BISA Magazine - Quarter 2, 2017 - 6

UP FRONT

Emotional
Rescue
Fear versus greed is
actually no contest. Fear
wins almost all the time
[in investing].
- Brian Boulerice, FS Investment Solutions

an emotions really be measured? They can when it
comes to investing.

Fear is two-and-a-half times more powerful than
greed, which means advisors will be punished
two-and-a-half times more for losing money
than they will be rewarded for making money, studies have
shown. Fear versus greed is actually no contest. Fear wins
almost all the time.
"What [investors] are really reacting to is an emotional
goal," said Brian Boulerice, senior vice president of business
development for FS Investment Solutions. For example: Will I
outlive my money? Will I be able to send my child to college?
Will I be able to afford health care?
BISA Magazine caught up with Boulerice in Hollywood, Fla.,
where he was teaching a continuing education course titled
"Managing Emotions in Investment Decisions" at BISA's Annual Convention.
When he teaches, Boulerice typically reinforces some of the
basics - what advisors and many investors know but do not
always act upon: "The time to be fearful is when everyone
is being greedy," and its corollary, "The time to be greedy is
when everyone is fearful." Stock market investing is unique,
perhaps, in being "the only thing that goes on sale but no
one wants to buy," he said.

6
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Boulerice explained why this can
be a problem for advisors. Studies
show that the typical client has at least
two financial advisors. The typical advisor, in
other words, has only about 40 percent of his or
her clients' business. So if one isn't getting to a client's
emotional drivers for investment, someone else likely will.
Boulerice teaches advisors to recognize the primary emotions in investing: fear, anger and joy.
Fear is the sense of not being in control, it is an anticipatory
emotion. For example, someone on a boat who can't swim
may be fearful about falling in the water. But if and when
the individual actually falls overboard, what is present is no
longer fear - it is panic.
Anger, the second emotion, is what happens when fear gets
out of control. It is immediate, like panic. This is when a client fires his or her financial advisor.
Advisors must recognize of what the client is really afraid,
Boulerice said. When a client complains, the advisor needs
to reframe the conversation. When a client moans that his or
her portfolio is down 10 percent for the quarter, bring the client back to their goals, Boulerice said. That's the real source
of concern - not the Federal Reserve Board's interest rate
policy or the recent sell-off in the S&P 500. - Andrew Singer

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Table of Contents for the Digital Edition of BISA Magazine - Quarter 2, 2017