Are we aware of the influence our brains have over our actions?
We're getting there. Did you know, for example, that we make decisions several seconds before we realise we've made them?
An experiment at the Max Planck Institute in Berlin in 2008 showed that, when we decide to move our hand, the decision can be detected in our brain about six seconds before we are aware we have made it. Which told us we have more to learn about our brains and how they work.
You may be wondering how I'm going to link this to financial services (as of writing this in-brackets bit, so was I), but, if advisers can understand what influences a client's thought process when, say, they are considering buying a financial product (ah, there we go), this can help achieve better outcomes for both consumers and advisers.
This is the study of behavioural finance – the impact of neuroscience and emotion on our investment decisions – and advisers appear to be taking more of an interest in this area (so, by the way, has the FCA).
To mark this, Professional Adviser has signed up Greg Davies, the head of behavioural finance at Barclays Wealth – and now our ‘Head Doctor' – to provide a regular column on this topic.
His first contribution forms part of our special on behavioural finance, which begins on page 8 and also includes one adviser's experimental use of an interesting theory to emerge out of the US. We hope you find it interesting.
Before I go, I wanted to point readers to a story that ran on IFAonline.co.uk earlier this week, which acted as a reminder of the myriad challenges facing financial advisers today.
In this case, an IFA had been receiving calls from pension liberation ‘promoters' with promises of double-your-money returns and commission kickbacks.
Now, advisers know a thing or two about pensions, so this promoter rightfully faced a few tricky questions but, worryingly, most recipients of these calls are unsuspecting members of the public who may have read a few glum headlines on annuity rates.
By the way, a pension liberation promoter cold calling a financial adviser is a bit like a dodgy plumber sending a leaflet to the BBC's Rogue Traders.
In our case, the adviser has reported the companies behind the calls to the FCA, along with a sternly-worded letter. Let's hope the regulator and other authorities look into it.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress