Trending
I recently listened to neuroscientist Emily Falk discuss a fundamental human truth: We are wired for short-term thinking, even when our goals are decades away.
For investors, that creates a constant tension. We ask people to tolerate discomfort today for rewards that may not appear for many years. So the real question is:
How do we help clients make better short-term decisions that support long-term goals?
Falk offered three ideas that map perfectly to investor behavior.
1. Bring the Benefits Closer
Investors can’t control short-term performance, and we certainly don’t want them reacting to it. But we can make the right behavior feel rewarding right now.
How? Through identity-affirming praise.
When markets are down, clients often feel like they’re doing the wrong thing. That’s when advisors need to reinforce:
“This is the right decision, and you’re doing it well.”
Praise builds confidence. It creates an immediate emotional benefit that keeps clients from abandoning their plan.
2. Strengthen Identity (“I Am a Disciplined Investor”)
People make decisions that match who they believe themselves to be.
If clients see themselves as disciplined long-term investors, they’re far more likely to behave that way when markets get tough.
Reinforce language such as:
- “You’re someone who stays committed to the plan.”
- “Most people panic here, but you’ve shown real discipline.”
This shifts discipline from something they do to something they are.
3. Use Social Proof
Falk’s third point: people take cues from what “others like them” do.
For advisors, that can sound like:
“The most successful investors I’ve worked with ignore the noise and stay committed. That’s what you’re doing.”
It’s motivating.
It elevates discipline.
And it frames their behavior as part of the group they want to belong to.
The Real Work Isn’t Just Numbers: It’s Psychology
Investing success depends as much on emotion and identity as it does on math. When advisors reinforce confidence, identity, and social proof, clients become far more resilient during uncertainty.
Related: How One Awkward Moment at a Conference Turned Into an Unexpected Career Win