Accepting the Inevitable

04 5月 2021
3 Minute Read

Our brains have a set of built-in shortcuts that influence us every day. Behavioral scientists call these hard-wired limitations heuristics, and researchers have isolated dozens of ways in which heuristics affect us.

One such heuristic is narrow framing, which occurs immediately and inevitably when our brains perceive a nearby danger. This automatic reaction is designed to help us protect ourselves.

For example, last summer I was on a hike and encountered a rattlesnake. On that cool morning, the snake was curled up in a patch of sunlight. My brain, instantly activated, used narrow framing to deal with the snake. All my senses and every bit of my brain’s processing power were focused on that one spot of sunlight. I was no longer aware of my surroundings because my brain zoomed in on the snake and edited everything else out of my awareness.

Millions of years of evolution were packed into that moment, and I avoided what could’ve been a bad experience.

The Problem of Complexity

Narrow framing also gets activated when the brain is faced with too much information. This forces you to automatically ignore any extra data so that your brain can process whatever it decides is important. This is how you can carry on a conversation in a crowded and noisy room.

Importantly, this means you cannot carry on one conversation and pay attention to another. If you try, the brain shifts back and forth from one narrowly framed piece of information to the other. Because of this natural limitation, there is no such thing as dual processing. 

Complexity and Wealth

For investors, as assets increase, so do the number of wealth-management decisions. Uniquely successful families may make dozens of decisions every day. This type of complexity exhausts the brain’s ability to sort through the information. Instead of thinking about all the issues, the investor’s brain uses narrow framing to concentrate only on what appears most important. This is why so many clients focus on a simple idea like price or performance or want to talk only about the portfolio and ignore other wealth-management issues.

As a client-facing advisor, it’s important to recognize that eventually all clients are destined to use narrow framing with their financial situations and to avoid or disregard the less obvious wealth-management decisions that their success has created.

How Can an Advisor Help?

Financial advisors face two big challenges with a client who has resorted to narrow framing his perspective on his wealth. The first is a resistance to any attempt to broad frame his perceptions in order to avoid feeling overwhelmed. Narrow framing is a natural attempt to protect the investor from the pain of too much information, so simply introducing more data reactivates the pattern and doesn’t allow him to see the big picture.

The second challenge is that understanding and sorting through complicated problems require the expenditure of energy. If you expand the client’s attention to the larger framework of his actual situation, he exhausts this ability to stay focused.

A tactic that will help you address narrow framing successfully is called “Yes! And….” Start by listening to what a client thinks she wants. Then ask questions and explore her thinking. By paying attention and listening actively, you will notice both the scope of what she is thinking and everything she is editing out of awareness and ignoring.

After you understand her thoughts, repeat them in your own words. Begin with “This is what I heard,” describe what you heard, and then wait for confirmation. This represents the yes by making the client feel understood and respected. It also builds a bond of trust.

Once you’ve demonstrated that you have heard the client, you can add new information to help her see the bigger picture. Continue by saying, “And you should also be concerned about these things….” In most cases, the client will be able to tolerate the added complexity long enough for you to explain why these new ideas are just as important or even more so than her original concerns.

This step helps the client cope with the mental exhaustion that occurs from getting too much information and keeps her from reverting to the simpler idea. A written checklist is a great visual way to catalog the important issues that need addressing and to keep the focus on the big picture. 

Request more information on wealth-management checklists and other resources from the AB Advisor Institute by visiting http://alliancebernstein.com/go/abai.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

Investment involves risk. The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This article is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor's personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer of solicitation for the purchase or sale of, any financial instrument, product or service sponsored by AllianceBernstein or its affiliates. This presentation is issued by AllianceBernstein Hong Kong Limited (聯博香港有限公司) and has not been reviewed by the Securities and Futures Commission


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