TGBA #41: Bright Spots and Their Implications for Financial Advisors

Welcome to the 41st edition of #theGoalsBasedAdvisor Newsletter!

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The Jerry Sternin Story: Finding Bright Spots?

In the late 1990s, Jerry Sternin was tasked with addressing child malnutrition in rural Vietnamese communities. Faced with limited resources and a daunting six-month deadline, Sternin adopted an unconventional approach. Instead of focusing on overwhelming systemic issues like poverty and poor sanitation, which are notoriously difficult to solve, he sought out "bright spots" – families whose children were well-nourished despite facing the same challenges as their neighbours.

Sternin observed these families to understand what they were doing differently. He discovered simple, locally-grown solutions that could be easily implemented by others. By facilitating peer-to-peer learning and empowering the community, Sternin’s approach led to a dramatic improvement in child nutrition, with 65% of the children in the villages adopting the bright spots methods showing better health within six months.

The Pygmalion Effect: Power of Expectations

Building on the idea of bright spots, let's consider the "Pygmalion in the Classroom" study by Robert Rosenthal and Lenore Jacobson. This research showed the profound impact of positive expectations. Teachers were told that selected students had extraordinary potential. By the end of the year, these students, who had actually been simply randomly selected, showed significant improvements in their test scores. The Pygmalion effect occurs because, as social creatures, we are influenced by others' expectations. When we anticipate success from someone, we tend to offer them more support to help them achieve it. This is exactly what happened in the classroom. The teachers gave these kids more support and encouragement. And the kids took it and thrived, turning expectation into reality.

Setting high expectations, and then providing support and encouragement, can lead to better outcomes.

Discovering Hands: Leveraging Unique Strengths

Another powerful example comes from the Discovering Hands initiative. Founded by Dr. Frank Hoffmann in Germany, this program employs visually impaired women as Medical Tactile Examiners (MTEs) for breast cancer screening. These women use their heightened tactile sensitivity to detect abnormalities that doctors might miss. For instance, it was found that MTEs can detect 28% more alterations in breast tissue compared to doctors and that MTEs can detect alterations that are 50% smaller than those identified by medical doctors. This approach not only provides better health outcomes but also empowers visually impaired individuals with meaningful employment.?

Challenges Clients Face: Focusing on Bright Spots

Clients often hear about what they are doing wrong, but rarely about what they are doing right. This problem-centric feedback can be discouraging. Instead, focusing on bright spots – the strategies and behaviours that clients are already excelling in – can inspire and motivate them. It’s often more effective to double down on strengths than to try to fix weaknesses. For instance, improving a client’s strong savings habits might yield better results than trying to overhaul poor spending habits completely.

Additionally, research on priming identity shows how powerful self-perception can be. For example, a study found that Asian women performed better on maths tests when reminded of their Asian identity, but performed worse when reminded of their gender. This demonstrates how emphasizing a positive aspect of one’s identity can significantly improve performance.

Five Actionable Insights for Financial Advisors

1. Identify and Amplify Bright Spots: Look for areas where clients are already succeeding and highlight these practices. For example, if a client is particularly disciplined about saving, use this strength as a foundation to build other financial habits.
2. Set Positive Expectations: Adopt the Pygmalion effect in your practice by setting high, yet realistic, expectations for your clients. Believe in their potential to achieve their financial goals and communicate this belief consistently. And provide the necessary support and encouragement.
3. Leverage Unique Strengths: Just as Discovering Hands utilizes the unique abilities of visually impaired women, identify and leverage the unique strengths and skills of your clients. This approach can lead to more personalized and effective financial strategies.
4. Facilitate Peer Learning: Encourage clients to share their successful strategies and experiences with each other. Creating a community of learning and support can enhance motivation and accountability.
5. Prime Clients' Identity: Use the power of identity priming to enhance client performance. Emphasize their positive traits and strengths, similar to how reminding Asian women of their cultural identity improved their maths performance. Encourage clients to think of themselves as successful investors who are actively planning and taking steps to achieve their goals and objectives. This can boost clients' confidence and effectiveness in realizing their financial aspirations.

By focusing on bright spots, financial advisors can shift from a problem-centric approach to one that celebrates and builds on successes. This not only fosters a more positive client-advisor relationship but also drives better financial outcomes. Remember, it’s often more effective to enhance your strengths than to fix your weaknesses.

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