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We take ourselves too seriously.
As investment advisors, it's appropriate that we view our responsibilities with a solemn sense of mission. After all, we are often accountable for the prudent management of our clients’ life savings. But that doesn’t mean our relationships with clients should be humorless.
Health benefits of humor
The skillful use of humor has a positive effect on your ability to persuade a prospect to become a client. An even more important benefit is that genuine humor is good for your health.
There are many studies indicating a positive relationship between humor and health. Here are some of the benefits or possible benefits identified by research:
The fact that humor can improve your wellbeing in these ways is more than enough reason to lighten up and see the humorous side of life.
Humor and persuasion
Humor plays an important role in making you more persuasive. Initially, the use of positive, well-deployed humor will result in your prospect having a higher opinion of you. A study of male executives found those who were ranked “outstanding” used humor more than twice as often as those ranked “average.”
It’s not entirely clear why those who use humor are perceived more favorably than those who don’t. One school of thought is that people who deftly use humor have a high level of self-awareness and an exceptional ability to empathize. These traits are generally associated with superior managerial and interpersonal skills.
Another study reviewed the data on persuasion. It noted that when issues to be resolved are not urgent, such as the decision whether to retain a particular investment advisor, people engage in “heuristic processing.” This means that instead of engaging in a careful, rational analysis of the situation presented to them, some people instead take short-cuts, based on their past experience, which may not be optimal.
There are many factors, unrelated to your merits, that a prospect might use in making a decision about whether or not to retain you as an advisor. These factors can include their perception of your credibility, whether or not you are "likable" and whether the prospect "feels comfortable." Humor has been shown to increase the perception of likability, perhaps because it may indicate that you and the prospect share underlying values.
Humor is effective as a persuasive tool because it creates a positive mood. If your prospect is in a good mood, he or she is less likely to disagree with what you are presenting and more likely to rely on heuristic shortcuts (in your favor) to make a decision.
Humor is an effective addition to your presentation arsenal because it distracts your prospect from constructing counter-arguments. The use of "ironic humor" has been found to have an even greater distracting effect because the prospect is required to process both the underlying and surface meaning of the remark.
Lastly, humor has been found to increase trust. Self-deprecating humor that speaks against your own self-interest greatly increases credibility and trustworthiness.
There is evidence that cartoon drawings combined with ironic humor can enhance the persuasive power of your message. Ironic humor – and especially self-effacing humor – standing alone, may be even more powerful.
While there are a number of ways you can deploy humor effectively, it is clear that any form of positive humor is better than none at all.
Dan Solin is the director of investor advocacy for the BAM Alliance and a wealth advisor with Buckingham. He is a New York Times best-selling author of the Smartest series of books. His latest book is The Smartest Sales Book You'll Ever Read. He limits his sales coaching practice to advisory firms that advocate evidence-based investing.
Read more articles by Daniel Solin
