I know we usually cover real estate and mortgage-related content on this weekly marketing blog, but I wanted to share something that's super interesting outside of the world of real estate, although it definitely still applies.

A friend and client of mine, Brian Boyd of Boyd Wealth Management, is a financial planner for high net worth individuals. He recently wrote this piece for his audience, which covers behavioral finance and our tendencies to screw things up based on emotion and bias.

Enjoy this excerpt from his article and there a link to the full version at the end. Thank you, Brian!

-Norm  :-)

Psychological and behavioral biases may cause investors to make decisions with their portfolio that have a negative impact on their long-term investment success.
 
Basically, human beings are often our own worst enemies when it comes to investing.
 
Understanding Behavioral Finance
 
Behavioral Finance is the study of psychological influences and biases that directly affect decisions around money. This phenomenon explains why markets often move erratically, based not on objective data but on the actions of participants who aren’t always acting rationally.
 
These influences can actually drive investors to make decisions that are contrary to their best interest.
 
Some common biases include:
 
Confirmation Bias – accepting information that confirms an already-held belief while ignoring information that contradicts it. 

Examples: searching out news reports that support your opinion that markets are set to go up/down. Or, if this candidate or that candidate wins the election, the economy will tank.
 
Loss Aversion - placing a greater weight on the concern for losses than the pleasure derived from market gains. 

Example: studies have shown that investors feel the effect of losses TWICE as much as they enjoy the satisfaction of gains.
 
Familiarity Bias - the tendency of investors to only buy what they know and are comfortable with, at the exclusion of other alternatives. 

Example: a US based investor may neglect quality international stocks in their portfolios. (By the way, this is also an issue with investors in Australia, Japan, Europe, and the UK.)
 
Anchoring Bias - becoming tied to a readily available reference point when making an investment decision. 

Example: judging your portfolio allocation and performance based on its most recent high-water mark.
 
Recency Bias - over-extrapolating the recent past or present into the future. 

Example: assuming a current run-up or downturn in stocks will persist forever.
 
These biases in human behavior are not likely to go away anytime soon. They’ve been ingrained in us since early humans survived by hunting and foraging for food, all-the-while mightily trying to avoid becoming food for something else!

-Brian Boyd, Boyd Wealth Management

To read the full article, click here.
***

I still remember the feeling.

During the early days of the mortgage meltdown in 2007, I was working in real estate and had just written a cheque for $30,000 to buy into a small mortgage company. 

And then, only weeks later, it all came crashing down.

The rest is history, as they say, but I want to focus on is the feeling I had every single morning - you probably remember it well if you were in the business. 

I woke up every single morning with a sining feeling in my gut, a slight buzz of panic always in the background as I put on my tie, tried to put on my best face, and drove to work. And all day long, it was like getting kicked in the stomach (or someplace a little lower!)...and coming back for more, again and again.

I also recall how hopeless it felt, like my choices shrank until it felt like I was working in a tiny phone booth with no oxygen. 

If you're a Realtor or lender who was working in those days, you probably have similar recollections, and our current climate economic climate may stir those old, unwelcome anxieties. 

For now, we've been miraculously spared by low interest rates and hot buyer demand, so I'm sure it was easy to dismiss those feelings and go to work with a smile every morning. For now. 

• But I don't want to talk about crashes, recessions, or pandemics today, but how we respond to them.

 
In fact, our heightened anxieties may be leading us to make questionable decisions that only dig a bigger hole.

And if you’re like most people in our modern society,  stress, fear, and anxiety are an unfortunate part of regular life. 

• According to the World Health Organization (WHO), anxiety disorders affect at least 40 million American adults and more than 18% of the total population (almost 60 million people).

 

• 8 in 10 Americans are so anxious about their finances that it affects their physical well-being.

 

• Women are twice as likely to have general anxiety as men.

 
And let’s be honest – a good portion of our stress and worries in life come from finances.

• In fact, almost 7 out of 10 Americans (68%) worry about saving enough to retire

 

• 58% of Americans feel that finances control their life

 

• Financial stress leads to feelings of fatigue in 43% of Americans

 

• 42% find it difficult to focus at work, and 41% say it interferes with their sleep.

