The Wisdom of Crowds, a 2004 book written by James Surowiecki, looks at the psychology and behaviour of crowds and draws the conclusion that the decisions made by groups are often better and more accurate than those made by any individual member.
This model can be applied to the physical behaviour of crowds, say in busy spaces like bars and clubs but also to knowledge. Surowiecki retells a story by Victorian statistician and polymath Sir Francis Galton, where a crowd at a country fair were guessing the weight of an ox. The average of the guesses was far closer to the actual weight of the animal than any of the individual attempts.
This theory could explain how the free market economy works because decisions can be taken by the crowd independently of central organisations controlling their behaviour and interfering with the crowd.
Obviously a crowd is not always wise and “herd mentality” has a negative connotation. Surowiecki notices that when the decision making environment is not set up to accept the crowd, the crowd can only do as well as its “smartest member”, rather than outperform as the ox story shows. If the charismatic leader is not correct this can have dire consequences for society.
So what makes a crowd smart?
Surowiecki reckons there are 5 aspects which combine for the wisest of crowds:
• Diversity of opinion
This made me draw a parallel with our organisation at FMB. You might not call 30 a crowd, but in terms of financial planning offices that is relatively large. So how wise is our “crowd”?
Diversity of opinion
The great thing about our team is the wide range of life experiences, age and gender. The team also has a wide range of experience working for different financial services organisations so they have seen many ways to advise clients. We have used that diversity of opinion, (you can’t imagine how passionate their opinions are!) to improve everything we do.
FMB has been independent for over 30 years. When a new company or financial product comes on the market we apply criteria objectively to decide whether we would be prepared to recommend it. Being tied to even a range of companies would leave us unable to choose the very best solution for you.
FMB is not a top down organisation. We have focus groups for key areas of the business which are made up of team members from each area of FMB. The ideas to make changes and improvements can come from any person in the organisation and they have the autonomy to make real change happen.
We keep a close eye on our data. By looking at patterns of everything from workflows, key performance indicators, employee and client surveys we can see the difference between what we think is happening and what is really happening.
The work we do to build our team, the recruitment process, our professional development, our team building and annual conference all contributes to an atmosphere of professional trust. Using the Investors in People framework enables us to develop a collaborative team and get the best out of everyone.
The biggest problem when managing your finances is that there is so much to know, so many different specialisms and complex rules and regulations make it challenging for one person to keep their knowledge up to date and relevant. Here at FMB we have 9 financial planners, as well as many qualified and experienced team members who support each other and share knowledge to make sure our clients get the very best advice.
So in conclusion, when it comes to something as important as managing a lifetime of savings and someone’s hard earned money would you really rely on one “expert” our wise crowd?