Your Financial Decisions and Neuromarketing

contributed by Nathan Gehring

I’ve long been fascinated by how people make financial decisions. One of the basic tenets of conventional economic theory is that people make rational financial decisions in their best interest. Yet, in my years of working with clients, I’ve discovered that financial decision-making is far more nuanced than this simple tenet suggests. Emotions can derail rational, long-term thinking. Biases can color what appears rational. The words used to describe a decision and potential outcomes can have dramatic impact on making the decision. Even simple things such as the aroma in a room when making a decision can change the process people use to make financial decisions.

Neuromarketing and Financial Decisions

While many fields of study are currently exploring financial decisions-making, such as behavioral finance, in an effort to understand how people actually make decisions and how to potentially improve decision-making; a new marketing field has emerged exploring some of these same issues. Known as neuromarketing, this marketing field explores how to market to people’s subconscious. Basically, neuromarketers are determining what is necessary to prime your brain to make a buying decision for a certain product.

It is important to be aware that neuromarketing is happening as you make financial decisions. Could this new field lead you to purchase a good or service that you don’t actually desire to purchase? Can you be driven to make decisions you wouldn’t otherwise make? Or can neuromarketing simply make it easier for you to say “yes” to something you were already inclined to purchase anyway? The little bit of research I’ve read seems inconclusive at this point. However, it may be helpful to consider the marketing messages you’ve received about a product or service when making the decision to purchase. Are you being sold or are you choosing to buy?

Is It Evil?

Neuromarketing certainly raises some ethical questions. Should marketers use subconscious queues to shape your decision-making? Do consumers have a right to full disclosure of any mechanisms used to change their buying behavior? If it turns out neuromarketing could change your decisions entirely and get you to purchase something you otherwise wouldn’t consider or might even find offensive, is this field evil?

I think these are interesting questions and something to be debated, but also find that neuromarketing offers an interesting new look into how people make financial decisions. As a financial planner, anything that offers insight into how my clients make decisions so that I can better help them is something I want to learn more about.

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