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Commonwealth's Birke: Millenials Miss the Human Touch (Audio) · Bloomberg Intelligence

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  Speaker 1: Thank you Charlie from the Bloomberg news room. I'm rainey
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  Speaker 1: in a cent cio. There's a report that senior Republican
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  Speaker 1: be selected by one sixty eight members of the Republican
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  Speaker 1: That's a Bloomberg business flash. This is taking stock with
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  Speaker 1: Life Today from Smith M. Lensky's near the Boston Harbor
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  Speaker 1: in Boston Seaport District. So we can talk to people
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  Speaker 1: like our next guest, So, how do you feel about
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  Speaker 1: the market right now? How do you feel about your investments?
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  Speaker 1: Do robo advisors make you feel better or worse? Well,
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  Speaker 1: here to talk about what makes us think that way
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  Speaker 1: and ways we can do with our own thinking. Caulbert
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  Speaker 1: He is senior vice president, Technology Strategy and financial behavior
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  Speaker 1: Specialist at the Commonwealth Financial Network. He's here in the
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  Speaker 1: Boston area. H You may recall hearing him on the
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  Speaker 1: show when we've gone to the Commonwealth Financial Annual Meeting.
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  Speaker 1: Always a treat for us on taking stock cold Welcome
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  Speaker 1: back to the show, Thanks so much for having me.
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  Speaker 1: So your degree and uh, you're actually it's a master's
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  Speaker 1: have applied positive psychology from the University of Pennsylvania. Uh,
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  Speaker 1: A lot of people don't feel that positive right now,
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  Speaker 1: and I honestly think robo advisors is one of the reason,
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  Speaker 1: because maybe millennials feel better because I like to just
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  Speaker 1: do things on their phones. But I think a lot
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  Speaker 1: of people miss the human touch absolutely, and I actually
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  Speaker 1: think millennials missed the human touch too. One of the
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  Speaker 1: things that I think is missed in working with millennials
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  Speaker 1: is the fact that they do want wise advice. They
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  Speaker 1: may want it through an instant message or a text
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  Speaker 1: or you know, a video chat or something else where.
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  Speaker 1: It's they're not having to actually go to your office,
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  Speaker 1: but they do want someone that they can rely on.
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  Speaker 1: How do you how do you identify fear based attitudes
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  Speaker 1: and behaviors? Well, I think that there are ways that
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  Speaker 1: you can identify it, certainly in person when you see
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  Speaker 1: different facial expressions and when you see different body postures,
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  Speaker 1: and there are incredible techniques that are just so easy
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  Speaker 1: to use. Like whether it's a doctor or financial advised
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  Speaker 1: or any professional when they see this type of behavior,
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  Speaker 1: One thing that they should know is that there are
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  Speaker 1: actually two nervous systems in the body. One system is
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  Speaker 1: that fight and flight nervous system. And when I'm in
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  Speaker 1: that state, that's called the sympathetic. When I'm in the
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  Speaker 1: sympathetic nervous system, I actually can't think rationally. It's only
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  Speaker 1: in the parasympathetic with psychologists nicknamed the rest and digest
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  Speaker 1: system that I can think rationally and make wise decisions.
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  Speaker 1: And so when an advised or or a doctor or
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  Speaker 1: anyone else who's trying to counsel someone is working with
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  Speaker 1: someone that they see is stressed or anxious or fearful
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  Speaker 1: or angry, the first step is really moving them from
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  Speaker 1: that sympathetic to the parasympathetic. Well, you better have a
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  Speaker 1: degree in pasitive psychology to do that, or you better
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  Speaker 1: have watched Lie to me that series that ran for
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  Speaker 1: a couple of years, which must have been one of
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  Speaker 1: your favorites. Absolutely, and that's based on actual research that
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  Speaker 1: was done worldwide to recognize different emotions that actually they
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  Speaker 1: have these things called micro expressions where when you practice this,
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  Speaker 1: you can actually see these things that the person themselves
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  Speaker 1: might not even realize they're experiencing. Absolutely, it's a great show,
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  Speaker 1: all right. Now, let's tie that into how people address
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  Speaker 1: their investments, because if you're a robo advisor, if you're
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  Speaker 1: doing something where it's just a human to a piece
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  Speaker 1: of technology, you can answer questions rather dispassionately and think
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  Speaker 1: that you're giving the correct answer. But when the stock
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  Speaker 1: market goes the way you didn't expect, that rationality can
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  Speaker 1: go out the window. Such a great point, So psychologists
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  Speaker 1: also talk about this notion of hot states and cold states,
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  Speaker 1: and hot states are when you're emotional and cold states
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  Speaker 1: or when you're rational, and a lot of times when
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  Speaker 1: you're filling out paperwork or going through an online wizard,
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  Speaker 1: you're in one of those cold states, and so you're
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  Speaker 1: rationally thinking about how much risk I can comfortably take.
