Avoid Causing Anger: Donít Try to Manage It
Anger is a protective emotion of varying degrees thatís deployed to remedy broken or unfair dynamics in relationships. Once a person gets angry about a loss or injustice, itís very difficult (and sometimes impossible) for another person to step in and dispel the negative feelings by arguing or negotiating. Anger comes from deep, primitive structures in the brain stem where thereís no language or rational process. As a practice-management strategy, itís better for advisors to take actions designed to avoid causing anger rather than try to untangle it once a client is in its grips.
The idea of anger as a protective emotion deserves greater consideration. Since anger is designed to right a wrong, itís always focused at someone or somethingĺitís the primitive mindís signal to the problem-solving part of the brain that something is broken and needs to be fixed.
Remember the last time you were angry? What did you want? You wanted to fix the problem, to heal the injustice. Those feelings of injustice can be powerful, and can be caused by something as simple as someone cutting in front of you on the highway.
What Causes Investors to Get Angry?
As Daniel Kahneman discovered, when it comes to investing, pain is twice as motivating as pleasure is: ďThe response to losses is stronger than the response to corresponding gains.Ē We all understand this implicitly: a gain needs to be more than twice as much as a loss to ďbalanceĒ the clientís experience of pain. An implication of this is that itís far easier to disappoint a client than it is to satisfy him.
No amount of rational conversation will erase the pain of loss. You canít inoculate your business from investor disappointment simply by explaining risks or assessing tolerance; humans simply canít tolerate losing money. A small loss causes us to wince, even when we knew to expect volatility and our advisor helped us understand the risk. A large loss is extremely painful and almost always translates into feelings of injustice, which turn quickly to anger. Clients complain about the loss and blame their advisor. Even when they donít say theyíre angry, clients perceive injustice and want a remedy.
The rational mind and the emotional mind donít communicate with each other very well. Experienced advisors have observed highly rational clients collapsing into irrational behaviors even when they were fully aware that an investment was likely to be volatile.
Fortunately, even though clients will feel hurt and angry about losses, most can be taught not to attach all of those feelings to their advisor. Over time, clients can learn to engage their rational mind, to question their tendency to blame the advisor about losses and to rein in their desire to seek a remedy.
Usually, as positive results stack up over time, most clients come to accept that occasional losses happen. They learn to feel the pain of the loss, to look at the good things that have happened and to feel (mostly) satisfied with the big picture of what their advisor does for them.
What Causes Clients to Become Outraged?
Anger is a powerful emotion and can lead to rage. Anger stirs a desire to repair something that is broken, rage stirs a desire to be compensated and to punish. Investors get angry when the markets are volatile; clients become outraged when they feel that their advisor was negligent or when they think a loss should have been avoided. For most people, incurring a loss that could have been prevented or reduced is outrageous.
Imagine that youíre driving and a tire suddenly blows out. Your car swerves and hits another car, and youíre injured. You feel pain and anger, and have to digest those feelings to get over the experience. A month later, you discover that the manufacturer of your tires is being investigatedĺ20% of the tires have defects, and executives have been covering up these faults. Your feelings now move from anger to outrage, and you want to punish someone for negligence.
Cause for Concern Today