 
 
And those numbers are BEFORE the Covid-19 pandemic when 40 million people lost their jobs and 4.8 million people stopped making their house payments!
 
Needless to say, we’re all concerned, deeply worried, or even in panic mode over our finances these days in some capacity.
 
Add in an unprecedented level of fear over health concerns, whether the kids will be able to go back to school, and the mental health effects of social isolation or losing loved ones, and our cortisol levels (the fight-or-flight hormone) are continuously in an elevated state.
 
So, what does that do to the decisions we make?

Will an abundance of fear, stress, and anxiety help or hurt us when we’re faced with critical choices?
And as a business person who is in sales and maybe an entrepreneur, how might we see the effects of our stressors and anxieties on day-to-day decisions?
 
The data on decision-making and stress or anxiety.
 
A host of studies show the profound effects of stress on our decision-making process, but I’d like to highlight a few:

• In one prominent study, a University of Pittsburgh neuroscientist identified a neuronal mechanism within subregions of the prefrontal cortex (PFC) that impacts the choices we make. They found that without proper function of the PFC, our cognitive capacity for long-term planning, critical problem solving, calculating options, and weighing risks and rewards is inhibited.

 

• Based on the study’s findings, researchers concluded that anxiety and stress lead to negative decision-making, particularly when presented with distractions or conflicts. They found that the presence of excessive fear “disengage brain cells in a highly specialized manner,” deactivating PFC neurons in the brain that are linked to high cognitive function used for decision-making.

 

• Research using neuroimaging data also shows that stress, fear, and anxiety play a role in our neural responses to stimuli. In fact, our responses to external feedback register in the ventral striatum, both those responses are diminished when we’re under stress, which takes away our capacity to look at a situation critically and logically.

 

• A study at Rutgers University conducted a study on how acute stress impacts our risk tolerance as we make decisions about money or finances. They found that people are more apt to pause and reflect when facing a loss, and end up making riskier decisions. However, when they’re facing a financial windfall or gain, they tend to act much more conservatively. The study concluded that our pattern of risk and decisions are significantly impacted by stress.

 

• Respected University of Southern California researcher Mara Mather recently spoke at a symposium, “How Stress Alters Decision Making.” She shared her scientific findings about our biological responses to anxiety and stress, and specifically how fear and stress impact our striatal dopaminergic reward systems. Basically, she summarized how our brains actually physically change under the influence of stress, and that causes our ability to process information and make decisions in a negative way.

 

• There are countless further studies that confirm the relationship between stress and the decisions we make, but let’s actually take a look at how our decisions may be altered when under duress.

 
Here are 5 ways stress affects our decision-making:

1. We become reactionary
When we're in a state of stress, anxiety, or fear, our brains emit high levels of cortisol, which is known as the "fight or flight" hormone. In this heightened state, our perceptions are more acute, and we tend to be far more reactionary. While cortisol and an adrenalized state helped us when we were running from dinosaurs or fighting off invaders, it doesn’t serve the modern human well, as prolonged cortisol levels are harmful to our health – and cause use to be reactionary with our decisions at the exact time when we should be more careful, critical, and measured.

2. We disproportionately focus on the positive
You may think that high levels of stress prompt us to see the world as all doom and gloom, but the opposite may be true. Research shows that acute stress actually leads our brains to ignore negative consequences and focus on the positives, or pleasure, instead. That's right – we're more likely to cling to any positive feedback or hope for positive outcomes when under stress instead of facing the reality of negative consequences.

3. We may think our options are binary 
One of the key findings of how our brains make decisions under stress is that we inadvertently restrict our options and solutions until we may think only two choices remain. We think that our only options are to take the job or not take it, to buy the service or not buy it, etc. 
 
But in the real world, our options are never binary (yes or no), and there are a multitude of solutions we can find if we only have the clarity to problem solve. Unfortunately, when under stress, our menu of perceived options shrinks down to very few, which forces our hand with some bad or limited decisions. We should entertain more options when under fire and facing stress and anxiety, not less!

