Everywhere you look, it’s the same show: banners shouting “unmissable offers”, countdown clocks ticking down the seconds, and bright red “last chance” stickers promising salvation through savings.
It’s the time of year when reason briefly takes a holiday and the shopping baskets fill themselves. Many of the offers are tempting, aren’t they?
But as Greg Davies, specialist in applied behavioural finance and decision science at Oxford Risk, said when he joined me on the Money:Mindshift podcast:
“Black Friday is a theatre. Suddenly, that decision is put on stage, and it’s surrounded by lights and music and excitement… The same decision taken out of a boring context and put into that theatre leaves you to be a very different person.”
Black Friday is a perfect metaphor for the behavioural traps investors fall into when markets get noisy
Just as retail has its once-a-year performance, the markets stage theirs every day. Prices flash red and green, headlines scream urgency and investors are nudged to act fast – often emotionally.
The latest scene in that ongoing spectacle: the so-called AI bubble. (At the time this piece was written it hadn’t burst. Perhaps it has now. Perhaps it hasn’t. It’s not the point.)
Advisers tell me their clients are anxious. And advisers may be, too. Many of us have read in consumer and industry press about start-ups with little revenue but sky-high valuations.
There’s a sense of growing disconnect between what AI can actually deliver and what’s being promised. The worry is that AI stock may tank, resulting in markets crashing everywhere.
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But take a step back and you see what Greg sees: “Almost every day in the investing market is a bit like Black Friday… There’s this constant frenzy of excitement – should I buy [or sell] now because the price will be different in five minutes?”
What advisers can learn
As an adviser, you’re not just managing money. You’re managing emotion: your clients’ and, at times, your own. Black Friday is a perfect metaphor for the behavioural traps investors fall into when markets get noisy:
- Anchoring: clients fixate on past prices or market highs.
- Scarcity and urgency: “buy now or miss out” becomes “invest now or lose the rally” (or in the context of the AI bubble “sell now, and you’ll be OK.”)
- Buy now, pay later: the emotional gratification comes today; the financial consequences arrive tomorrow.
Greg’s practical advice for winning at Black Friday can be repurposed for investing. It starts with recognising what’s happening and preparation.
- Make a list: just as shoppers should decide what they might really need before the sales begin, help clients define what they really need from their portfolio. What outcomes matter most to them?
- Build pause points: encourage deliberate slowness. Whether that means sleeping on a decision or calling a trusted sounding board, the act of pausing gives the rational brain space to re-engage.
- Pre-commit: if clients hesitate to invest, suggest they commit to starting at a set time in the near future. This softens the emotional sting and increases follow-through.
Black Friday is designed to separate people from their money. And, in many ways, so is much of the financial world. The difference is that in markets, the theatre never closes.
That’s why advisers play such an important psychological role. As Dr Daniel Crosby often reminds us, good investing behaviour isn’t about resisting emotion. It’s about designing systems that make better behaviour the default.
Black Friday is designed to separate people from their money. And, in many ways, so is much of the financial world
Preparation, structure and self-awareness are the antidotes to panic and overconfidence alike.
Helping clients define their goals in advance, rehearsing how they’ll respond to volatility and building routines that keep emotion in check isn’t just financial planning; it’s emotional planning. That’s exactly what the human-centric adviser does.
Because when the lights flash and experts offer their views in catchy headlines, the advisers whose clients stay calm won’t be those who predicted the plot.
They’ll be the ones who helped their clients write a better script. They’ve helped them define goals, build habits and create emotional resilience.
Dr Tom Mathar is head of Money:Mindshift at Aegon
