For many advisors these days, the biggest obstacle to effectiveness is a negative mindset. After all, a reasonably optimistic outlook is the most important trait advisors can bring to the job; it’s the necessary first step that makes everything else we do possible.

Right now, we need to put explicit strategies in place to stay motivated. For most of us, motivation doesn’t happen unless we make it happen. (For 10 tips on staying motivated, visit www.investmentexecutive.com, click on “archives” and go to the January 2009 issue.)

We also need to tap into new research on ways to keep an optimistic frame of mind.

Recently, I came across an article by Dave Kahle, speaker, writer, sales expert and principal with Daco Corp., about the work of Martin Seligman, a psychologist with the University of Pennsylvania. Seligman wrote a book 10 years ago called Learned Optimism: How to change your mind and your life. Seligman’s research has shown that optimism isn’t just something that we’re born with. Rather, we can develop the skill of maintaining a positive point of view, even in the face of difficult circumstances.

According to Kahle’s article, Seligman began his career as a research psychologist by studying helplessness in dogs. In an early experiment, he put dogs into a cage from which they could not escape and subjected them to mild shocks.

After some effort to get out, the dogs would give up trying and lie down. Later, he put the same dogs into a cage from which they could easily escape, and subjected them to the same mild shocks. The dogs would just lie down and give up; they did not attempt to remove themselves from the irritant. They had learned helplessness and hopelessness.

In subsequent experiments, Seligman found that people behaved in much the same way. Put into a room and subjected to irritating noises from which they could not escape, they soon gave up.

When then put into a room with a mechanism that would turn off the noise, many didn’t try to remove the irritant. Like the dogs, they had learned helplessness and hopelessness.

From this beginning, Seligman eventually formulated a thesis he called “learned optimism.” His conclusion is that each of us learns to have either a pessimistic or an optimistic outlook. The good news is that this outlook is not set in stone; it can be changed.

MANAGING SELF-TALK
Seligman’s thesis arises from his analysis of people’s “explanatory style” — how we explain negative events to ourselves. When something negative happens, as it inevitably will at some point, how we respond is a function of the extent to which we view the event on three key dimensions:

> Permanence. Pessimists believe negative events will be permanent, while optimists believe they will be temporary;

> Pervasiveness. Pessimists believe negative events are universal, affecting everything they do. Optimists believe them to be specific and limited to individual circumstances.

> Personal Responsibility. Pessimists believe they themselves are entirely responsible for negative events. Optimists tend to assign at least part of the responsibility to events beyond their control.

Here’s how this behavioural perspective works in the everyday life of a financial advisor.

Let’s suppose you’re meeting with one of your largest clients. During that meeting, he informs you that he is moving his account because of unsatisfactory performance.

Now, that’s a negative event if ever there was one!

As you leave the meeting, you think to yourself: “I blew it here. I should have seen this market coming. None of my clients are happy. I’ll probably lose other big accounts, too. And I probably won’t land that prospect I’m talking to, either. I’ll never make President’s Club.”

That’s a very pessimistic explanation of what happened here. Notice that you have explained it in a way that is personal: “I blew it” and “I should have seen this market coming.” Your explanation is also permanent: “I’ll never make President’s Club.” And it is pervasive: “None of my clients are happy.”

Now, stop a minute and analyze how this explanation makes you feel. Probably defeated, dejected, depressed and passive. These are not the kinds of feelings you need to bounce back from this setback and to energize you for your next client meeting.

Let’s revisit the situation, this time offering different explanations. The same event occurs: you receive bad news from your best account, but this time your response is different:

@page_break@“This client really made a mistake. It’s really unfortunate. No one saw this market coming. The only good thing is other advisors are getting similar news from their clients. I need to focus on talking to some people I know who might be looking at alternatives. In the meantime, I’m going to touch base with my other key clients to talk about repositioning their portfolios in light of market opportunities. I’m just glad it was only this account and that my other clients are hanging in with me.”

Because your explanation this time is not personal, permanent or pervasive, it is a more optimistic explanation. How do you feel as a result of this? Not thrilled, of course, but reasonably energized and hopeful — and in a position to move on to do what needs to be done.

See the difference? The event was the same. The only difference was the way you explained it to yourself. One set of explanations was pessimistic, leading to dejection and passivity, while the other was more optimistic, leading to greater energy and hope.

YOUR EXPLANATORY STYLE

Seligman has isolated optimistic behaviour as one of the defining characteristics of successful people. Using various techniques he developed, Seligman predicted elections by analyzing each candidate’s explanatory style — generally, the most optimistic candidates win. (Ronald Reagan is a classic example of this technique.)

There are dramatic implications here for advisors. If you can make your explanatory style more optimistic, you’ll create more positive energy and hope for yourself — no matter how difficult or negative the circumstances with which you must deal. And by presenting a more optimistic outlook, you’ll be someone whom existing clients and prospects are attracted to and feel better working with.

At the core of learned optimism is one powerful principle: your thoughts influence your feelings and your actions, and you can choose your thoughts.

Seligman suggests a three-step process to help you do that:

> Step 1: analyze your explanatory habits.

The next time you have to deal with some negative event or adversity, stop and observe what you are telling yourself about the event. What do you believe about yourself and the reason why bad things happen? Ask to what degree your explanations are personal, permanent or pervasive.

> Step 2: note the consequences of your explanatory style. Pessimistic explanations almost always lead to passivity and dejection. Optimistic explanations lead to energy and hope. Which approach is more likely to help you get through the current tough period?

> Step 3: if you find yourself fighting pessimism, try to change the way you think.

Your future success depends on your ability to rise to the challenge and meet adversity with renewed energy and optimism. You can do this by choosing to think differently.

Don’t just tell yourself: “This is the way I am; I can’t change.”

That’s simply not the case. Seligman’s research suggests most people struggling with a pessimistic outlook are capable of changing.

Among his suggestions:

First, distract your thoughts. In other words, when you find yourself thinking negative and pessimistic thoughts, tell yourself: “Stop!” You can even say it out loud. Just “STOP” thinking those things.

Then, shift your thoughts to another topic — perhaps something that brings you pleasure or satisfaction, or something that you’re good at.

Second, dispute your explanations. This is a longer-lasting approach. Argue with yourself. Reason your way out of your negative thoughts. Look at the evidence, or suggest alternatives.

Back to our example: “I blew it here. I should have this seen market coming. None of my clients are happy. I’ll probably lose other big accounts, too. And I probably won’t land that prospect I’m talking to, either. I’ll never make President’s Club.”

When you catch yourself thinking defeatist thoughts, argue with yourself by focusing on the facts.

Think: “Wait a minute. It’s true I’ve lost this client, but all advisors are losing clients. I’ve actually done better on this than some others in my office.

“What is there to suggest I missed something about markets that other people saw coming? I’ve been talking to my key clients recently — is there any evidence that they are unhappy? As for that prospect I’ve been talking to, have I been getting signals as to whether there is real potential interest there?”

What you’ve done is introduced hard evidence to change your thought processes. As a result of thinking differently, you have more energy, more hope and, therefore, more likelihood of success in the future.

What we think about and how we think about what happens to us is one of the most important choices we make. Remember, you can change your thoughts, you can choose to think differently — positively — and you can choose a different set of beliefs.

And that fundamental decision about how you think can, more than any other single decision, affect your future success. IE

Dan Richards is president of Strategic Imperatives Corp. in Toronto. For other columns, visit www.investmentexecutive.com.