If I asked you how likely you are to experience crime, illness, divorce, job loss or an accident, you’d probably underestimate the likelihood of those experiences affecting your life.
This is Optimism Bias in action.
Before you dismiss this as too bleak (“I’m more likely than I think to be a divorced, unemployed, accident-prone crime victim? Thanks!”), consider the possibility that Optimism Bias can often be a very good thing.
Optimism Bias makes us believe our chances of experiencing negative events are lower than our peers’. In truth, humanity may not have achieved much without it. It takes optimism to take risks, plan for a future and defer gratification.
That said, Optimism Bias is tricky for financial services providers to navigate. When a client confidently believes they needn’t worry about pensions because their future net worth will be so humungous, what do you do?
Clearly you can’t say: “Sorry, you’ve greatly overestimated your chances of success”. You need another approach.
Fortunately you can use Wi-Ai tools to help your clients understand their susceptibility to certain biases, including Optimism Bias, and to take ownership of these.
To learn more, get in touch at [email protected]