4. We come up with quick fixes instead of problem-solving
When we're feeling the strain of fear or anxiety, we're also likely to make decisions much more quickly (which isn't necessarily a good thing). Perhaps it's our fight-or-flight instinct kicking in, but our thought processes, problem-solving methods, and decision making tend to be rushed when the heat is on. That may allow snappy, definitive decisions in combat or in the face of an emergency, but they don't help us in day-to-day life when it comes to decisions about finances, business, relationships, or other important life choices.

5. We abandon our normal decision-making process
There are two basic types of decision-making processes, which are based on your personality type. Some people are analytical, crunching numbers, taking in as much information as possible, and weighing all options such as a chess player who scrutinizes all of their moves carefully. 
 
The second personality type relies on their instincts and makes gut-level decisions, “going with the flow” and counting on their intuition when pressed to make a choice.
 
The fact is that neither method is right or wrong, and by sticking to the decision-making process that feels best to that individual, they build up a lifetime of practice and hone that skill.
 
However, when feeling the stress or pressure, we tend to abandon our comfortable and trusted method of decision making. Those who rely on instinct start crunching data and information; analytical people throw that out and go with their gut.
 
While we just noted that neither of these methods are wrong, you shouldn’t switch course and try a new, unfamiliar, or un-practiced decision-making process when under stress! 

Do men or women make better decisions when under stress?
 
Interestingly, research has pointed to some inherent differences in the decision-making process of women and men.  A study at the University of South Carolina found that under pressure, men took bigger risks than women, who were significantly more conservative. So, when forced to make decisions or solve problems under stress, women tend to take more time, weigh their options, and become more analytical, while men make snap decisions.
 
To account for these patterns, researchers point to differing responses in the anterior insula and dorsal striatum, which moderate our choices when rewards (like money) are on the line. 
 
It turns out that women may make better decisions when under stress!
 
***
The good news is that no matter who you are, there are ways you can be conscious of your decision-making patterns and work to correct them as needed. There are also plenty of ways to naturally reduce your anxiety or be more clear-headed when making decisions, like deep breathing, meditation, exercise or fresh air, and positive visualization. 
 
-Norm  :-) 

PS This article first appeared on Kelly Resendez' Foundation To Sustainable Success. Thanks, Kelly! 
​
Sources:
https://www.psychologytoday.com/us/blog/the-athletes-way/201603/how-does-anxiety-short-circuit-the-decision-making-process
https://www.psychologicalscience.org/observer/under-pressure-stress-and-decision-making
https://hbr.org/2017/08/stress-leads-to-bad-decisions-heres-how-to-avoid-them
https://healthland.time.com/2012/03/05/decision-making-under-stress-the-brain-remembers-rewards-forgets-punishments/
Directions in Psychological Science.
Northwestern Mutual
Capital One & The Decision Lab

In fact, there’s one fundamental snafu that many brands and organizations make over and over; their marketing is all about them, not their clientele and audience.
 
The good news is that this pivotal error is also incredibly easy to fix, and the shift will reap huge financial rewards almost immediately.
 
How do you flip that switch?
 
Stop talking about your own firm, service, or process in your marketing, and start focusing on your customers.
 
“Make the customer the hero of your marketing story,” as presentation and sales expert Tom Bresnahan puts it. 

Let’s take a further look at how (and why) to do just that.
 
The transformative solution: 
 
According to a comprehensive study by Rutgers University, all marketing content falls under one of two umbrellas. 
 
“Meformers” mostly talk about themselves with their marketing messages, posts, and images.
 
While “Informers” do the opposite, turning their lens to the outside world by focusing on their customers or audience. 
 
Informers post marketing materials that provide value, solve problems, acknowledge people’s challenges, and share experiences. Basically, they tell a whole lot of stories about others – not themselves.
 
So, that loan officer whose "marketing strategy" consists of posting nothing but selfies (we all know that person!) - he or she is a "Meformer."
 
But the professional who posts tips, hacks, resources, educational facts, community news, and especially tells the stories of the clients they help is thoroughly an Informer.
 
And the benefits to being an Informer are profound.
 
Stats and facts that prove Informers win:
 

• According to research by Deloitte and Touche, companies that focus their marketing on their audience are 60 percent more profitable than similar firms who focus messaging on themselves.

