As a NAPFA-Registered Personal Financial Advisor, I am required to have at least 60 hours of Continuing Education (CE) credits for re-certification. This is the most demanding of any financial planning organization, and that's why I'm attending their annual conference in Salt Lake City. So, why did I come so far and spend so much money, only to waste one hour on a class that doesn't give any CE credit?
It was called "When Logic Leaves the Room." With apologies to the excellent speaker, Ted Klontz, this is what I took away from his lecture.
The front third of the brain is the thinking portion. The back two-thirds of the brain house the survival instinct and emotion factory. Since the thinking portion is so much smaller and since emotions can arise five times faster than thoughts, the thinking portion is easily over-whelmed by the larger portion of the brain. Due to the nature of financial planning, advisors are required to live in the front portion of the brain, enjoying the cozy company of logic. Clients can live where they wish, when they wish.
However, sometimes a client may be experiencing emotions from the back part of the brain. Long ago, I learned never to argue with emotions. When logic leaves the room, it is time to go silent. Be understanding . . . but be silent.
Most behavior scientists advise listeners of emotion to be understanding and to be re-assuring. Unfortunately, that is a problem for serious financial advisors. The SEC goes crazy whenever an advisor re-assures a client that "everything will be okay." They view such a statement as a guarantee, which is strictly forbidden. (Logic doesn't live at the SEC either.)
We are therefore reduced to telling one of Warren Buffett's many good stories. For example, if a person is worried about the normal gyrations of the stock market, we can say "when asked what the stock market would do the next day, Warren responded that, while he had no idea what it would do the next day, he did know it would be up in ten years."
Besides, a big hug is often better than any words! At least, the SEC doesn't prohibit hugs.
But, I wish I could have earned another CE for that lecture!
