The Advisor Institute: Coach's Corner
Disconnecting today's opportunities from yesterday's decisions

Practical messages intended to help you elevate the success of your practice.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By David RichmanNational Director, Eaton Vance Advisor Institute

      Were you drawn to the thesis of Eddie Perkin, chief investment officer, equities at Eaton Vance, about the potential great rotation ahead? Let's explore how, if you agree with his analysis, it might just help you attract your next prospect.

      In our prior post, we explored how "regret aversion" and "confirmation bias" played a role in a prospect's reason for staying hunkered down in cash on the absolute disconnect between "the market" and the alarming spike in COVID-19 cases and deaths. Now, we'll turn to two cerebral possibilities:

      • "The market" is in quotation marks intentionally and speaks to our first cerebral issue. As you know all too well, many prospects think of the market as "one thing." Few think of all the components of the markets. In equities alone, we have small caps versus mega caps, domestic versus international, growth versus value, etc.
      • Second, there is always a dynamic backdrop to the markets. Conditions change and, therefore, investor baseline scenarios deserve to be scrutinized in light of such changing conditions.

      How might you embrace Eddie's thesis, "a rotation is brewing toward value, cyclical, small caps," to inspire our prospect to act based upon the catalysts of the election being behind us and new promising vaccine developments?

      Since our hypothetical prospect is potentially dealing with regret aversion, it is critical to help him look forward lest he becomes anchored to needing to stay in cash, perhaps awaiting full vindication in hopes of a market crash. Additionally, if the prospect is also grappling with confirmation bias, odds are strong that he hasn't been digesting much in the way of bullish insights.

      You can help the prospect shun regret, comforted by the notion that he has missed nothing, as this train has barely left the station, and become open to this "new" opportunity on the horizon. Essentially, you will have decoupled today's decision from the one he made way back in March and successfully addressed the ultimate behavioral bias: status quo bias.

      "Chasing Positivity" is all about getting past client and prospect inertia. In reflecting upon this case study, instead of our prospect mired down in his sense of "the market" disconnect, you can help by "disconnecting" today's opportunities from yesterday's decision.

      Bottom line: As Eddie reminds us, "Remember, equity markets always look forward." Help your prospective clients do the same.