The Brains Behind Making Financial Decisions

What happens in the brain when choosing between two financial products? How about when the decision is perceived as ‘risky’? Can individual decisions be a predictor of how financial markets work? These are the sorts of questions that have emerged from the developing relationship between neuroscience and finance… sometimes called “neurofinance” or “neuroeconomics”. Understanding what … Continue reading “The Brains Behind Making Financial Decisions”

What happens in the brain when choosing between two financial products? How about when the decision is perceived as ‘risky’? Can individual decisions be a predictor of how financial markets work?

These are the sorts of questions that have emerged from the developing relationship between neuroscience and finance… sometimes called “neurofinance” or “neuroeconomics”.

Understanding what happens in the brain when we make financial decisions is relatively new science but it is already proving to be interesting.

The neuroscience

A new lab at the University of Miami’s School of Business has been set up to examine the relationship between the brain and finance.

Using electroencephalography (EEG) to measure electrical activity in the brain, and eye-tracking technology, it conducts experiments on finance students without the need for expensive fMRI technology.

One of the lead researchers explains what the neuroscience is trying to discover:

“Money doesn’t exist in nature. When a person says, ‘I’m going to save 20% of my paycheck to put into a retirement account,’ is that the same part of the brain a squirrel would use to put away nuts for the winter?”

“We’re trying to figure out what parts of the brain we use today to make financial decisions, what they were originally intended to do, and the consistency they have.”

The common assumption is that the decisions we make (regarding finances or anything else deemed as ‘important’) are purely rational decisions, taken without emotions interfering. In terms of finance there is a vast array of metrics used that allow us to make ‘informed’ decisions.

However, the findings from the lab back up previous neuroscience that shows that emotion plays a very important part in all decision-making.

The work of neuroscientist Antonio Damasio demonstrated that people with damage in the part of the brain where emotions are generated are also unable to make decisions – even simple ones like what clothes to wear.

In one of the experiments, students are given two institutions with exactly the same metrics, but with different names of people who run the funds. The latter information should not be a factor in the analysis of which fund to go with, but students consistently choose an American-sounding name over a foreign-sounding name. This is the effect of emotions in the decision-making process.

Can this help explain financial markets?

Neuroeconomics is a growing field that encompasses many fields including neuroscience, experimental and behavioural economics, cognitive and social psychology, theoretical biology, and mathematics.

One of the questions at the forefront of the field is whether understanding what happens in an individual’s brain when they make a financial decision may be extended to financial market behaviour.

The lead researcher at the University of Miami’s School of Business suggests the following:

“If you really think about the market, it’s a collection of people doing stuff. If you really want to understand group behavior, it makes sense to understand how they would make decisions at an individual level.”

A study from the California Institute of Technology sheds more light on this, suggesting that it is a biological impulse to predict how others behave – and that this helps to drive the type of fluctuations in the markets seen in ‘booms’ and ‘busts’. It was found that, rather than making dispassionate decisions based solely on explicit price and value data, traders were driven to predict how the market will change from the behaviour of other traders (in the belief that others in the market knew better than them).

Next time you are about to make a financial decision, stop and think: what is driving this decision? Is it really just analysis and numbers? Or are there emotions bubbling away in the background driving it?

Are You Losing Out on Unclaimed Funds?

Believe it or not, uncashed checks resulting from bankruptcy cases often go unclaimed, but you can now find out if the Federal Court System is holding onto funds with your name on them. There’s a new search tool available that will let you quickly and easily see if there are some funds out there belonging to you that were never claimed.

Accessing Unclaimed Funds

A new online search tool developed by the Federal Court System makes it simple to search for any unclaimed funds simply by entering your last name into the database. The ‘Bankruptcy Unclaimed Funds Locator’ can be accessed through 39 of the country’s 94 court websites. Why would so much unclaimed money exist?

At the end of bankruptcy cases, monies owed are sent (usually via check) to those people that are part of a court case. Sometimes, addresses are wrong, people have moved and other details don’t add up. Many times, these individuals don’t even realize they are owed money and this means that the funds in question become unclaimed and left idle. Unless a person claims those funds (rightfully), there is little to no chance of those funds being returned to the person that was originally owed a specific amount.