 

• But only two-thirds (66%) of marketing campaigns actually focus on their audience’s information needs over their own company information or messages, per a 2020 B2B Benchmarks, Budgets, and Trends study.

 

• However, that same study (conducted by Content Marketing Institute and MarketingProfs) found that 88 percent of top performers and earners in any field are Informers!

 
It’s not only advertising campaigns that illuminate this crucial chasm, but regular day-to-day social media marketing.
 

• In fact, Rutgers University professors Mor Naaman and Jeffrey Boase, found that Informers have almost 300 percent more social media followers than Meformers.

 

• Consumer surveys back up that assertion. A study by Chadwick Martin Bailey found that consumers share 72 percent of social media posts because they find them interesting or entertaining, and 58 percent because they feel they are helpful (the two top responses for that question).

 

• And according to marketing research conducted by HubSpot, news (78 percent) and how-to information (58%) are the forms of social media content that are shared the most, while posts about products (45 percent) were near the bottom.

 
The tangible benefit to this marketing shift:
 
By “turning the marketing lens outward,” you’ll engage and connect with consumers on a whole new level. These days, that’s a necessary tactic since they’re inundated with marketing and advertising messages at a mind-boggling rate – including from your competitors.
 
Did you know that the average person is bombarded by more than 3,000 commercial messages every single day?!
 
But you’ll stand out, develop an authentic relationship, and build brand loyalty once you look to make the consumer the hero in your marketing stories. 
 
No longer is it sufficient to intercede and reach them right before they make a buying decision or certain consumer triggers pop up, like credit score checks, home value estimates, or home searches, etc.
 
Instead, you’ll share their journey every step of the way, offering advice, information, resources, help, and a lot of genuine investment in the relationship. 
 
They’ll already understand the value your firm provides and trust you to provide solutions via your services. 
 
Your audience will love you for it!
 
Your audience will appreciate that you’re authentically interested in their lives and experiences, and that’s backed up by mountains of data. 
 
For instance, 77 percent of people surveyed are brand loyal according to HubSpot, and 90 percent of consumers trust brand recommendations from friends online.
 
The best part is that by making your marketing about THEM, you'll see a significant uptick in user-generated content, like when your clients share photos, recommendations, shout-outs, testimonials, and other endorsements.
 
That’s HUGE – the Holy Grail of any marketing – as 70 percent of consumers trust content and endorsements from regular people (over brand-sponsored marketing), and 61 percent are more likely to engage with an ad if it includes a real customer or regular person.
 
That’s fundamental to your success (and a spike in profits!) since repeat clients or referrals from past clients convert at a 65 percent rate compared to just a 13 percent closing rate for new prospects. 
 
***
I recommend you sit down and map out your marketing strategies to see if you fall in the Meformer or Informer category. 

​-Norm  :-)

Step 2: Organize, categorize, and add it up
 
After each week, I went through and added up these activities based on certain categories or tasks that I regularly perform. 
 
For me, these were:
 

• Posting on social media
• Writing
• Talking to/attracting new clients
• Creating images and graphics
• Writing and checking emails
• Setting up ads and special tasks
• Working on my individual projects and brand
• Organizing each day or week
• Administrative tasks (including managing Sendible, which is the social media sharing platform I use)
• Posting content to email campaigns (such as in Mailchimp)
• Posting content to blogs (such as to WordPress)
• Invoicing clients (the fun part!)
• Research
• YouTube management for clients
• Fiverr use (a job platform where I can both sell my own services and hire others for help)
• Taking naps and online shopping for stuff I don’t need

 
Ok, maybe I’ll leave the last one off.
 
Once my time audit concluded, I took the weekly tally for each of these categories (in minutes) and averaged them per week. 
 
I also could see the average number of hours I worked each week in total. 
 
Next, I created this spiffy-looking pie chart with a percentage of each task or activity in relation to my total hours. So, if I worked a 40-hour week or 60-hour week, the percentage I spent on each task would be roughly the same.

Now that my time audit was done, what did I learn?
 

• If you have low-level, unskilled admin tasks that are taking up a larger slice of time on your pie chart, you’ve identified a golden opportunity to free up your time by outsourcing or hiring someone to do it.

