Some good books are not really marketed too well – Influence: The Psychology of Persuasion by Robert Cialdini is one such book. It is a good book and a worth read. More importantly it is a good book to read if you are a salesman (clients do not read, so nobody will spot you). It is also a good book to read if you want to be protected AGAINST the salesman and his usual talk…He talks about how we are influenced…here are a few of the things he has spoken about. This is also a book on behavioral finance, so ….here we go:
- Authority: I am the expert come to me. Awesome power of having an image of an expert. Remember it is the image – the truth can be different. How you look in real life has NOTHING to do with your social media image right? well, authority as an influence works. So for a person working in a bank or a big advisory firm spending a few million in appearing to be an expert is not an issue. We cannot forget how LTCM or Bernie Maddoff raised money can we? We see wealth managing companies like ICICI destroy its own balance sheet, right? Or how Citibank the wealth manager gets rapped on its knuckles regularly by the Regulators. However the employees are trained to talk in such a way that people think “oh..these are wealth managers”.
- Gifts: We love to do a tit for tat. Oops sorry, but if somebody gave you a gift, you would want to do something in return, right? So a banker will invite you for a concert by a top musician in a nice 5 star hotel and follow it up with a lovely meal. You cannot really say no to a “Rs. 50L one time investment” in a complex hedge product made to sound very simple, right? Ask the Financial Controller who is invited to a Golf Tour by a banker or a big 4 management consultant. It feels so unnatural to not help someone that has helped you! How can you ignore this basic thing – after all “Givers Gain” is what you have been taught. Iam not sure but there is a HUGE body called Business Network International which teaches people to “give” so that they gain. This is a terrible thing – even as an individual if you are giving to get something, you are just doing business. However, the Golf Tour and the lovely dinner or lunch has an impact. Financial tricksters use reciprocity bias to get you to buy their products even though they MAY know they won’t be in your best interest. Sure, they are wealth managers, but bank’s wealth managers, NOT YOURS!
more to follow…in fact there are 6 in the book…will do it later..
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