Hardwired to seek instant gratification

Adrian Gore, Discovery Group CEO

In my time as a financial journalist, I have heard my fair share of theories about why there is a poor savings culture in South Africa. While many of these theories logically make sense, none of them truly resonated with me. There simply were some holes in the theories being presented.

However, we live in a time where we face complexities around every corner and we need to find a way to build financial security around us. This was the topic at the recently held Discovery Financial Planning Summit.

The summit was opened by Discovery Group CEO Adrian Gore who presented yet another theory about why we are simply miscoded (unsuited) for financial planning.

Primal instincts

Gore travelled back to a long forgotten past where mankind first walked the earth. At the time, humans were hunter-gatherers and were acutely aware of all the risks surrounding them because the future was simply never assured for them.

It is like the old saying about Africa: Every morning in Africa, a gazelle wakes up; it knows it must outrun the fastest lion or it will be killed. Every morning in Africa, a lion wakes up. It knows it must run faster than the slowest gazelle, or it will starve. It doesn't matter whether you're the lion or a gazelle - when the sun comes up, you'd better be running.

“Because of the primal instincts that drove our primitive ancestors, we are hardwired to seek instant gratification,” said Gore.

Advanced progression

The problem with the above situation that mankind found itself in is that humanity advanced, became more aware of its surroundings, and was able to adapt to live in the world in a better way.

“The problem is that humanity moved from a world of scarcity towards a world of abundance. But humanity never took this into account and to this day, we smoke too much, we drink too much and we consume too much,” said Gore.

Negative signalling

According to Gore, our hunter-gatherer instincts have forced us to adhere to negative signalling.

“We always think that our country, and the world, is in a state of decline. However, this is simply not the case. If we look at our own country, the JSE is significantly bigger now than it was ten years ago. By this virtue alone, the country is doing better. Poverty has been cut by a third, child mortality rates have decreased worldwide and education has increased,” said Gore.

Hyperbolic discounting

But it always seems that South Africa faces more problems than most countries in the world who are not in the grips of a war. First it was the fight against HIV in the days when it was rampant and we didn’t have anti-retroviral treatment, then it was xenophobia, and now it is the FeesMustFall campaign and the current concerns around state capture.

“It always seems that South Africa moves from one crisis to another. This gives the public the wrong signals about the true state of the country and forces them to concentrate on short-termism and make poor decisions,” said Gore.

This is why, according to him, South Africans are so fond of hyperbolic discounting.

The adviser’s role

So what is the adviser’s role in this world? The role of the adviser in a world of hyperbolic discounting is to encourage clients to resist their natural urges over the long run.

“Advisers have the ability to influence thousands of people. They are masters at building trust and building confidence. They need to trust their instincts and the signals that they are receiving. Being negative is primal, being positive is advanced,” said Gore.

While a lot of what Gore said made sense, I have one problem with his theory. Hunter-gatherers were also protective by nature. They did what they could to provide and protect their family or clan. Further, they were providers and provided for their family or clan.

So if we are driven by primal urges, as Gore suggests, surely there is some thread within our DNA that naturally wants us to provide for our families and protect them? Yes, maybe a lot of it is being done now as opposed to the future as Gore suggests, but I don’t think humans are completely coded to be predisposed to hyperbolic discounting. There must be some element within all of us that wants to provide for the future.

Editor’s thoughts:
Advisers need to be positive when they engage with clients, and I am sure that they are. Gore suggests that advisers need to be aware of their clients’ preference to a negative bias, I say that humans are only predisposed to the messages they receive. Let’s be positive and positivity will be bred. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.

Ends