Another Time for Financial Professionals to Shine

The recent news of Silicon Valley Bank and Signature Bank has increased uncertainty and creates another great opportunity for financial professionals to shine.

March 21, 2023

George Bailey knew how to avoid a run on the bank in the 1946 movie “It’s a Wonderful Life” by speaking to his community and calming their fears. Almost 80 years later, human emotions haven’t changed, and irrational behavior is alive and well. The recent news of Silicon Valley Bank and Signature Bank has increased uncertainty among individuals participating in financial systems and creates another opportunity for financial professionals to shine.

The collapse of a bank can be a stressful and uncertain time for individuals, even for those who have deposited large sums of money in insured deposit accounts. During such a time, emotions can run high, and individuals may be prone to making hasty decisions, such as moving deposits and changing portfolio mixes, that could lead to further financial losses. For others, emotions can paralyze people at the exact time when decisive action is needed to minimize risk. We’ll explore some of the most common emotions and behaviors that occur during a bank collapse and provide tips on how to avoid them.

Availability Bias

Availability bias is the tendency to estimate the likelihood of events based on how vivid or emotional the potential outcome is. This means that negative outcomes that are especially easy to imagine, and for which there is high emotionality, are perceived as more likely to occur. During a bank collapse, investors may overestimate the risk of bank failures due to recent news stories about other banks collapsing. To avoid this bias, financial professionals can provide feedback about individuals’ “performance” in estimating risk. For example, since 2001, on average 0.4% of banks have failed in a given year and no investor has lost funds that were insured (FDIC). While statistics are less emotional than an investor’s imagination, they can temper overreactions to information that plays on emotionality. According to Liz Strait PhD, lead Behavioral Scientist at Atlas Point, this could show up more with your Yellow and Purple Bulls.

Herding Behavior

Herding is the tendency to follow the actions of others instead of making decisions based on independent analysis. During a bank collapse, investors may be more likely to participate in a run on the bank if they see others doing the same, even if they do not have independent reasons to believe that the bank is in trouble. To avoid this bias, investors should seek out the advice of trusted financial professionals and experts, and make decisions together based on their own analysis, rather than following the crowd. Even simple advice such as “avoid the news or searching for information on bank collapses” can go a long way. This could present itself more with your Yellow and Blue Bulls, according to Dr. Strait.

Confirmation Bias

Confirmation bias is the tendency to seek out information that confirms our pre-existing beliefs and to ignore or discount evidence that contradicts those beliefs. During a bank collapse, clients may cling to their emotional responses to reallocate money without researching whether their money is actually at risk or if their fears are grounded in fact. Conversely, individuals may seek information about insured deposits to ease their fears while discounting the need to adjust their asset mix. The best way a financial professional can help with this tendency is to tactfully provide reasons for why the investor might be wrong. A financial professional can guide the thought experiment for the individual —encouraging them to produce ideas for why the opposite of what they predict may be true and help them reach that conclusion on their own. Dr. Strait says this may show up more with your Orange Bulls.

Loss Aversion

Loss aversion is when an individual feels the pain of losses more acutely than the pleasure of gains. During a time when investors are worried about a bank collapse, they may be more likely to withdraw their money from other institutions to avoid the risk of losing it, even if the risk is low. To avoid this bias, financial professionals can reframe the outcomes so investors can see the potential losses of removing or reallocating their money. By changing the loss from the loss of money due to a potential banking collapse to the loss of money from responding to an improbable bank collapse by moving or withdrawing assets, Financial Professionals can help their clients avoid losses that are not aligned with their predetermined financial plans. This may present more in your Purple Bulls according to Dr. Strait.


Overconfidence is when individuals overestimate their own abilities or knowledge—believing they are better able to predict outcomes and, as a result, often avoiding advice because of their inflated sense of personal expertise. During a bank collapse, investors may be overconfident in their ability to predict which banks are at risk and may fail to take appropriate precautions to protect their money as a result. To help with this bias, the best approach financial professionals can take is to ask investors to think of all the reasons they can for why their prediction may not come to fruition. Financial professionals can also guide investors through taking the perspective of an individual who does not believe they can predict a bank collapse or which banks specifically may collapse. Again, Atlas Point’s lead Behavioral Scientist, Liz Strait PhD, says this may show up more with your Yellow and Orange Bulls.


A bank collapse can cause stress and uncertainty for individuals. However, by being aware of the biases and tendencies that can occur during such a time, financial professionals can help individuals make more rational and informed decisions about their total portfolio – which could be “do nothing” or “take some action.” By understanding the behaviors at play and providing sound advice, Financial professionals can shine by helping people take a balanced and objective approach to the risks and benefits of their financial plan. Individuals will feel better about their plan, minimize irrational behaviors, and feel more confident in their decisions.

How does the Atlas Point Platform help Financial Professionals

Financial Virtues and Pulse Checks invite individuals into the process and allow clients and prospects to understand if they are susceptible to any of these biases.


Download a list of Financial Virtues responses from the Atlas Point platform and identify people who may be susceptible to these biases.  Let them know you are a resource if they are feeling concerned.


If you are proactively reaching out, be mindful of how each individual prefers to receive information.  This can be found in the Financial Professional report you receive for each respondent.

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Possible preparation ideas for each Bull
  • BLUE BULLS: Be prepared with stories about how you and your clients have weathered previous financial uncertainty.
  • YELLOW BULLS: Connect recent events to their overall financial plan and broader economic news.
  • ORANGE BULLS: Prepare a few bullets on how you have helped them prepare for uncertainty and what actions you can take together.
  • PURPLE BULLS: Align these feelings and emotions with other information or parts of their financial plan that you know the person understands.