Advisor: Investor Behaviour – A Crash Course On What Drives Your Clients

Do you think you could advise your clients based on investing behaviour and give up (sort of) advising on investments? Seems a little off, right? Ron Fox, from Glidepath Portfolio Services Inc. says you can, and we agree. We recently attended The Value Of Human Advice hosted by Advocis and Ron lead a stellar session. Here’s our takeaways.

This article is not about investing per se, rather, investor (read: human) behaviour and that behaviour primal in nature. Recommendation; read this post readily asking “based on what I just read, how will I alter my actions to positively impact my interactions with clients?” – that’s how you’ll get the most value.

To start we need a brief snapshot of how our brains work. It’s called Neurochemistry. Disclaimer: We are not Neuroscientists! This is designed to be an overly simplified overview on the factors that motivate our primal behaviours and specifically speaking, our clients behaviours, especially around money.

How does your brain work?

Well, simply put you have three brain ‘operating levels’. The first is the Reptilian Brain – responsible for your routine, unconscious, automatic actions, like your heartbeat. The second, Neocortex which stores life experiences, language, patterns to connect past and present, etcetera – but there’s no emotions here, it’s analytical. And finally, the Limbic System which is impulsive and not rational – it produces chemicals which are responsible for every emotion and feeling that your Neocortex can connect, but it’s not analytical and has no language.

Remember we said, readily ask yourself “based on what I just read, how will I alter my actions to positively impact my interactions with clients?”. This is a good time to ask that question.

What does your brain perceive as value?

In short – chemicals. Specifically, happy chemicals. Our Limbic System produces many chemicals, the most important of which are:

  • Oxytocin: Love Drug
  • Serotonin: Care Chemical
  • Dopamine: Source Of Pleasure (and addiction)
  • Endorphins: Natural Pain Killer
  • Cortisol: Emergency Broadcast System

So, do we perceive value? Imagine, you have an experience in life and based on that experience, the Limbic System releases a certain chemical (the one produced by the natural response to the experience), you get a dose of the associated chemical. Your Neocortex stores that experience (and the resulting feeling produced by the chemical release) and BOOM! a repeatable connection is made. We perceive the good feelings produced by the happy chemicals as value.

Oxytocin: Love Drug

Oxytocin produces the emotional experience of empathy, friendship and trust. Trust is the name we put to the Oxytocin released from being heard and empathized. It also reinforces social affiliation – you know that feeling of being kicked out of a club? It sucks. In the old school (you know, the prehistoric era) being kicked out of the cave meant almost certain death. Which also sucks. So, when you’re acknowledged, affiliated and associated, you get some Oxytocin.

Think about it – why do we engage in handshakes when we meet someone? Physical contact generates Oxytocin, as do acts of service and for example, handwritten notes.

Serotonin: Care Chemical

Serotonin is also called the leadership chemical. It produces a comforting sense of security from being socially important – helping and being helped. The feelings you get in the relationships of coach and player, teacher and student, employer and employee, advisor and client – those are the feelings of honour (Serotonin) flushing through your Limbic System.

It’s also released when people offer respect, like at an awards ceremony. Serotonin also makes you do things that others appreciate – to get respect (which expands mating opportunities and protects offspring, providing social stability). See, it’s very primal in nature! Driving nice cars and owning luxury brands also produce Serotonin – because they’re deemed to elevate you socially. And, that’s probably why you don’t get the same feeling wearing a fauxlex – you can’t fool your brain.

Dopamine: Source Of Pleasure (and addiction)

Dopamine is the chemical of immediate pleasure, the reward chemical. It’s what’ll have you get what you need, even if it takes a lot of effort. Like driving 10 minutes out of your way to find a Starbucks when you get a caffeine craving. Checking off items on a to-do list also provides a Dopamine shot. It also has you take risks to pursue opportunity. It is highly addictive and the source of drugs addictions, gambling addictions, and texting addictions.

Endorphins: Natural Pain Killer

Endorphins are a natural pain killer (like runners high). They motivate you to ignore physical pain – primally, so that you could escape harm when injured. They have a short term effect and today, are triggered by laughing and exercise, among other activities.

Cortisol: Emergency Broadcast System

Cortisol is the chemical responsible for pain. It’s like an emergency broadcast system (you get a massive Cortisol jolt when you stub your toe). Lesser shown though, Cortisol contributes to anxiety, stress and paranoia (which are all survival instincts). If you’re being chased by a prehistoric Saber-toothed tiger, paranoia and anxiety are quite useful.

When you get a shot of this, your body prioritizes where energy should be spent. It shuts down all non-emergency functions, including growth and your immune system, and routes energy to essential bodily services. Cortisol is inversely related to Oxytocin.

Connecting the chemicals and behaviour.

With you clients, start with empathy. Ask a question and give them an opportunity to be heard and connect your cakes with theirs. Empathy triggers Oxytocin, and Oxytocin triggers trust. When one person trusts another, they believe you will protect them. Going the extra miles keeps Oxytocin levels high and also reinforces the value of the relationship.

When someone trusts another to protect them, they are willing to grant them leadership – it’s like being cared for, producing Serotonin. This also facilitates a clients willingness to do things that they would not otherwise do, without your coaching.

Provide your clients with a to-do list. Checking off items on a to-do list generates a Dopamine release for both of you, motivating you, and them, to achieve goals and milestones.

Have you had a client seriously interested (borderline obsessed) with Marijuana and Bitcoin stocks lately? That’s Dopamine. CHASE THE HOT STOCK! Conversely, they get a shot of Cortisol when stocks are down. Cortisol is released in association with the pain felt when stocks fall and that gets anchored. Now, when stocks drop, it hurts. Cortisol is the source of panic selling. Speak to clients Neocortex and stop that Limbic System long enough to stop a panic sell or chasing the hot stock. Be their rock – unwavering.

Positively impacting client interactions.

As advisors, if we do good work, we’re with our clients along the way. Really our value is realized at the time of crisis. Align your clients financial behaviour to be consistent with their core values – know when they’re being rational and when they’re not and act accordingly.

Behavioural advise, financial coaching – that’s where it’s at. We don’t have to be the investment expert to validate our value to our clients. We have portfolio managers for that. Value is less in the actions you take for your clients rather, in the actions you get your clients to take for themselves.

This is not to manipulate our clients – it’s about being informed by the motivating factors that drive our behaviour, often, unbeknownst to either party. But now you know.

For more concepts and opinions, explore our related posts below.

What you need to know:

The information in this article is derived from various sources. We do our best to ensure the sources are both accurate and reliable and – information changes. As such, we make no guarantee or warranty to the completeness of the information presented here or it’s application to your personal circumstances.


  1. Outstanding summary of my presentation Alaeddine! Thank you! There is so much value to behavioural advice, more than we as advice professionals or our clients have recognized, understood or appreciated in the past. Often, our clients are their own financial worst enemies and equipped with this knowledge, we can help them be financial friends with themselves. Great work and thanks again for your appreciation and post Alaeddine!

    1. It’s true, we often overlook the value of behavioural advice. Bringing this topic to the forefront is key. Thanks again for a great seminar and I’m glad you enjoyed the article.

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