The fear of missing out has always been a strong motivator, but its power is increasing. Social networking exposes us to what more people are thinking and doing. This is causing many clients to question their choices, and at times make rash decisions.
According to marketing and communications agency JWT, fear of missing out (FOMO) is the uneasy and sometimes all-consuming feeling of missing out — that peers are doing, in the know about, or in possession of more or something better than you.
The role FOMO plays in motivating clients to action should not be underestimated. It may be behind the Monday morning call from a client inquiring about absolute return investment strategies. The call may leave you somewhat confounded, particularly if he rejected your previous overtures towards absolute return strategies. The client’s change of heart can probably be attributed to a cocktail party discussion. He may remember some of the buzz phrases and maybe even some fund names, but what sticks with him the most is that “they” are in and he is not. He doesn’t want to be left behind, perceived as out-of-touch, or miss out on a great opportunity. The opportunity is not immediately valued on its merits, but by whether the client wants to be part of the “in” group.
Social media adds fuel to the fear of missing out fire. As you poke around on Facebook, LinkedIn or Twitter or media message boards it is easy to get influenced by the perceived masses.
In the example above, your client may have been perfectly comfortable with his decision to ignore your recommendations for incorporating absolute return strategies when presented in March. Now that he has heard that his friends all have a certain percentage of their portfolios in absolute return strategies, he suddenly wants to follow suit
Investments aren’t the only ways that FOMO can affect your practice. Clients are also going to hear talk or be exposed to social networking chatter about the level of service, accessibility and transparency offered by their advisor. If everyone else in their social circle or aspirational social circle is working with advisors who provide online access to an aggregated and consolidated view of their portfolios, your relationship is vulnerable unless you can match or beat that service.
The best way to ensure that FOMO doesn’t lead clients astray from their financial plans or their relationships with you is to stay ahead of the curve. Keep the lines of communication open, and offer your thoughts on a wide range of investment strategies. This way, clients will remember where they heard about investment strategies first. From you. They’ll remember that you had an opinion, and they simply have to reach out to you for your opinion as to whether it is in their best interests.