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Do You Suffer from Stockholm Bias?

by | Aug 6, 2018 | Blog |

There is a phenomenon that occurs over time to those who are kidnapped or held hostage in dangerous and traumatic situations. The captive begins to rationalize, identify with, and even care for their captors. Stockholm syndrome occurs unconsciously and is a self-preserving, survival technique. After all, the more you can view the harmful actions of your imprisoner favorably, the easier it becomes to survive imprisonment. Thankfully, most of us will never have to experience the traumatic and horrific situations that give birth to Stockholm syndrome; however, there is a lesser form of the unconscious response called Stockholm bias that we experience more often and most frequently at work.

You may not even be aware you suffer from Stockholm bias. If you think about your employer’s decisions over the past several months or even a few years, you may uncover a more profound truth about your current situation. Take a moment to answer these questions:

  1. Do I feel powerless and as if I have no voice?
  2. Have I been angered or frustrated by decisions made by my employer or other business relationships over the past several months or years?
  3. Is my employer focused on doing what’s best for my clients, and me or the company?

If you are a captive advisor, beholden to one company, you are likely limited in product selection, solutions, and choices for how to run your practice and serve your clients. Over time, you may have begun to replace any feelings of anger and frustration when told, “No,” with a more favorable view of your employer as having to make the hard decisions to protect your best interests. You may also have come to believe your limited choices and flexibility are a small sacrifice for staying with a supportive and protective employer. Stockholm bias is a self-preserving response to feeling powerless and having no voice.

Stockholm bias does not only happen to captive advisors. Independent financial advisors are less likely to fall victim to the phenomenon. However, it still occurs when decisions made by broker-dealers, business partners, investment management firm, or others, focus on pursuing corporate interests over what is best for advisors and their clients. When independent financial advisors begin to place a higher value on loyalty to corporations over their need to continuously pursue better alternatives for their clients, they too likely suffer from Stockholm bias.

Another indicator of Stockholm bias is when one places grandiose value on an employer or corporation’s tokens of gratitude. Small gestures become much more significant and take precedence over what the financial advisor has lost. When you think about your relationship with your employer or other corporation, have you been placing more value on the perks over what is essential to your practice?

Stockholm bias is one of the primary reasons advisors stay with their employers and do not pursue increased independence. Since we are blind to the biases that exist within ourselves, as too are others in our same situation, it’s best to consult with someone who has an outside perspective.

Financial Advocates can help you analyze your current situation as it compares to the larger world, helping to free your mind and our future. Call us today (360) 866-2345.

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