"PowerPoint makes us stupid!"

So says Gen. James N. Mattis, Joint Forces commander of the Marine Corps.

This quote is from a fun article in the NY Times this week, authored by Elisabeth Bumiller, entitled, "We have met the enemy and he is PowerPoint."

The gist of the article is that the pervasive use of PowerPoint in the military has reached dangerous levels. In fact, there are platoons of junior officers, known as PowerPoint Rangers, who do nothing but prepare PowerPoint slides for daily briefings that seem to accompany the quotidian realities of military life.

The backlash against PowerPoint stems from concerns that it: stifles discussion, critical thinking, and thoughtful decision-making. Says Gen. H.R. McMaster, who banned PowerPoint presentations when he led a successful effort to secure the northern Iraq city of Tal Afar in 2005, "It's dangerous because it can create the illusion of understanding and the illusion of control. Some problems in the world are not bullet-izable."

Speaking of presentations, I want to thank OnlineUniversities.com for posting a remarkable compendium of 50 historical speeches, all posted on YouTube. Containing many of the well-known classics, e.g. Martin Luther King Jr.'s "I Have a Dream" and Sir Winston Churchill's "Finest Hour"...this article also links to some of the lesser-known but excellent speeches, e.g. Randy Pausch's "Last Lecture" and Steve Jobs' "Stay Hungry. Stay Foolish." (As a sobering counterpoint to the inspiration and soaring oratory of King and Churchill, the list also contains excerpts from speeches by Joseph Goebbels and Adolf Hitler. The power of words cuts both ways.)

Spend some time listening to these master speakers. Quite moving. Good learning too!

Presentations, whether they include PowerPoint slides or not, are a critical component of a financial advisor’s arsenal. After listening to some of the best prose ever written, spend some time thinking about your own presentations, then ask yourself some serious coaching questions.

• How are you currently using PowerPoint? Can your presentations be improved, so that your message is conveyed more clearly or more succinctly?
• Does your speech match up to your PowerPoint slides, or do you tend to go off on tangents? Would it be helpful if you created some notes for yourself to keep you on track?
• If you’re not comfortable giving a formal presentation or using PowerPoint slides with a client or prospect, spend some time practicing with someone you know. Become comfortable with the process, so your confidence shows through to your audience.
  

Remember, what you say is just as important as how you say it. PowerPoint shouldn’t make us stupid, and it certainly shouldn’t be the enemy. If you use the written and spoken word to your advantage, the “enemy” could just very well become your best friend.

by Chris Holman

Trusting Your Gut

A great example of the power of intuition is the story of Juan Manuel Fangio, an Argentinean race car driver. Fangio dominated Formula One racing in the first decade of the sport, in the 1940’s and 50’s. In the 1950 Monaco Grand Prix, as he exited the tunnel on the second lap, Fangio braked (inexplicably) as opposed to the normal behavior of maintaining speed. As a result, he avoided a horrendous accident, which was beyond his vision around the bend…and subsequently went on to win the race.

It wasn’t ESP that triggered his immediate reaction. Fangio had picked up a remarkable detail in his peripheral vision. Normally, the spectators in the stands have their faces turned towards the drivers as they exit the tunnel (pale color). At this particular moment, the spectators were looking up the track towards the scene of the accident and had the back of their heads facing Fangio (dark color). This subtle change in color registered instantaneously in Fangio’s non-conscious mind, and caused him to brake, thus avoiding the wreckage, and led to his winning the race.

“In the same way that I tend to make up my mind about people within 30 seconds of meeting them, I also make up my mind about a business proposal within 30 seconds based on whether it excites me.”…Richard Branson

Intuition Facts

• Dutch researchers have recently discovered that with many complicated decisions, such as buying a house, the better the outcome if one simply doesn’t dwell on it.
• In a survey of managers and executives, 90% said they combined intuition with rational analysis when making decisions.
• In another survey, the use of intuitive judgment tends to correlate to job level, i.e. C-level executives are most likely to use intuition, and lower-level managers are least likely.
• There are no consistent research findings that identify “female intuition”. However, some social scientists postulate that females have a more acute sense of social intuition (the ability to read peoples’ motives and intentions) than males do.
  