 

• As I mentioned earlier, there was a big difference between how I was actually spending my time and how I perceived my work hours. For instance, I thought that posting blogs and emails, posting videos to YouTube, etc. took up a whole lot more time than it really does. I also realized that I was spending a ridiculous amount of time just on checking and sending emails every day.

 

• When you outsource or hire someone to handle those admin tasks, you not only free up your time, but they will probably do a better job since it’s their main focus. But, most importantly, you’re freeing up hours each day that you can now allocate to your activities that represent your highest and best use – the shaded 50% on the left of the chart.

 

• Going through this time audit helped me to stop multi-tasking: I was better at singularly focusing on one task at a time. Likewise, I found that focusing and doing a task right the first time saved time overall versus needing to go back and make corrections or fix errors.

 

• Keeping track of my time helped me stay off my phone, personal email, social media, and falling prey to other distractions that have nothing to do with being productive. If I just checked those two times per day, I could get just as much done in far less time.

 

• I could also set new time goals. So, if I wanted to work 8 hours per day or take a Sunday completely off, I knew what tasks I needed to do within certain time parameters. 

 

• I better understood my high-energy and high-focus hours. This is so important. I realized that I could get more quality work done from 6-10:30 am (I’m an early riser) than I do from 10:30 am to 8 pm (which is usually when I quit work for the day). ​ So, if I have something to do that takes my full concentration, creativity, and focus, I make sure to prioritize it during those golden hours.

 

• I also experienced something fascinating, which I call the Energy Continuum. If I was having fun with a task, genuinely interested, received positive feedback, or even had a great relationship with the client, I was more excited about doing the work, had more fun, and the hours I put in seemed shorter. 

 
Many times, I was actually reenergized after spending time at work because I really believed in the client, the mission, or what I could do to help. 
 
Basically, my perception of time was warped on a continuum by the kind of energy and emotions I felt about the work I was doing.
 
***
Why is this time audit so important?
 
After performing this audit, I know where my time is going, where it’s best allocated, and what tasks I should prioritize. I can also slow down and do a better job since I don’t have to feel rushed or overwhelmed.
 
I now see the opportunity to hire someone or outsource to free up a few hours and take a lot of ticky-tack work off my hands. 
 
Recapturing the opportunity cost of time.
 
Maybe hiring someone to take those bottom 20% tasks, combined with my improved efficiency, only frees up one hour per day.
 
But that’s one hour I can reinvest into my most productive activities that clients really hire me to perform. I can also use that hour for learning, research, and stepping up my game, which benefits my clients.
 
I can also spend that hour exercising, reading, meditating, or on personal development. Even better, that’s one hour (and a whole lot of energy) I can use to connect and help people, which is really what it’s all about for me.
 
What would you do with an extra 23 days each year?
 
Even one hour per day adds up quickly. That comes to:
 

• 7 hours per week,
• 30 hours per month,
• 365 hours per year, which is like having almost 23 additional days each year (considering we sleep 8 hours per day). 

 
That’s crazy – recouping or adding 23 days per year just by performing a time audit!
 
I hope this helps and have fun with your own time audit – let me know if you have questions or need help!
 
Your friend,
Norm  :-)

How to EXPAND your business when everyone else is contracting.
 
In 2008, Steven Jobs gave an interview to Fortune Magazine in which they asked him about Apple’s strategy for the coming Great Recession. Jobs said, “In fact we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over. And that’s exactly what we did. And it worked. And that’s exactly what we’ll do this time.” 
 
Instead of paring down R & D, laying off workers, and shuttering stores to withstand the economic storm, Jobs was focused on actually growing Apple, gaining market share in the season where most others were contracting and playing it safe.
 
In fact, many of the top companies and brands do exactly the same, and that’s one of the chief reasons why they last and stay on top.
 
But you don’t have to be a Fortune 500 company or blue-chip brand to grow your business in the coming months and years. Every salesperson, entrepreneur, boutique broker, and small business owner has the tools to succeed even as fear pervades our business climate (and rightfully so). 
 