What Happens to the Funds?

Bankruptcy courts in the U.S. will hold onto funds for many years. If the funds are not claimed, they are eventually turned over to the U.S. Treasury. It is estimated that around $280 million funds are currently unclaimed in the U.S. Surprisingly, these millions are all sitting idle as a result of bankruptcy cases. How long can one debt linger? It depends on each individual court, but some claimants have managed to retrieve funds going back as far as the 1970s.

Getting Your Money

Step 1 of this process is searching the web to see if you actually are one of those who is owed money. If you do discover that some unclaimed funds are in your name, it might be a challenge to try and claim those funds. Due to complex court systems and laws, getting the money that is owed to you is often easier said than done. The best way to retrieve any funds that are owed to you is to hire a bankruptcy attorney. A knowledgeable and experienced attorney will know the ins and outs of bankruptcy laws and can help you to claim funds that are rightfully yours.

How to Sell Final Expense – Why Agents Fail In the Final Expense Business

The reason agents fail learning how to sell final expense is fairly simple. The unfortunate reality of sales, no matter the industry, is that 90% of all sales people fail or quit within the first 12 months of starting their sales profession. Why is that the case?

The number one the reason agents fail selling final expense is because they give up on themselves. They go into the business with aspirations that didn’t match reality. Looking from the outside in, many new final expense agents have the perspective that to succeed in final expense it is only a matter of going out and talking to people. If it were only that simple!

It takes time to learn the skills necessary to sell final expense successfully. Final expense sales training is something that takes months if not years to develop. A lot of new agents don’t understand that sales is totally different from a typical salaried employee position. You have emotional ups and downs almost daily. Being on straight commission, you literally wake up every morning unemployed; you must “eat what you kill!”

If you don’t have experience, there is nothing to really prepare you for it until you understand what that is like and you are living it. It is something that many people just can’t handle.

Then the other reason people fail is because they don’t get involved with the right agency to help train them, to prepare them for the realities. They get involved with a business that sells “Blue Sky,” meaning all the benefits to a lifestyle of Final Expense and none of the gritty work that it takes to succeed in the long-run.

Also, new agents fail because they get involved in an agency that is designed to short change them and squeeze the dollars out of them at a ridiculous rate. It ends up being a revolving door type of sales agency.

It is important that agents do their research on the front-end. Talk to different agencies. Get a feel for your managers personality type. Figure out who has been successful. How long agents have been working with them? Ask for proof. Are they transparent with what to expect as far as commission and percentage advancements based on merit and production history?

What do you get for your investment? Because the manager makes money off of your production. You just have to make sure value is there. Take the time to ask these questions. Again, it is really important you are reading this because most agents don’t go into this business even knowing what to ask, much less what to expect.

Many agents don’t understand that you must come into this business with a business mindset. Most agents must buy direct mail, and won’t have the benefit of a referral network or an existing book of business. Instead, they have to buy leads to get going.

My recommendation is to have about $4,000 to $5,000 to invest into a final expense direct mail lead system, or if you have less than that keep a full-time job and then also you know if you got $2,000 or $3,000 minimum into a telemarketing final expense lead system.

You MUST start on the right foot. You MUST be prepared for the ups and downs. You MUST be willing to work through it with the understanding that the long-term is what makes it worth having. What makes it all worthwhile.

That’s the reasons why most agents fail learning how to sell final expense. The important thing is to go into this with the right group that shows you transparently what to do. When you know that you have got that on your side it is really up to you.

Do you have the X-Factor to work hard and follow the system that is laid out upon you?

That’s really the ultimate determinate of your success or failure.

David Duford is the owner of Final Expense Agent Mentor.

In addition to personally producing business each and every week, David specializes in training new and experienced agents on how to successfully sell final expense burial insurance.

Why You Need Liability Coverage From Your Insurance Company

Who is responsible to prime the pump and fill the top of the funnel? Many agencies and brokers expect their sales team to cold call, network, and send emails to build their own pipeline, and fill the top of the funnel. It reminds me of the old slogan, “Let your fingers do the walking”. The slogan referred to the Yellow Pages, the omnipresent database of the time. Regardless of the database used, be it the online Yellow Pages, Google Pages, or an internally generated prospect list, the question still remains. Who is responsible to fill the pipeline, and what’s the most likely path to success.