What is Intuition?
Intuitions are judgments imbued with feelings that arise rapidly and non-consciously on the basis of recognizing a pattern of clues in the environment. This is in contrast to instincts (biological and reflexive, i.e. a knee-jerk reaction) or ‘eureka!’ moments (sudden insights that explain the answer to a problem that has been pondered for some time).

This definition of intuition helps us to understand the Juan Fangio anecdote. He was able to recognize the pattern of clues in his environment (the turned heads of the spectators) based upon his previous experiences, which caused him to react instantaneously.

The Power of the Non-Conscious Mind
Has this ever happened to you? You have been struggling with a perplexing issue for hours, or maybe even days… and you just can’t make a decision, find a solution to a problem, or remember something you’ve forgotten. So, you decide to take a break. Perhaps you turn to something else, walk away, go for a run, or decide to simply “sleep on it”. As you focus on these other activities, your mind is “freed” up. Then, Eureka! You suddenly make a decision, find that solution or remember what you had forgotten.

Here’s what’s happening. During sleep, the linear mind is turned off. It’s pure intuition. During running, walking, intense exercise, or yoga…where one is paying attention to the physical, the unconscious mind is freed up, letting the quieter, non-conscious process integrate the various sources of data that we have gathered. In other words, the brain doesn’t stop when we’re not conscious; it only processes information in a different manner.

The Limits of Intuition
As an interesting counterweight to this discussion, I would refer one to an excellent book, authored by Michael Maubossin, entitled, “Think Twice: Harnessing the Power of Counterintuition.” Maubossin, who is the chief investment strategist for Legg Mason Capital Management argues convincingly that intuition only works well in “stable environments where conditions remain largely unchanged, where feedback is clear, and where cause-and-effect relationships are linear.” He points to the ideas of psychologist and Nobel prize-winner Daniel Kahneman who describes two systems of decision-making. The first is experiential, i.e. it’s fast, automatic and difficult to control. The second is analytical, i.e. it’s slower, serial, and takes effort. The trick is recognizing which is which.

Developing Intuition
Eugene Sadler-Smith, the author of “The Intuitive Mind” and “Inside Intuition” believes that one’s intuition can be honed and developed. He offers the following suggestions for those interested in accomplishing this:

• Open up the ‘closet’, i.e. be accepting of your intuitions,
• Track when/where your intuitions tend to be accurate. Get a feel of your ‘batting average’ for when you are right…and wrong,
• Don’t be literal all of the time. Use metaphor and imagery to help visualize potential future scenarios,
• Play devil’s advocate to test out your intuitive judgments,
• Create the inner state that will give your intuitive mind the freedom to roam,
• Capture your intuitions before they are censored by your rational analysis.
  

Your intuition is a muscle. It gets stronger by repetition and practice. In the words of Michael Horowitz, president of The Chicago School of Professional Psychology, the power of the unconscious mind is underrated and underused by many.

Coaching Question: Are you currently using intuition to make decisions about your practice, your colleagues, or your clients? For financial advisors and others who work with people for their profession, how can you use intuition to your advantage?

Rather than spend an inordinate amount of time trying to figure out a solution to a problem, go for a walk, do some exercise, focus on something else, or sleep on it. When trying to make a decision about a client, just trust your gut instinct. Chances are, you’ll probably be right…plus, you can save valuable time in the process.

On a Personal Note
One year ago, I was recovering from cancer surgery.. During my recovery, I noticed a remarkable thing. I observed that my powers of intuition had increased quite markedly. I'm certainly not an expert in this area, but here's what I think may have happened.

In the 6-9 months before and after my surgery my days were consumed with a rather intense investigation into my medical welfare and the desired course of treatment. During this urgent focus, I was filled with a certain amount of self-reflection and analysis. Post-surgery, I believe that this heightened sense of self-awareness morphed into something much greater, i.e. an increased sense of awareness and sensitivity towards others. Moreover, my enhanced intuitive skills seemed to feed on themselves...the more that I used them, the more accurate I became. It was all quite remarkable. This may give some truth to Mr. Sadler-Smith’s theory that intuition is a muscle and gets stronger with repetition.

by Chris Holman

Alan Greenspan Missed the Last Bubble, Will Your Clients Miss the Next One?

Last month, in an apparent attempt to burnish a bruised reputation, Alan Greenspan presented a 66-page kinda-sorta apology to the Brookings Institution entitled, "The Crisis."

