Advisor, Is Your Bias Showing?

Jul 20, 2017

bias

Like many of you, I have a love/hate relationship with some aspects of social media. My Facebook page for example, often contains a mishmash of political posts from friends and acquaintances. Being from a small town in the Midwest and living near a large city in the Northeast, you can guess that many of those posts have polar opposite views on the news of the day. Frankly, I think the opposing views give me some balance and present both sides of an argument. Being practical and not wanting to offend, I do my best not to comment or show favoritism to either side. (Although I often type out a reply to make myself feel better and then delete it).

As I thought about those posts, I noticed a trend. One person will write something or post an article and the same group of people will usually cheer them on. I think what I am seeing is confirmation bias, where people are usually only reading headlines and posts on things they already agree with and completely discounting the other side (assuming they think there IS another side). They seek out things that agree with or confirm their already-made-up minds.

As usual, then I think about advisory businesses and ask:

  • What are we doing to combat the biases in our own businesses?
  • Do we even acknowledge that we have biases?
  • How open are we to new ideas?

The purposeful change

When Raef Lee, Bob Veres and I wrote the Purposeful Advisory Firm, I think we tackled the industry bias of “All successful firms should aspire to become an enterprise business.” Our research showed that 64% of advisors surveyed were heading down the path of being a lifestyle business and there was no roadmap for those advisors to maximize their practice. Our goal was to look at ways for the successful lifestyle advisor to thrive in an environment where they are told there is only one way. I think it is important to look at some other biases in our business and ask what we can do to look at it in a different way.

You are who you talk to

If you are a frequent reader, you know that I spend a great deal of time at conferences (my guess is about 26 so far this year!). As I meet with and attend sessions with advisors, I notice that many of them are hovering around and attending presentations for products and companies that they already use. It seems like a confirmation bias coming to life in front of my eyes. They want to feel good about what they are doing, so they go to their preferred vendors to validate their choice was correct.

To me, conferences are a great way to expand your mind around ideas, without the pressure of having someone come to your office. New ideas, new strategies and new opportunities are all around at these conferences, waiting for you to expand your mind – if you let it.

At the next conference you attend:

  • Break out of your rut. Force yourself to see a speaker or topic that is out of the norm for you (unless the speaker is opposite me on the agenda, then by all means – attend my presentation).
  • Use the time to network with other advisors – ones who may think differently than you. Seek out people you respect and learn about what they do and how they do it.
  • Allow yourself to be challenged, rather than simply reconfirm a decision you already made. What would happen if you looked at your decisions from a new angle? It may help you have a more informed or well-rounded perspective.

The first step

As with any challenge, there is a first step to overcome it. Understanding your bias and admitting that there may be another way is the first step. Think about what you read and where you go to get new ideas. I think you will be surprised to find that there are some other good ideas out there. And sure, you may have a negative response (just don’t announce it on social media), but at least you will be better informed. And maybe become a better advisor, too.

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John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

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