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  Speaker 1: But then of course the market starts going down and
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  Speaker 1: you see your savings dwindling and retirements out the window.
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  Speaker 1: You might have to defer for a few years and
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  Speaker 1: you hate your job. All of a sudden, that hot
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  Speaker 1: state has kicked on, right, and so it pushes you
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  Speaker 1: to make act to take action, and a lot of
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  Speaker 1: times that action isn't in your best interest. And that's
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  Speaker 1: where whether it's a wise friend or a wise financial advisor,
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  Speaker 1: that's where they really come in handy in or and
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  Speaker 1: they're going to keep How do I know if I'm
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  Speaker 1: got the right financial advisor? I might if I feel
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  Speaker 1: good talking to you? Is that a good sign? Or
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  Speaker 1: does it show that I'm kind of gullible? And if
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  Speaker 1: someone's nice to me it says what I want to hear,
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  Speaker 1: You know that I'm not going to get the best advice.
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  Speaker 1: Is there a way to to deal with your feelings
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  Speaker 1: which drive a lot of the thought, but which we
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  Speaker 1: think is objective, but it's very subjective when it comes
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  Speaker 1: to making an important decision like that. That's a great question.
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  Speaker 1: There's actually some interesting research out there about doctors and
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  Speaker 1: that the doctors that they're that patients like the best
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  Speaker 1: actually give some of the worst advice. And so I
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  Speaker 1: think you're spot on that it's not just about feeling
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  Speaker 1: good about your financial advisor. It's also that they help
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  Speaker 1: you plan for the future. I think there are really
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  Speaker 1: three things that a financial advisor can spend their time
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  Speaker 1: on trying to predict the future, what's going to happen
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  Speaker 1: in the markets, what tax laws are going to change, etcetera.
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  Speaker 1: And personally, I think that's impossible. So if you have
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  Speaker 1: an advisor that's telling you they're doing that, they're likely
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  Speaker 1: not actually able to do that. They can plan for
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  Speaker 1: the future right techniques that already exist, whether it's putting
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  Speaker 1: money into a row for the right reasons or whatever
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  Speaker 1: else might be, and then they can wisely react with
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  Speaker 1: you to the current events. And I think those last
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  Speaker 1: two are the things that advisors should focus on. And
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  Speaker 1: so if you have an advisor that's doing those last two,
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  Speaker 1: well then you're in the right place. I want to
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  Speaker 1: just get your thoughts on the combination of having a
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  Speaker 1: live human being assist you or guide you with your
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  Speaker 1: financial future, but also employing some of these new robo
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  Speaker 1: advising technologies. Give me about ten seconds, All right, great point.
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  Speaker 1: I think it's robo versus RoboCop. And everybody wants RoboCop.
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  Speaker 1: You want somebody that you can look at in the eyes,
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  Speaker 1: but who's using all of the technology that the world's
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  Speaker 1: got available. And so similarly, if your advisor isn't using technology,
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  Speaker 1: they're not able to serve you well, thanks very much,
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  Speaker 1: good advice, good interesting alright. Cole Burke is the senior
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  Speaker 1: vice president Technology Strategy and a financial behavior specialist for
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  Speaker 1: Commonwealth Financial Network. They are based in Waltham, Massachusetts. If
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  Speaker 1: you're listening to Taking Stock, I'm pim Fox. My co
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