We See What We Want to See
As advisors seek unexplored potential and transition to a new firm or start an RIA, it can be hard to keep emotions out of the decision-making process. These emotions, while natural and comforting, may cloud the truth, resulting in a less than desirable decision and outcome.
Everyone knows that it’s best to view options in a business decision objectively.
Uncontrolled emotions often influence our perception of the truth and lead to negative behaviors, narrowing options and creating a false sense of reality.
One of the most pervasive, harmful behaviors is confirmation bias, a tendency to pay attention to evidence that supports pre-conceived notions about a subject and discount evidence to the contrary. Once a decision is made, it’s comforting to find information that confirms it rather than be open to the possibility that the wrong choice was made. Once we decide, we don't like to decide again.
Asking yourself this question after forming an opinion can go a long way: “How do I know I’m right?”
The truth is, know-it-alls do not learn a thing. Leaders assume they know very little and seek out unbiased facts to reach the best possible conclusion. It’s not the result of decision that shows confidence and leadership, but the way in which it was chosen.
Another common stumbling point for advisors is affinity bias. This is a tendency to believe people we like or admire and ignore opinions of those we do not. When I see advisors speaking with vendors, broker dealers, or wealth firms, I often hear statements like, “I like this firm, they are a great bunch of people.” Although it’s great to work with people we like, it’s crucial that we seek out other opinions that may be less desirable to the outcome we want. Without different or dissenting opinions, we cannot have a clear picture of all our options.
Some other common statements I hear from advisors as they transition include:
“My book will easily be worth 2.5x of my gross revenue when I am ready to sell.”
“My payout will easily double with this new firm.”
“My clients won’t have any platform fees.”
“Being an RIA is not as difficult as it sounds.“
“This firm wants to give me ‘free’ money just for joining them”
“They have a completely open architecture and do not push their prop funds.”
“There are no hidden fees to my client.”
“My new firm will allow me to do Rep as PM accounts and manage clients’ money as I see fit”
In each of these phrases, I hear advisors quoting sales reps from a recruiting firm, usually to validate their decision. While trying to help them unpack the truth, I am often met with resistance and a narrow viewpoint. These advisors have already made their choice and would rather be told how great it is instead of learning to see objectively. Once these advisors switch firms, it becomes clear to them that things were not exactly as stated in the sales process.
Don’t punish yourself! As David Thoreau wrote,
" It's not what you look at that matters, but what you see."
Let’s accept what is and focus on asking the right questions. Extract the truth to make informed, well thought out, and researched decisions.
CEO and Founder
Where Fiduciary Freedom is First
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Advisory services are offered through f3Logic, LLC, a registered investment advisor.