Trying to Stay Rational

Consulting firm Lennick Aberman Group has some words of advice for financial advisors in light of the current market chaos—keep thinking. “Extreme emotions can often lead to poor decision-making,” according to Doug Lennick, founding partner and CEO of LAG, a behavioral advisor whose clients include American Express and Charles Schwab. “It’s understandable to experience fear, anxiety, and uncertainty right now, but it might not be the best time to make a reflexive decision.”

It’s biological. “The field of neuroscience tells us that when we experience extreme emotions, the physiology of our brain actually restricts rational thought,” Lennick explains. “When a triggering event occurs, the part of our brain that experiences emotions responds within 12 milliseconds, while the rational part of our brain responds in 40 milliseconds.”

LAG has developed a technique he calls the “4 R’s” to bridge that 28-millisecond gap between the irrational and the thoughtful response: “Recognize your own experience; reflect on the big-picture and the long-term, and what you care about most; reframe your self-talk to account for biases and avoid quick, reflexive responses; and respond with a decision that is consistent with your principles, values and goals.” Those milliseconds will fly right by.

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