Sometimes, the hardest thing to do is act boldly and confidently when others are in safe mode. Our natural reaction is to:

• Cut prices to gain enough clients and eke out some profit 
• Cut our expenses to a bare-bones budget 
• Cancel everything we think is non-essential
• Lay off and fire staff
• Put all plans for expansion or growth on hold
• Stop focusing on anything that will develop skills or educate
• Think you can do the same things as before, but just do more of them to get over the hump

 
It all starts with a 180-degree mind shift, a focus on execution, and a whole lot of hard work. But there is absolutely no reason why you can't bring your business to new heights! 
 
Here’s the game plan to expand when everyone else is contracting:
 
1.         Invest in new skills and education
It's time to learn and adjust to the new reality as fast and effectively as you can. Luckily, there are more courses, books, talks, and tools available to us online than ever, and most of them are inexpensive or free.
 
2.         Systematize
Instead of resting on your laurels, break your business down to the smallest blocks and build it all back up again, ensuring your system and operations are superbly efficient. 
 
3.         Leverage 
The difference between a solo-preneur and a true business owner is that the biz owner leverages other peoples’ time, energy, and skills. Stop trying to do everything yourself and start taking advantage of others and what they do well.
 
4.         Look at partnerships/Team up
Of course, there will be plenty of businesses going under or looking to downsize, and there’s no shame in that. But it also creates a golden opportunity to entertain strategic partnerships and build teams that help you expand quickly. 
 
5.         Network
The average person brags about their victories when times are good, but you won't hear a peep from them in tough times. You should do the exact opposite, becoming a networking machine and reaching out to everyone you can. Create connections and authentic relationships, as they'll pay off in huge, unexpected ways down the road.
 
6.         Help others
That's what it's all about, and in dark days, your best product should be help. Focus on solving problems, bringing value, offering solutions, and empowering others to overcome their challenges. Become the person they turn to for advice and guidance. With that, your business will soar as high as the economy sinks.
 
7.         Create new content
Throw out the blueprint from last year, last month, and even from yesterday. Create a brand new marketing and outreach campaign and create blogs, emails, videos, podcasts, webinars, graphics, and social media every single day. That's how you expand!
 
8.         Be the best communicator you know
Double down on points of communication and customer service with clients, and actively practice your listening skills.
 
9.         Cut the bottom 20%
Just like an arrow needs to be drawn back to propel forward, we need to pull back, first by identifying and cutting the 20%. Just like an arrow needs to be drawn back to propel forward, we need to pull back by cutting inefficiencies according to the 20% Rule.
 
Drop the 20% of your products that don't sell, the 20% of your employees who are lazy or aren't producing, and simplify the 20% of your day that consistently steals your time, energy, focus – and money.
 
10.      Recruit
To survive and even thrive through a recession (or depression), firms need to actively attract new personnel. Recruiting will be paramount over the next few years, and you should sign as many talented, battle-tested, and hard-working people from your competitors as possible.
 
11.      Negotiate with vendors
If times are hard for you, they’re even harder for vendors, suppliers, and distributors. So, instead of canceling or doing without, renegotiate every product, service, and lease for lower prices, better terms, and added perks.
 
12.      Nurture your people
Just like we talked about enhancing your own skills, do the same for your employees and partners by offering more training, guest speakers, education, and personal development than ever before. Investing in people always pays off!  
 
13.      Increase marketing and advertising output
People invest in marketing and advertising out of greed (when times are good) but tend to shut off that spigot when times are bad. Do the exact opposite, as effective marketing campaigns are vital to keeping your firm alive and well.
 
14.      Measure
We’ve talked a lot about investing and not cutting back, but don’t do that senselessly, of course. Instead, set clear goals for every dollar that leaves your pocket and carefully measure the effectiveness of everything you do. If it doesn’t measure up, make the appropriate changes and cut it!
 
15.      Rewrite the rules
I truly believe that when markets crash and the economy shrinks, it creates a proportionate amount of opportunity. Your job is to identify and take advantage of those opportunities. That starts with putting fear and uncertainty in a box when you come to work every morning, and instead making clear, big-picture decisions. Remove the limitations and raise – not lower – your goals and dreams. 
 
It’s up to YOU to rewrite the story of your success!

***
-Norm  :-)