Although not a full-on mea culpa, Greenspan acknowledges that the Central Bank failed to grasp the magnitude of the housing bubble. Surprisingly, he continues to maintain, on the macro level, little could have been done to prevent this global breakdown.

The operative question for all financial advisors is...can we do better?

In an excellent recent article in Horsesmouth, "How to Ride Out the Next Market Bubble" (subscription required), author Steve Utkus argues that financial advisors can prepare themselves and their clients to "counteract the human tendencies that go into making a bubble and get into a position to ride out the next inevitable collapse as comfortably as possible." [Steve Utkus is the director for Vanguard's Center for Retirement Research.]

In this insightful piece, Utkus goes on to explain the four common "bubble biases" and the innate tendencies that contribute to investors' bubble behavior:

1. Representative Bias is the tendency of investors to add an overlay of emotion to the interpretation of statistical information...and overweight events that have happened more recently.
   
2. Investor Overconfidence and Aversion to Losses are the flip sides of the same coin. The former is the predilection to overestimate one's own investment acumen. The latter is to extrapolate that, when markets are declining, that everything could go to ZERO.
3. Group Polarization is the idea that people take more risks in a group than when standing alone, i.e. the herd mentality.
4. Past is Prologue is the recognition that the social and group aspects of risk, as well as wild, over-excessive views of the future (both positive and negative) are nothing new. "There is nothing new except what has been forgotten"...Marie Antoinette
   

Deferring to the viewpoint of Mr. Greenspan, bubbles may be inevitable. How we respond to them...isn't.

For financial advisors, the following coaching questions seem opportune: How did you and your clients respond to the last bubble? What did you learn? How are you and your clients positioned to handle the next bubble? Rather than wait for the next upheaval to materialize, start asking your clients, and prospective clients these questions now..."I'm curious, how is your portfolio positioned for the next bubble?" or "Have you analyzed your investment portfolio for the four 'bubble biases' that investors are susceptible to?"

Do you think this might lead to some interesting discussions?

by Chris Holman

How to Serve Your Clients Better? (Ask Them!)

There’s a thought-provoking article in the April issue of On Wall Street.

Entitled, “Life Style Referrals: Savvy financial firms understand that acquiring new clients is more than just getting one customer to give them a recommendation”…the gist of the article is the changed dynamic between advisor and client. In the author's view (Lauren Barack), the “ubiquity of information” means that investors no longer need advisors in the way they once did.

She's right, of course...and she cites two examples that bolster her premise. Here they are from the article verbatim:

Example #1: It seemed as if John Thiel just could not land this one client. An officer of a firm about to go public, the potential client wouldn't even consider meetings with Merrill Lynch Private Banking and Investment Groups, despite numerous overtures. Then Thiel and his team discovered the prospect had concerns about how his new wealth would affect his two adult daughters. Solution? The team invited the two women-without Dad-to a financial boot camp that the firm began offering several years before. "They were so ecstatic, and he was so impressed by how their attitudes had changed, that he created a meaningful relationship with us," says Thiel.

And…

Example #2: Doug Lockwood's firm Harbor Lights Financial Group in Manasquan, N.J. ran a survey among his clients a few years back. But instead of asking them about the things they liked about their advisors, he asked about favorite sports teams, wines, and what stressed them the most. Their top answer to what created anxiety in their lives? Buying a car.
So Lockwood and his team hit every car dealer in Monmouth, N.J., found the ones that would treat their clients with white gloves and began doing the negotiating for them. And restaurants with impossible-to-book tables? No problem for Lockwood's clients. He called them as well. And after 12 months, the firm saw a 100% growth in assets under management, including one investor who had just inherited a $7.8 million estate from his mother. That client came in after the firm helped lease a car for a close friend, Lockwood says.

In the first place, kudos to these twofinancial advisors for their creativity in finding solutions that matched the needs of their clients.

Here's the other thing. How did these two advisors learn about the concerns of their prospective clients?

They asked them.

It's not unusual how this works. It's called 'The Answering Reflex'. It's followed most of us through our entire life. When asked a question, we answer. To do otherwise is rude and ill-mannered.

For financial advisors, the key is having the understanding, insight, and curiosity...to ask that one good question that uncovers something telling, interesting, or revealing about a person.

When was the last time you asked a coaching question of someone whose response was..."Gee, that's a good question. No one has ever asked me that before."?

Ask and you shall receive.

by Chris Holman