Today insurance lead generation encompasses many new tools to help producers prospect, including eMarketing, Social Media Marketing, Blogging and Web Seminar Marketing, in addition to traditional cold calling and networking. Agencies and brokers must also add their website to this mix of tools, as many broker websites are out of date, difficult to navigate, and are not mobile compliant. The mobile compliance issue is very significant, as mobile searches are now exceeding PC based searches.

Many producers find these new web marketing tools, and in general the lead generation aspect of their jobs, to be arduous and challenging. That’s why so many producers fail, they are not insurance lead generation machines, nor are they savvy insurance web marketers. The results are self-evident, insufficient qualified prospects at the top of the sales funnel, usually translates into inadequate results at the bottom of the funnel.

A better path to success for many agencies and brokers begins with a comprehensive and consistent insurance marketing and lead generation program, providing producers with an influx of quality prospects, so they can spend more time selling and less time prospecting.

Why don’t more agencies invest in these types of programs?

They lack the internal resources necessary to execute these marketing initiatives
They plan on doing this type of marketing and lead gen, but never seem to find the time to get it done
They believe in doing business the old-fashioned way (I built my own pipeline and you can too)
They over invest in sales and under invest in marketing and lead generation
They tried it once and it didn’t work
They tried a short pilot program and didn’t see an immediate ROI

These are just a few of the reasons many agencies and brokers are unable to accomplish their insurance lead generation and top line growth goals. Regardless of the reasons, agency owners and executives should review current and past producer performance and determine if it’s time to refine their insurance marketing and lead generation programs, to improve the path to success for their producers specifically and their businesses in general. Agencies, brokers and wholesalers lacking the knowledge and skills necessary to undertake these marketing and lead generation initiatives can seek assistance outsourcing assistance from proficient insurance marketing agencies as a viable alternative to internal staffing.

Why You Need Liability Coverage From Your Insurance Company

Designed to cover professional practitioners against claims of negligence made by clients or patients, professional liability insurance goes by many names. When used in the medical profession, it is commonly called medical malpractice coverage. Notaries public also require this security, but they refer to it as errors and omissions insurance. Real estate brokers, management consultants, and even website developers are all eligible for protection.

What’s It For?

Insurance is used to protect people in case something unfortunate happens. Auto policies protect them in the event of an accident; medical policies protect them from unexpected illnesses; commercial policies protect them from a number of mishaps. If there is a fire, theft, or an accident on the job, the commercial variety will cover it.

Why You Need It

Few companies are fortunate enough to survive for a protracted period of time without getting sued by a client, customer, or employee. Liability coverage from an insurance company is the only shield most businesses have against litigious attorneys. This goes double when an employer competes in a risky industry like construction. Why?

A construction site is arguably the most dangerous working environment on earth. Not because people are careless, but because making something, anything, is risky. Workers fall down stairs; they trip on cords; they cut themselves. Builders must assume this risk and purchase the right amount of coverage from their insurance company to protect them from financial ruin. But that’s not all.

These policies not only shield the employer, but they also safeguard his workers. If an electrician falls off a ladder or a carpenter cuts himself, a liability policy will pay his medical bills. Commercial coverage will also cover most attorney fees and court costs if someone files a suit against you.

How Much Do You Need?

As you might expect, the size of the policy often depends on the size of the business. Most actuaries recommend at least one million dollars of professional liability coverage for small businesses. Large businesses and corporations obviously need a lot more and often carry huge policies. Because lawsuits are quite common in the medical profession, malpractice insurance is the most common form of liability coverage.

Most doctors have several million dollars of malpractice coverage at all times. When they work in a large practice, that figure might be five or even ten times as high. Lawyers and accountants must also carry liability because of the high rate of litigation in their fields. But what about everybody else?

Numerous Benefits

Any business that can be held financially responsible for failing to complete a project on time may need to purchase a professional liability policy from their insurance company. This includes general contractors, architects, builders, and many, many more. These policies also cover personal injury, breach of warranty, intellectual property, and security. In short, any company that has more than one employee should have liability coverage.