie as anexpert in this form of cancer. He couldn’t understand why thepatients wouldn’t take his advice, and even worse, would optfor the riskier treatment. Duhigg reports that this response isnot limited to Dr Ebdaie, and that an estimated 40% of prostatecancer patients opt for unnecessary surgeries.To help him see what he may be doing wrong whenengaging with his patients, Dr Ebdaie engaged the servicesof Professor Deepak Malhotra from Harvard Business School,an expert in negotiation. Professor Malhotra told Dr Ebdaiethat he was assuming all his patients wanted was objectivemedical advice in which he outlined their options to make aninformed choice.Prof Malhotra suggested that Dr Ebdaie, before givingadvice, should try to understand what his patients wanted.He suggested that the best way of doing this was throughasking open-ended questions, such as, “What does this cancerdiagnosis mean to you?” In response to this question, patientsdidn’t talk about medical concerns but rather about theirfamily and how the different treatment options might impacton them. Invariably, when Dr Ebdaie approached his patientsin this way, they didn’t talk about the disease, but rather abouttheir marriages, their memories of a parent’s illness or worriesabout the future.Dr Ebdaie also discovered that different people neededdifferent things, some wanted emotional reassurance, otherswanted to feel in control, and some wanted to know how otherpatients had made their decisions. Dr Ebdaie soon realisedthat his previous way of engaging in these conversations wasflawed, and that it didn’t help to convey lots of informationwhich patients didn’t care about or couldn’t process becauseof their emotional state. He changed his approach, askingfirst what mattered to his patients when they heard they hadcancer, and within six months the number of patients optingfor surgery fell by 30%.If you would persuade,appeal to interestnot to reason.Dr Ebdaie could have continued doing the surgery thatpatients asked for and get them to sign “disclaimers” aboutpotential incontinence and impotence. But he was concernedabout the wellbeing of his patients, and why as the expert,he was not able to get them to take hisadvice. His professional effectivenesswas compromised. As a trueprofessional he had his clients’ bestinterests at heart, and when “reason”didn’t prevail – giving theminformation, he discovered thatfinding out what really mattered tothem – their “interest”, was the key toenabling his advice to land.As a financial planner, the nexttime a client doesn’t want to take youradvice, consider whether the bestroute is to get them to sign a“disclaimer”, or to see if theremay be questions you couldask the client that appealto their “interest” ratherthan to “reason”. After all,asking clients to sign a“disclaimer” because theydon’t listen to your adviceseems more like throwingreason to the wind, andnot acting in the client’sbest interest. Rob Macdonald,Independent Consultant
