You probably think you can spot a liar. In fact, as an advisor, you may consider this innate ability one of your professional attributes.

After all, nobody wants to get stuck working with a Madoff-like money manager, an analyst fudging facts about a stock-or especially a client who's not as forthcoming as he ought to be.

Unfortunately, the odds are you cannot tell who is lying to you. Nor can the so-called experts.

And forget about such "giveaways" as someone who won't look you in the eye, appears nervous, fidgets or contradicts himself. "There is no relationship whatsoever between those behaviors and not telling the truth," Maria Hartwig, associate professor of psychology at the John Jay College of Criminal Justice in New York said at a CFA Institute research presentation on Thursday. "Zero," she repeated for emphasis.

A meta-analysis of research conducted over 50 years on judging deception showed that the odds of accurately detecting lies are only "marginally higher" than pure luck, Hartwig said at a presentation on the psychology of deception, based on research conducted with the CFA Institute.

What's more, she said, "not a single study has found that presumed experts outperformed lay people" in accurately detecting lies—although these self-defined experts are more likely to think all statements are lies.

Help for Advisors
The good news is that the CFA Institute is working with Hartwig on a methodology to help financial professionals improve their ability to detect deception said Jason Voss, content director for the Institute and co-author of the study on lie detection beliefs.

While there is no "magic bullet" to detect deception, the key is to ask better questions, Voss said, and to think of dealing with suspected liars as if it were a chess match requiring more strategic thinking and anticipating an opponent's next moves.

Whether the suspected deceivers are fellow professionals or clients, financial advisors are likely to have an ongoing relationship with them, he noted. As a result, the advisors need to ask smart, systematic questions that draw on previous knowledge in such a way that will reveal false statements, he said.

Indeed, Hartwig added, one of the best ways to detect deception is having prior knowledge of a situation—and using that information to skillfully draw the truth out of suspected liars.

Another technique, she said, is to ask suspected liars, who often carefully rehearse the way they will counter challenges to their veracity, questions which they are unlikely to have anticipated.

The bad news is that the above suggestions are much easier said than done and that researching how to detect deception more effectively has just begun.

"More research needs to be done," Voss said. "It will take several years to get right."

Pinocchio Myths
So what about those infamous "tells," like nervous tics, tensing up, shifting body position and averting eye contact? All Pinocchio myths, Hartwig said.

Yes, people who lie do all those things, she said-but so do people who don't, especially if they're in a stressful situation.

And liars know they're being scrutinized, so they make more of an effort not to do things that might give the game away.

Indeed, we're all somewhat socialized to not reveal everything we know or think, Hartwig said.

Children who complain after receiving a present that's not to their liking will almost surely be reprimanded, for example.

And society wouldn't function very smoothly if people expressed their actual feelings all the time.

Indeed, she said, those who consistently do so are usually classified as having a behavioral disorder.

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