When Research Lies

The Liar’s Box is the repository of market research findings that you know are false even though respondents declare them to be true. We recall a vivid example: In a market survey, avid skiers dismissed the importance of graphics on their skis. Research reported that the desirability of skis was all about the shape, size, material and performance. How they looked? A trifle.

Not true, according to the manufacturers and retailers. Graphics are critical to the buying decision, which is why most manufacturers continue to outdo themselves putting out the hottest-looking skis on the market. Respondents’ feedback on graphics has been relegated to the Liar’s Box.

Recently, Forbes reported a similar example from the wealth management sector. More than a thousand institutional investors were asked to rank what’s most important in selecting an asset manager. As you might expect, performance ruled.1

But when the same respondents were asked if they would recommend certain asset managers and why, things like “provides proactive advice” and “understands my unique needs” bubbled to the top. Performance didn’t land solidly in the Liar’s Box, but formal research had given it outsized weight. Whether skis or asset management, it seems respondents often respond the way they think they should, which can often mask their true feelings.

Now comes a book from former Google data scientist Seth Stephens-Davidowitz with the stark if ungainly title Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are. The author maintains that the purest form of honesty resides in what we search for on the Internet and where we visit. There’s no filter – no survey, no questionnaire, no moderator clouding our true feelings and intentions. The holy grail of market research is to capture that kind of candor through scientifically constructed surveys. We’re not holding our breath, but neither would we be surprised if big data mining and artificial intelligence somehow got us a bit closer to this goal.

For wealth advisors, there’s a lesson in the Liar’s Box. The first thing a prospect may ask might be about investment performance, but they’ll probably make their decision on chemistry. Cultivating the intangibles of your practice could be more important than the investments or manager selection. In fact, you may be weighing those intangibles more than you think in choosing the managers you’re working with.

1Source: Forbes CommunityVoice™, May 26, 2017