Are Your Clients Visual Thinkers?

Written by: Daniel Roos, CEO at Cboe Vest Technologies

According to research 65% of the population are visual thinkers and have an easier time understanding charts and illustrations than tables and numbers. By identifying which of your clients are visual thinkers and by adapting your presentation style accordingly you will not only understand your clients better, but also improve your communication .

But it’s not as simple as just tossing in some charts from Excel. In this article, we cover the psychological factors that make charts effective and how to apply them in new ways - moving beyond the standard ‘portfolio performance’ illustration .

The reason people love stock charts

To better understand the psychology behind visual thinking, let's start with a classic example comparing two stocks performance over a period, using the table below.

The return number is clear; however, the risk taken is also important and most people will not have an intuitive understanding of what 17% vs 35% volatility really means.

Now, let’s make a chart of the two stocks’ performance instead:

We clearly see that the returns are very close, but we also get a clearer picture of how much of a rollercoaster ride the 35% volatility stock is compared with its 17% alternative.

But the chart offers even more, it contains over 500 data points compared with the table’s 4 data points. When the brain sees this, it automatically starts scanning the chart looking for patterns and meaning. Are the stocks following each other, are there any significant jumps etc.?. Complete industries such as technical analysis have grown out of charting.

Takeaway 1: The brain's natural tendency to scan visuals and look for patterns is a powerful way to get engagement. It also lets us look at massive amounts of data and make high-level sense of it very quickly.

The danger of false patterns

However, the brain's tendency to look for patterns can be abused and lead people astray, finding meaning where there is none to be found. An example is a display next to a roulette table. Seeing a row of red numbers the brain may guess that it will continue, or that the streak is too long to last and it’s time for black. As the wheel is (hopefully) random, any patterns perceived are false.

Takeaway 2: Use some care when working with visuals, they can lead people astray.

Related: Why Do Clients Fail to Understand Option Investments?

Go beyond the standard charts

Stock charts, graphs of portfolio performance or maybe a pie chart of asset class allocation, are all common, but there is much more you can do.

Start by asking yourself two questions:

“What is most important for my client?”

“What am I having a hard time explaining?”

If you find out that you need to explain many numbers or values that change over time, a visual presentation could be a good alternative.

For example, a client is concerned with sustainable investing. A chart showing their allocation proportion to these instruments over time could make a lot of sense—even though it’s not a standard report.

4 Simple Steps to get visuals working for you

It’s easy to use visuals in your communication. Here are 4 simple steps to get you started:

Prepare: Before meeting with a client, think about if they are visual or numbers oriented? If they are visual - ask yourself ‘Can I show them what is most important in one clear chart?”

Question: Look at any material you print or present, if it has large tables of numbers, would a graphical presentation be a good complement?

Get the tools: Excel is the go-to-tool for quick charts. But there is a wealth of powerful tools specialized for finance. A small investment here will not only save a ton of time but let you do things that otherwise wouldn’t be feasible.

Experiment: Good visual presentation is as much an art as a science. Get creative, try different approaches, learn what works for your clients.

Using visuals well will make communications clearer and more impactful. At Cboe Vest Technologies we work actively with this approach, specifically making option strategies and overlays easy to understand.

Give us a shout! We love discussing thoughts or challenges you have in this area, so please feel free to reach out to daniel@cboevesttech.com