(<2 min read time)

'Social proof' is "a psychological phenomenon where people assume the actions of others reflect the correct behaviour for a given situation... driven by the assumption that the surrounding people possess more information about the situation." – Wikipedia

Otherwise known as, herd behaviour!

Find the right herd

For example, everyone is buying (or selling) property (or shares), maybe I should too so I don't miss out. Everyone I know is not very concerned about retirement, maybe I shouldn't be! Everyone is reviewing their life insurance, maybe I should. And the list goes on!

Social proof has a major influence in our business. For example, the majority of our new clients come from referrals. The social proof being that one of our existing referral partners or clients recommend (provide social proof) our services.

The great thing about social proof is that if you are getting this proof from the right sources it can be very powerful, however if you are getting it from the wrong sources it can be financially disastrous.

My question to you this month is:

"Who are the members of your "financial herd" (accountant, lawyer, financial planner, mortgage broker, family, friends) and are they the best people to trust and likely to know more than you?"

Action for the month:

  • Make a list of who is in your "financial herd";
  • Determine if you are part of the right herd; and
  • If you aren't part of the right herd, find some new herd members.

Have a great month.

Cheers,

Ben Law.