The forces driving investor behavior are often hidden beneath the surface of rational decision-making.
Most people have had that moment when they’re walking along outside, enjoying a sunny day, and suddenly something long and twisty on the ground catches their eye. Before they even know what’s happening, their whole body jumps and their brain shouts, “Snake!”
A second later they realize it’s just a garden hose, a stick or maybe even a shoelace someone dropped on the sidewalk. They may laugh, shake their head and keep walking. But for most people, that intense feeling of anxiety and activation lingers for a while.
It’s amazing how fast—and intensely—the brain reacts, even when there’s nothing to fear.
That tiny drama is a perfect example of how powerful heuristics are. Most advisors know the term “heuristics,” the mental shortcuts that help us make quick decisions without thinking too hard. They’re useful some of the time, but sometimes they get too activated and cause us to be jarred emotionally.
When your brain sees something that looks even a little bit like a snake, it doesn’t wait for a careful analysis. It fires an ancient survival response that helped our ancestors stay alive. The reaction is fast, emotional and completely automatic. You don’t choose it—a small, ancient part of the brain chooses the intense reaction for you.
This is the same kind of reaction that investors experience, especially when they feel the fear of missing out (FOMO). The brain sees something that looks like an opportunity, but before its rational part has a chance to weigh the facts, the emotional part leaps forward. It’s the financial version of being startled by a garden hose.
Just like the snake reaction, FOMO feels very real and very intense in the moment. However, observations over the past 30 years of investor behavior have revealed that investment decisions driven by FOMO are not at all based on reality.
Imagine an investor scrolling through the news and seeing a headline about a stock that “skyrocketed 18% in a week.” Their heart jumps. Their mind races. They picture other people making money. They imagine being left behind. They feel a sudden urge to act right now, even if they don’t know much about the company or the risks. It’s funny when you think about it—nothing bad has happened, nothing is chasing them and nothing is forcing them to make a decision. But their brain reacts as if the opportunity is slithering away.
Humans are wonderfully dramatic creatures. We can turn a simple price movement into a full emotional event. More importantly, we can imagine a missed gain as if it were a personal tragedy. We can treat a normal market fluctuation like a once in a lifetime chance. And we do all of this with great enthusiasm, even when we know better. It’s part of being human, and it’s why FOMO is such a powerful force in investing.
But here’s the twist: FOMO isn’t just one reaction. It’s actually a whole cluster of heuristics firing at the same time, like a backstage crew all pulling ropes and flipping switches to create a dramatic scene. When investors feel FOMO, their brains aren’t using one shortcut—they’re using (at least) 12. And when those 12 shortcuts work together, they create a strong, fast, emotional response that makes good decision making very difficult.
Here are just a few of the heuristics involved: First, loss aversion jumps up and shouts, “If you don’t buy now, you’ll lose out!” Then recency bias reminds of last week’s gains while inappropriate extrapolation leans in and whispers, “This trend will keep going forever.” At the same time, social proof pops up and says, “Everyone else is making money—don’t be the only one who misses it.”
And this is just a sample—there are many more programs activated with their own unique message to contribute. It’s quite a production, and it all happens in seconds to create a powerful emotional wave that can sweep investors into bad decisions.
Fortunately, there is a way to quiet the FOMO response, and it doesn’t require superhuman discipline or complicated analysis. It simply requires shifting attention.
“Attention shifting” is a strategy that helps the brain move its focus from the emotional, reactive system to a calmer, more thoughtful one. When the brain’s attention shifts in a particular way, the heuristics lose their power and the investor can think clearly again.
A highly effective attention shifting technique for advisors is the “future self check in.” It works because the part of the brain that imagines the future is completely separate from the part that fires heuristics. When you imagine being someone else—even your future self—the emotional shortcuts aren’t just dulled, they are disconnected. The brain becomes calmer, more analytical and better able to see the big picture.
Here’s how it works.
When markets appear to be expensive, advisors will generally shift assets to protect more on the downside. This will mean missing some of the upside, at least in the near term, and missing is precisely the condition that activates FOMO in a client.
Instead of waiting for the client to have a strong, emotional reaction, the advisor proactively frames the decision to adopt the new approach and the possible consequences of missing some of the upside. The advisor intentionally invites the client to experience the possibility of a loss, but in a very particular way.
The future-self check-in is a three-step process: First, the advisor shows the investor the information that triggered the need for a shift in approach. Second, the advisor explains the implications of prioritizing downside protection—there is a real possibility that the client will miss some of the upside.
The third step is where the client’s heuristics are muted. The advisor tells the client, “I’d like to check in with your future self and play out some possible scenarios that may happen over the next period.” In the context of an imaginary future version of themselves, the client can consider how they imagine they will feel if markets correct and their portfolio is protected.
And the advisor can also check in on how the client imagines they will feel if the market doesn’t correct and their portfolio misses some of the upside. Because their attention is shifted out of the present and they are using the part of the brain that imagines rather than reacts, they can more clearly see the value of protecting their assets even if markets don’t correct.
In psychology this is called a “double dissociation”: The client has stepped out of the current moment (first dissociation) and is experiencing a future world as a different person (second dissociation). To do this, the client must use the part of the brain that imagines things. When these two shifts happen, the emotional shortcuts lose their grip. The imaginary scenario cannot trigger the survival shortcut because it doesn’t seem real.
This technique is simple, but it’s powerful. It gives investors a way to rise above the noise of the current moment and make decisions that match their long term goals. It helps them stay steady in a world full of dramatic headlines and fast moving markets. And it reminds them that they have a wise, calm version of themselves waiting in the future, ready to guide them toward better choices, as well as a wise, calm advisor helping them make more thoughtful decisions in the present.