Rotman Management – April 2019

100 / Rotman Management Spring 20 19

and non-profit sectors. I work with an incredible team

— most notably James Morrison, Mohsin Bin Latheef,

Sarah Khan and Matthew Satterthwaite. They are all bril-

liant, curious and inspired, and they make my job easy.

In your experience, which industries/sectors can benefit

the most from behavioural insights?

In my opinion, the behavioural toolkit has its greatest ap-

plication in sectors where there is a significant gap between

peoples’ intentions and their actual behaviour. We call this

‘the intention/action gap’, and it often has a significant

impact on the financial, social, mental and physical well-

being of stakeholders — whether it be employees, customers

or citizens.

This means that our Behavioural team spends a con-

siderable amount of time helping stakeholders make the

right decisions for them — from saving more for the future

and making informed decisions with their investments, to

putting their paper in the recycling bin and riding public

transit, to avoiding chronic diseases and sticking to treat-

ment regimens. These problems naturally align to finan-

cial services and healthcare markets broadly, but they are

also ripe for organizations that operate within the public

and social-good markets.

The majority of the human brain is built around social

connections. What are the implications for behaviour?

One of my favourite theories of Neuropsychology is that the

human brain has evolved over time due to the pressures of

social contract and connectivity. I love this theory because

it acts as a consistent reminder that as a species, we are truly

better when we act together.

However, this natural knack for social connectivity

means that whether we mean it to or not, our behaviour

influences other people and others’ behaviour influences

us — sometimes in significant ways. When we start think-

ing about this nuance within the context of leadership and

organizational behaviour, it becomes clear that sentiment

and attitude can spread like a contagion throughout the

workforce — and that is not always a good thing. The onus

is on leadership — and its reinforcement of and care for

team culture — to harness and balance collective energy

for the betterment of the whole.

Many of your clients are in financial services. As we all

know, the process of building financial well-being over

time is riddled with biases. Describe a few of the key cul-

prits.

It is important to note that biases are not distinct operations

within the brain. Rather, they tend to ebb and flow depend-

ing on the context. When it comes to any future-based de-

cision, we are generally at a disadvantage because of our

brain’s data-processing capabilities. ‘Present data’ — the

data that we are crunching in the here and now to make a

decision in the moment — are very concrete and available.

But when it comes to thinking about the future, the data we

use to build our mental model is ambiguous. Combined

with the fact that we tend to overestimate our capabilities

and underestimate the likelihood of negative events, our

brains like to fill in the gaps with best-case scenarios: ‘I

will spend less in the future’; ‘I will get a promotion’; or ‘I

will stick to my new years’ resolution of packing a lunch’.

This decision-making process makes it very easy to justify

spending money today.

Which key principles of choice architecture do financial

advisors need to understand?

Financial advisors have a really tough job: They have to

somehow distill the incredibly complex and esoteric world

of finance into simple explanations that enable their clients

DID YOU KNOW? Gallup research shows that companies

applying behavioural economics principles outperformed

their peers by 85 per cent in sales growth and more than

25 per cent in gross margin during a one-year period.

Our brains like to fill in the gaps with best-case scenarios.